Thursday March 7 2019, Weekly News Digest

chinese p2p lenders

News Comments Today’s main news: Funding Circle US small biz loan portfolio surpasses $2B. JPMorgan Chase to compete with Affirm, Klarna on POS financing. Funding Circle expands into Canada. Funding Circle financial highlights. Revolut fights new allegations. Dianrong lays off 2,000. Today’s main analysis: U.S. credit card debt hits record $870B IN 2018. International P2P lending volumes for February 2019. Today’s thought-provoking […]

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chinese p2p lenders

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News Summary

United States

Funding Circle US Small Business Loan Portfolio Surpasses Most Banks with $ 2 Billion Lent Through Platform (PR Newswire), Rated: AAA

Funding Circle, the global small business loans platform, today announced that investors have lent more than $2 billion through its platform to small businesses in the United States. With this milestone, Funding Circle now has more US small business loans outstanding than almost 98% of FDIC-insured banks1.

Funding Circle now has more than $1 billion of small business loans in its portfolio, which means that if it were a bank it would be among the 50 largest small business commercial & industrial loan portfolios in the United States, according to the latest FDIC data available1. However, unlike a bank, Funding Circle provides a single financial product. Its fully amortizing business loans, powered by sophisticated technology and proprietary credit models, enable business owners to access financing with speed and efficiency, allowing them to devote more time to delivering their product or service to the market and ultimately create more jobs and vitalize their communities.

JPMorgan Chase Enters A Hot Fintech Space: Point-Of-Sale (POS) Financing (Forbes), Rated: AAA

JPMorgan Chase announced that it is moving into the point-of-sale (POS) financing market.

POS financing certainly isn’t new. In 2016, merchants in nine different retail categories saw more than 160 million POS loan applications—only 53% of which were approved, however.

Source: Forbes

Filene Research Institute 

Source: CORNERSTONE ADVISORS

Shopping at Discount Stores Could Help Get You a Loan (WSJ), Rated: A

Discount-store shoppers may soon get an unexpected benefit: better odds when applying for personal loans from Discover Financial Services.

Discover, best known for its credit cards, plans to use artificial intelligence to assess hundreds of unusual characteristics about personal-loan applicants in an attempt to get its rising losses under control.

U.S. Credit Card Debt Closed 2018 at a Record $ 870 Billion (Bloomberg), Rated: AAA

U.S. credit card debt hit $870 billion — the largest amount ever — as of December 2018, according to the data from the Federal Reserve. Credit card balances rose by $26 billion from the prior quarter.

Source: New York Federal Reserve

Nearly 480 million credit cards are now in circulation — up by more than 100 million since hitting bottom after the recession a decade ago.

At the end of last year, credit cards were the fourth-largest portion of consumer debt in the U.S. after mortgage, student loan and auto debt. But the quarterly increase in credit card debt was faster than the other categories. Overall debt reached a record $13.5 trillion.

Source: New York Federal Reserve

LendingTree Compares Renting and Owning a Home in the 50 Largest Metropolitan Areas in the U.S. (LendingTree), Rated: AAA

Louisville, Milwaukee and Oklahoma City are the metros where median rents are cheapest when compared to median mortgages. In these areas, median rent costs are an average of $310 cheaper than median mortgage costs.

Source: LendingTree

Miami and Orlando, Fla.; and Virginia are the metros where rent payments are the most expensive when compared to mortgage payments. Median mortgage payments are an average of $215 cheaper than median rent payments in these metros.

Four of the top 10 metros where monthly rents are higher than monthly mortgage payments are in Florida. According to a recent housing study from Harvard University, low wages and too few rental units are key factors that have caused Florida’s rental affordability crisis to become the worst in the nation.

Source: LendingTree

‘Stop pitting misery against misery’: How TrueAccord is turning debt collections into a financial service (Tearsheet), Rated: AAA

Ohad Samet has spent his career working on lending analytics — first, at a firm called FraudSciences, which got bought by eBay. He ran analytics at Analyzd, which was acquired by Klarna. As the chief risk officer at the pay later lender, he became aware of how antiquated the debt collections industry was. Call centers, dialing for dollars, it just hadn’t kept pace with the front end of the business.

So, in 2013, he left and with two co-founders started TrueAccord, which is essentially a nearly-automated marketing and sales campaign for debt collection. Based on consumer data and data from the lender, it can determine who to call, what time to call, what communications channel — phone, text, email, chat — and what message to use. It purports to be a much better experience for consumers.

KBRA Assigns Preliminary Ratings to Kabbage Asset Securitization LLC, Series 2019-1 (BusinessWire), Rated: A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes (the “Notes”) issued by Kabbage Asset Securitization LLC, Series 2019-1 (“Kabbage 2019-1”).

This transaction is Kabbage, Inc.’s (“Kabbage” or the “Company”) third securitization and it is expected that the proceeds of the sale of the Notes will be used to refinance the Company’s existing $610 million outstanding Kabbage Asset Securitization LLC Series 2017-1 Notes and provide extra funding capacity for Kabbage.

Notes Preliminary Rating Initial Principal Balance
Class A AA (sf) $421,221,000
Class B A (sf) $59,715,000
Class C BBB (sf) $69,348,000
Class D BB (sf) $35,316,000
Class E B (sf) $24,400,000

Peer to Peer Lending Platform Beehive Raises $ 4 Million (Crowdfund Insider), Rated: A

Beehive, a peer to peer lending platform servicing SMEs in the MENA region, has closed on $4 million Series B funding round, according to a release from the platform. This most recent funding brings the Fintech’s total raised to $15.5 million since platform launch.

Loan officers cast serious doubt on latest loanDepot, Chase mortgage promises (HousingWire), Rated: A

In recent LendingLife news, loanDepot announced its new digital mortgage, which it says can identify significant time and cost-savings for borrowers in seven minutes.

AI Foundry Unveils Next-Generation Artificial Intelligence Platform and Mortgage Automation Solution (PR Newswire), Rated: A

AI Foundry, an artificial intelligence (AI) platform company, today announced the launch of its next-generation Cognitive Business Automation Platform along with a new Agile Mortgages solution. This patent-pending technology incorporates the latest in AI, machine learning and machine vision to deliver a higher level of problem solving and decision making for enterprises. The new Agile Mortgages solution, which is built on top of the platform, automates manual, labor-intensive mortgage processes, enabling lenders to dramatically accelerate the lending lifecycle.

Could A Selfie Put An End To False Identities? (Forbes), Rated: A

Earlier this year, 

Auto Loan Statistics (LendingTree), Rated: A

Key facts

  • Americans originated a record 2.5 million auto loans in July 2018, the most recent month for which data is available.
  • Americans owed more than $1.14 trillion in auto loans as of September 2018, 23% more than 2013.
  • Outstanding auto loan balances are rising about 3.1% a year in dollar amounts.
  • Auto loans accounted for about 8% of outstanding consumer debt in 2018, including mortgages, about 2 percentage points higher than a decade earlier.
  • Gen Xers carry the highest auto loan balances with a median of $18,741 and are the most likely of other age groups to have a car loan.
  • The average new car loan originated by a finance company is $29,921.27, an increase of more than $5,000 from 10 years earlier.
  • Average monthly payments are rising, too:
    • $530 for new vehicles, up 5% year over year
    • $381 for used vehicles, up 4%
    • $430 for a new vehicle lease, up 4%

For many Americans, car loans are their largest debt burden, a weight which threatens to become overwhelming as they stretch loan terms to buy increasingly expensive vehicles — new and used. To get the full picture of auto loan debt in the U.S., we looked at auto loan originations, prices and term lengths. Here are the numbers.

Online bank Chime now valued at $ 1.5 billion after new funding round (CNBC), Rated: A

Digital bank Chime has tripled its valuation, officially passing the $1 billion-mark this week.

The San Francisco-based company announced a $200 million Series D financing round that brings its new valuation to $1.5 billion. Investors were led by DST Global, which also participated in earlier fundraising rounds, and new investors Coatue, General Atlantic, Iconiq Capital and Dragoneer Investment Group, Chime said Tuesday.

Jason Gross of Petal (Lend Academy), Rated: A

In this podcast you will learn:

  • The personal experience that led to the founding of Petal.
  • Their core product and how it is different to what else is out there.
  • A profile of their typical customer.
  • How they are approaching underwriting.
  • The typical APRs and credit limits they offer on their card.
  • How they are protecting their company against fraud.
  • How Petal is getting the word out about their credit card.
  • The large waiting list they had when they launched last year.
  • The early signals they are seeing with credit performance.
  • How they are generating income.
  • The primary funding sources they use in providing the credit lines.
  • What they mean on their website when they say “a credit card with a conscience”.
  • Their biggest challenge as they grow their company today.
  • The goals the Petal team has for 2019.

FINRA Approves Circle’s Acquisition of SeedInvest, Continues Mission of Tokenization (Crowdfund Insider), Rated: A

FINRA has given their stamp of approval to the acquisition of SeedInvest by Circle. The crypto focused company announced the purchase of SeedInvest in October of 2018.  The acquisition of a regulated securities crowdfunding platform by the blockchain based Circle represented a seminal turning point in the crypto industry.

Virginians say online lender uses tribal immunity to get around state laws (Pilot Online), Rated: A

Virginians are taking a lead attacking what they say is a legal loophole that has left thousands of people stuck with debt they can’t escape.

The case involves loans at interest rates approaching 650 percent from an online lender, Big Picture Loans, associated with a small Indian tribe on Michigan’s Upper Peninsula.

Lula Williams of Richmond, the lead plaintiff in one case, still owes $1,100 on the $1,600 she borrowed from Big Picture Loans — debt that she’s already paid $1,930 to retire. One of her loan documents reports the annual percentage rate for her debt at 649.8 percent, calling for her to pay $6,200 on an $800 debt. Her first three installments on that loan, each for $400, would have yielded Big Picture a 50 percent profit on the loan after just three months, court records suggest.

How to Invest in Real Estate without Buying Property (Realty Biz News), Rated: B

Lastly if you love jumping on the latest trends, then jumping on one of these companies services that how recently cropped up will help you get involved in real estate investing. You are able to invest in commercial and residential real estate investments and receive cash flow distributions in return, and just like the other options on this list, someone else is doing the heavy lifting whilst you reap the rewards.

Whilst there is no one standout company that we can confidently recommend, since they all havent been around long enough for us to make a property judgement, Fundrise returned an average of 11.4% on the invested dollars in 2017 and a further 9.11% in 2019.

The best part is you don’t even need to be an accredited investor to open an account, meaning if you’re new to the market, then this is your chance to get in on something thats shiny and new and that could potentially give you a place to invest your cash and reap the rewards of owning physical property.

Elevate Appoints Kathleen Vanderkolk as Head of Enterprise Risk Management (BusinessWire), Rated: B

Elevate Credit, Inc. (NYSE: ELVT) (“Elevate” or the “Company”), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced that it has promoted Kathleen Vanderkolk to Chief Risk Officer.

Vemanti Group Engages With Securitize And DSLG To Launch Digital Security Offering For eLoan, JSC (GlobeNewswire), Rated: B

Vemanti Group, Inc. (OTC PINK:VMNT), a technology-driven holding company, today announced that it has engaged with Securitize, Inc. (“Securitize”) and Digital Securities Law Group (“DSLG”) to launch a Digital Security Offering (“DSO”) to fund and propel the business objectives for eLoan, JSC (“eLoan”), its portfolio company. The Company recently announced that it has completed its investment in eLoan, a fintech company based in Vietnam.

The offering will be conducted by the Company on behalf of Fvndit, Inc. (“Fvndit” – formerly Directus Holdings, Inc.), eLoan’s US-based parent company, as the issuer. The issuance will be managed by Securitize’s platform and DS Protocol. Details of the offering will be announced at a later date.

United Kingdom

Funding Circle Announces Expansion to Canada (PR Newswire), Rated: AAA

Funding Circle, the leading small business loans platform in the UK, US, Germany and the Netherlands, today announced its plans to enter the Canadian market and expand access to fast, affordable and transparent financing for Canadian small businesses.

Funding Circle will establish operations in Canada in the second half of 2019 with an office located in Toronto. The business will be led by Tom Eilon, who previously led the commercial strategy for Funding Circle in the United Kingdom.

Funding Circle Holdings plc (Funding Circle), Rated: AAA

Financial Highlights:

  • Strong Group performance delivering IPO guidance whilst continuing our strategy of investing for growth
  • Revenue of £141.9 million (2017: £94.5 million). Year-on-year growth of 55%1 (excluding property2) exceeding c.50% guidance stated at IPO
  • Segment adjusted EBITDA3 of £7.0 million (2017 loss: £3.9 million) with margin of 5% (2017: negative 4%)
  • Adjusted EBITDA4 loss of £28.5 million (2017 loss: £25.1 million) with margin improving to negative 20% (2017: negative 27%)
  • Basic loss per share of 18.2 pence (2017 loss: 14.0 pence)
  • Loss before tax £50.7 million (2017 loss: £36.3 million)
  • Free cash outflow5 of £42.0 million (2017 outflow: £35.3 million)
  • Cash of £333.0 million, £244.1 million higher than at the end of 2017 (£88.9 million), including IPO proceeds of £300.0 million, before expenses of £15.0 million

UK Peer to Peer Lending: Loans top £800 Million in Q4 as Industry Matures (Crowdfund Insider), Rated: AAA

The UK Peer-to-Peer Finance Association(P2PFA) has published fourth quarter numbers for member platforms. According to their data, cumulative lending now tops £9.5 billion with over £800 million originated during the period.

The P2PFA states that platforms facilitated loans worth nearly £3 billion during 2018.

In Q4, P2PFA platforms originnated £527 million to businesses and £282 million to almost a quarter-of-a-million consumers. Cumulative lending among P2PFA platforms has now exceeded £5.5 billion for business lending and £4 billion for consumer lending.

Revolut is fighting back after yet more allegations were made against the $ 1.7 billion fintech unicorn after a week from hell (Business Insider), Rated: AAA

The Financial Times on Tuesday alleged that the UK National Fraud Intelligence Bureau (NFIB) is examining a complaint from a customer, adding to Revolut’s issues after a difficult week for the fintech.

However, the allegations were denied by Revolut and the Financial Times article was subsequently taken down.

The FT, citing emails, reported on an incident in which £70,000 was incorrectly paid into a Revolut customer’s account.

Is the Innovative Finance Isa worth it? We look at the pros and cons (City A.M.), Rated: A

At barely three years old, the Innovative Finance Isa still has some proving to do. And for some savers, it’s a product that is deemed too risky. But how risky is it really?

Of course, the IFISA is merely a tax-free wrapper, so the risk actually depends on the underlying investments held within.

And while investments can vary wildly, most IFISAs are invested in the peer-to-peer (P2P) lending market, where lenders are grouped together to invest capital through an online platform which distributes funds to borrowers.

How savers can use an Innovative Finance Isa to reap the rewards from the property market (City A.M.), Rated: A

Investors can open one IFISA per tax year, and have an annual subscription allowance of £20,000, with substantial tax-free returns.

There are also several different opportunities available when it comes to property IFISAs, including buy-to-let and development.

Wealth management firm urges greater awareness in investments (Wealth Adviser), Rated: B

Last year, the National Trust was criticised for investing in a fund with holdings in fossil fuel companies, while the Church of England was shown to have ploughed funds into Wonga, despite having publicly criticised the payday lender.

Provident fights back in bitter £1.3bn bid battle as it accuses former boss of destroying shareholder value and failing to grasp modern technology (This is Money), Rated: B

A war of words has erupted between the doorstep lender Provident Financial and its former boss John van Kuffeler as he mounts a £1.3billion hostile takeover bid.

The Provvy has accused van Kuffeler of destroying shareholder value and failing to grasp modern technology.

China

Dianrong has laid off as many as 2,000 employees amid a regulatory crackdown (Business Insider), Rated: AAA

China-based peer-to-peer (P2P) lender Dianrong has laid off as many as 2,000 employees and will shut down 60 of its 90 brick-and-mortar outlets, which helped verify the identities and qualifications of users, according to Bloomberg, citing people familiar with the matter.

Additionally, the company has been accused of falling behind on wages and severance pay, per a Chinese media outlet cited by TechNode . The company reportedly started shrinking its business around 10 months ago, despite securinga $70 million funding round in January to expand its services, including SMB lending.

Source: Business Insider
European Union

How PSD2 Will Change Lending (PYMNTS), Rated: AAA

Merchants and customers are now transacting under PSD2 and GDPR in the European Union (EU) — regulations that allow a greater window into how customer data is being used. While these regulations are aimed at increasing consumer trust by allowing them more transparency, many consumers in the region are still adjusting.

French regulatory body, the Commission nationale de l’informatique et des libertés (CNIL), has fined Googlethe equivalent of $56 million for noncompliance with GDPR within the region, alleging that the information services company was using EU customer data for advertising purposes without obtaining clear consent from those customers.

For third-party providers, such as P2P lending and investment provider Zopa, PSD2’s data transparency rules provide an opportunity to “level the playing field” when it comes to gaining that consumer trust.

International

10 Fintechs Have Already Raised Monster Rounds in 2019 (Lend Academy), Rated: AAA

We came into 2019 after a strong year of fintech investments with about $40 billion invested globally according to CB Insights.

Acorns

  • $105 million round led by NBCUniversal and venture arm of its parent company Comcast. NBCUniversal is now their largest shareholder.

Better

  • $70 million Series C from American Express Ventures and the Healthcare of Ontario Pension Plan (HOOPP). The company originated $1.3B in mortgages in 2018.

Figure

  • The $65 million Series B round was led by RPM Ventures as CEO Mike Cagney continues to show his fundraising prowess. Their valuation is said to be $365 million today about double the valuation from last year. Read our coverage here.

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

The total volume for the reported marketplaces in the table adds up to 531 million Euro.

This month I added Bondster (use Bondster Promotion Code 5506 to get 1% cashback).

Source: P2P-Banking

Omidyar Network spins out its fintech investment arm as Flourish, with up to $ 300 million (TechCrunch), Rated: A

After twelve years spent investing in impact-oriented financial services startups around the globe, the Omidyar Network,  which serves as the family investment office for eBay founder Pierre Omidyar, is spinning off its financial inclusion investment arm as Flourish Ventures.

Equipped with up to $300 million in capital for operations and investments, the new Flourish will continue to invest around the Network’s core mission of backing companies with a dual focus on making a social impact and achieving quality financial returns.

List of Multi-Crypto Wallets To Consider For Your Portfolio (Cryptomorrow), Rated: A

Everus

Everus is a multi crypto wallet that allows for payment of bills and for mobile top-ups in multiple crypto and management of multiple crypto. The wallet, which is part of an ecosystem featuring bill payment, marketplace, peer-to-peer lending and micro-finance; allows customers to send, receive, store and withdraw multiple cryptocurrencies (more than 50 currently).

Peer-to-peer lending will allow people to offer and accept microloans affordably, which will be more targeted to the un-banked.

Infinito Wallet

Other features to be added soon include crypto lending where users can lend crypto and earn profits, exchange integration to allow users to exchange crypto from the wallet, fiat gateway to let users purchase crypto with fiat, digital identity and KYC where users can register their digital identity and use it everywhere else without needing to create another one, news portal to furnish users with happenings in the crypto space, and App Square for browsing dApps.

Quppy Wallet

It links to other parts of the company’s product ecosystem including decentralized exchange to allow users to buy and sell crypto, a licensed crypto bank, Prepaid co-brand bank cards, a decentralized peer-to-peer lending for borrowers as well as merchants, individuals, corporate, financial and non-financial institutions as well as crypto-fiat payments for merchants and 100% legal fiat-crypto-fiat transactions regardless of region and legislation.

India

P2P lenders develop new ways to build trust (India Times), Rated: AAA

Monexo ensures less risk for lenders by keeping a lender’s contribution to a loan to only Rs 1,000. So if a Monexo customer lends Rs 1 lakh on the platform, it gets split across 100 loans.

Faircent also has a similar strategy. It does not allow lenders to lend more than 20% of a single borrower’s requirement. So for an average loan of Rs 1 lakh, there will be on average 43 lenders funding that. They also advice lenders not to lend beyond Rs 5,000-7,000 for one loan.

Scaling small businesses with alternative finance (India Times), Rated: A

Lack of access to finance is the most widely cited constraint by SMEs for growth and scaling up business. Generally commercial banks perceive SMEs fall in the category of high default risk due to limited collaterals, smaller in asset size and limited historical track record.

Asia

Tightened supervision needed for P2P lending services: Deputy PM (Nhan Dan), Rated: AAA

Deputy Prime Minister Vuong Dinh Hue has asked competent ministries and sector to enhance inspections, supervision and settlement of violations related to peer-to-peer (P2P) lending model which has been springing up in Vietnam in recent two years.

E-Money, P2P Lending The Hotspots (Fitch Solutions), Rated: A

  • The e-money and payments segment continues to show strong growth, and consolidation within the sector is positive to improve services and ease competitive pressures.
  • P2P lending is emerging as a bright spot, and regulation remains lax enough for lenders to thrive.
  • Cryptocurrencies show little potential for growth as the regulator remains apprehensive towards crypto-based assets.

FINTERRA Calls for All Thought Leaders and Regulators to Envision A Global Waqf Bank (Salaam Gateway), Rated: B

Malaysia has the potential to become the first nation in the world to set up a global “Waqf” bank using blockchain technology, expounded Hamid Rashid, the Founder of FINTERRA.

The platform is a blockchain-based solution to crowdfund Waqf charity, Islamic investments, and peer-to-peer lending.

Canada

Klarna And PayBright Partner To Give More Shoppers The Ability To Pay Over Time (PR Newswire), Rated: A

Today, Klarna, a global payment provider, announces a partnership with Canadian instant financing provider, PayBright. Klarna and PayBright are joining forces to give Klarna’s 100,000 global retailers the ability to turn on a consumer finance solution for their Canadian shoppers quickly and easily.

Authors:

George Popescu
Allen Taylor

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

Thursday March 22 2018, Daily News Digest

Thursday March 22 2018, Daily News Digest

News Comments Today’s main news: LendingTree launches free credit monitoring. Paytm gets into P2P lending. EquityMultiple stops promoting Reg D 506c offerings. Trusted Quid customer info stolen in data breach. PPDai grows revenue as stock rises. Today’s main analysis: Why China Rapid Finance’s ownership structure is important. Today’s thought-provoking articles: Are Amazon, Costco, and Target inching into wealth management? Open banking […]

Thursday March 22 2018, Daily News Digest

News Comments

United States

United Kingdom

China

Other

News Summary

United States

LendingTree Launches Free Credit Monitoring Service (LendingTree), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today announced the launch of a free credit monitoring service within the My LendingTree platform. In partnership with TransUnion, LendingTree monitors users’ credit profiles daily and sends alerts of any changes or potential suspicious activity within 30 minutes of the credit report being updated.

Real Estate Investment Platform EquityMultiple Gives up on Reg D 506c (Crowdfund Insider), Rated: AAA

No longer will EquityMultiple publicly promote its real estate offerings online and elsewhere. Previously, EquityMultiple has leveraged Reg D 506c – a new securities exemption created by the JOBS Act of 2012. This rule allowed issuers and platforms to promote offerings on the internet – via social media and elsewhere  – in contrast to old Reg D (506b) that was barred from any advertising. And why on earth would EquityMultiple not want to promote unique and compelling investment opportunities? Because of the broken nature regarding the general solicitation rule.

Amazon in wealth management? What about Costco or Target? (Financial Planning), Rated: AAA

With Amazon inching closer to financial services, industry observers say its a worthy exercise to think about other potential retail competitors.

“People may roll their eyes in the land of wealth management and financial services, but it’s no longer a place for just banks. They don’t own it anymore,” said Doug Fritz, CEO and founder of F2 Strategy, a technology and marketing consulting firm to the wealth management industry based in the San Francisco Bay area.

Costco seems like the most obvious candidate to get into the wealth management space, said Fritz.

Incumbents such as Charles Schwab have already boxed in robos with products and are not being shy about advertising them, he adds.

5 Savvy Ways To Invest $ 10,000 In 2018 (Forbes), Rated: A

Online Real Estate Investing

Poll of SMBs Reveal Plans to Make Tech Investments Amid Strong Sales Growth (WWD), Rated: A

In a recent poll of small- to medium-sized businesses, financial and technology firm Kabbage Inc. found high expectations for sales growth this year as well as plans to make investments aimed at automation.

Kabbage, which offers lines of credit of up to $250,000 and cites retail as its top vertical, said more than 67 percent of the brick-and-mortar retailers polled expect revenue growth of over 20 percent this year. More than 73 percent of the online retailer respondents expect the same. The survey was based on responses from 800 businesses.

Regarding automation technology, nearly 44 percent of physical store retailers have plans to make investments in this area compared with 60 percent of online retailers. With cyber security and similar fraud prevention technologies, about 44 percent of both online and physical store retailers have plans to make investments in these solutions.

 

 

 

Hundreds of Start-Ups Tell Investors: Diversify, or Keep Your Money (New York Times), Rated: A

The American venture capital industry, which invested $84 billion in more than 8,000 companies last year, has long faced little to no impetus to alter its demographics. Venture firms are usually small private companies made up of former tech executives or financial types, who are mostly male and white. And because venture firms operate with long-term horizons — their funds generally invest over a 10-year period — the industry’s pace of change is often glacial.

In 2016, 11 percent of venture capital firms’ investment partners were women, according to a survey by the National Venture Capital Association and Deloitte. The survey found no black investment partners at venture firms, while 2 percent of investment partners were Latino.

Buyers acquire taste for deposit-rich banks (American Banker), Rated: A

Total loans at banks with less than $10 billion in assets rose by nearly 17% between 2012 and 2017, surpassing the roughly 5% increase in deposits over that time, according to data from the Federal Deposit Insurance Corp.

 

NYDFS sends survey request to online lenders (National Law Review), Rated: B

The New York Department of Financial Services has sent a letter directed to businesses that the DFS “understands…may be involved in online lending in the State of New York” and that asks recipients to complete a “New York Marketplace Lending Survey” that they can access online.

The letter states that the DFS is conducting the survey to gather information for a public report that it is required to issue by July 1, 2018 and which must include information about online lenders operating in New York and their business practices, including lending practices, interest rates and costs charged, and consumer complaints and investigations about the industry.

United Kingdom

Open Banking prompts UK fintechs to reassess collaboration partners (P2P Finance News), Rated: AAA

A report from accountancy firm EY, released on Thursday, found that 59 per cent of UK fintech firms see Open Banking as an opportunity to review their collaboration strategies.

The survey of 31 UK fintech firms also found that 74 per cent of respondents believe that new competitors such as tech firms will become increasingly important over time.

The new data rules, which mandate high street banks to share anonymised customer data with approved third parties, came into effect in January 2018. Peer-to-peer lenders such as Zopa and Lending Works have already announced their plans to capitalise on the new initiative.

94 per cent of fintech firms said they were focused on enhancing their current products and services and 81 per cent said they are planning to use Open Banking to build new services.

Early Returns From Open Banking Show a Mixed Picture (Lend Academy), Rated: A

Banks have not really stepped into the new world until recently as HSBC has stated they will be set to go live with a product by early May, RaboBank is creating a mobile ecosystem and RBS has explained they are working on solutions which includes a stand alone digital bank.

Digital banks Monzo and Starling Bank have already established themselves as early leaders in the market with their open APIs. Both have created financial marketplaces to allow for easy integration and access to different banking services.

Payday lender Trusted Quid admits 66,000 customers details were stolen in data breach (The Sun), Rated: AAA

Details of 66,000 customers including phone numbers, dates of birth, addresses, loan details, employment status and bank account information, were all taken from the website.

In a statement the company said: “There has been a theft of data from unauthorised access to the Trusted Quid website.”

“The incident relates to data directly entered by people applying for a loan only on the Trusted Quid website between 1 July 2016 and 17 February 2018.”

Trusted Quid say they have made three previous attempts to contact customers affected by the data breach.

 

Feature: Is London cooling? (Mortgage Strategy), Rated: A

Research from online estate agent HouseSimple in January showed only 387 properties for sale in zones 1–2 below the magic £300,000 level, rising to just 1,235 in zone 3. For homes valued at £300,001–£500,000, there were just 7,687 in zones 1-3 that were eligible for a stamp duty cut.

BUSINESS SHOWCASE : LOANBIT (Irish Tech News), Rated: A

LoanBit is a multi-currency platform that supports everything from fiat currencies to the latest cryptocurrencies. It allows you to send money in an encrypted format and secure it with state-of-the art security measures.

LoanBit offers an armor of a protection for the lenders. It safeguards the interests of the lenders in the community by covering up to 75% of the loan.

With LoanBit you can:

  • Keep money in a multi-currency wallet,
  • Trade on the integrated exchange,
  • Invest money in cryptocurrencies, and
  • Get a loan in the currency of your choice

ISAs 2018: Innovative Finance Isa can offer rates from 5 to 10 per cent (Express), Rated: A

The Innovative Finance Isa, or Ifisa, was announced by the Government in April 2016, giving ordinary savers the opportunity to invest in growing British businesses free of tax through the growing peer-to-peer (P2P) lending market, sometimes called crowdlending.

Landbay targets 3.54 per cent, Zopa aims for 4.6 per cent a year, Ratesetter offers between3and 6 per cent and Money&Co an average of 8.6 per cent.At the riskier end of the scale the RebuildingSociety is aiming for 9.7 per cent.
China

Is Ping An China’s Most Valuable Insurer or a Tech-Investing Fad? (The Wall Street Journal), Rated: AAA

The $100 billion question for the world’s second-largest insurer: is it an insurance firm or is it a technology firm?

Shares of China’s Ping An Insurance—the biggest insurer by market value after Warren Buffett’s Berkshire Hathaway—have more than doubled in the past year, far outpacing peers. The increase in its market capitalization—of more than $100 billion—is partly due to the fast growth of its life- and health-insurance business. The value of new business last year grew 33% from 2016.

Shares Rise as PPDai Reports Revenue Growth, Stock Buyback (Capital Watch), Rated: AAA

PPDai Group Inc., an online peer-to-peer lending platform in China, reported today that its operating revenues for the fourth quarter increased more than 85 percent compared with a year earlier.

The Shanghai-based company, which completed its initial public offering in November, said during the quarter, it had a net loss attributable to ordinary shareholders of $200.4 million, or 89 cents per American depositary share. That was in contrast to income of $2.8 million a year earlier. Revenue for the three months ended Dec. 31 was $140.2 million, up from $75.7 million in the year-earlier period.

Why China Rapid Finance Limited’s (NYSE:XRF) Ownership Structure Is Important (Simply Wall St News), Rated: AAA

I am going to take a deep dive into China Rapid Finance Limited’s (NYSE:XRF) most recent ownership structure, not a frequent subject of discussion among individual investors. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. The same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, which is a decisive factor for a long-term investor. It also impacts the trading environment of company shares, which is more of a concern for short-term investors. Therefore, I will take a look at XRF’s shareholders in more detail.

Source Simple Wall Strett

Institutional Ownership

In XRF’s case, institutional ownership stands at 18.79%, significant enough to cause considerable price moves in the case of large institutional transactions, especially when there is a low level of public shares available on the market to trade.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market.

General Public Ownership

The general public holds a substantial 42.76% stake in XRF, making it a highly popular stock among retail investors.

Private Equity Ownership

Private equity firms hold a 16.12% stake in XRF.

Private Company Ownership

Potential investors in XRF should also look at another important group of investors: private companies, with a stake of 5.44%, who are primarily invested because of strategic and capital gain interests.

China toughens supervision on third party payment (xinhuane), Rated: B

Agricultural Bank of China announced in a recent notice that it would cut off the payment channel for Internet finance businesses such as peer-to-peer lending, the Xinhua-run Economic Information Daily reported.

The move followed a series of penalties levied at banks and online payment companies, which analysts said were aimed at curbing risks arising from direct clearance agreements between them.

European Union

 

Danish online lender basisbank to implement Fico Blaze Advisor (Finextra), Rated: B

With FICO Blaze Advisor decision rules management system, Basisbank risk analysts will be able to quickly make changes to credit strategies for unsecured consumer loans and point-of-sale financing in order to increase profitability and reduce the risk of loans going unpaid. Basisbank receives more than 75 percent of its credit applications from mobile devices.

International

How digital banks are raising the bar for customer experience (Tearsheet), Rated: AAA

Challenger bank N26 raised $160 million in Series C funding this week to fuel its expansion to the U.S., and other markets, later this year. Revolut, another U.K. challenger, has been planning a U.S. launch this year too and Monzo is rumored to follow.

Digital-only challenger banks have changed customer expectations, including customer service and how customers want to use financial products. Big banks are taking notice, with companies developing sub-brands to hook younger, digital-savvy customers or others — the most recent of which is rumored to be the Royal Bank of Scotland.

For Monzo, which just crossed 500,000 current account holders, the absence of physical branches doesn’t mean a lack of interaction with customers. Monzo’s approach is to release early versions of products to a group of customers and get customer feedback from within the app and through an online forum. It’s an approach that gives customers a sense of ownership and excitement about the brand. For Monzo’s marketplace beta, it sought out feedback from 3,000 customers.

India

Digital payments player paytm wants slice of P2P lending (The Economic Times), Rated:AAA

Paytm, the country’s largest digital payments company, is trying to enter the lending space and is seeking a licence from RBI to become a peer-to-peer lending platform.

According to documents sourced by ET from the Ministry of Corporate Affairs, the company moved a board resolution on February 7 saying it intends to “carry on the business of non-banking financial company — peer-to-peer”.

Authors:

George Popescu
Allen Taylor

Monday January 22 2018, Daily News Digest

California triple-digit APR loans

News Comments Today’s main news: SoFi seeks to poach Twitter  COO for CEO slot. Zopa increases investor interest rates. SoftBank considers IPO in London. TransferWise launches borderless bank account. Spotcap partners with BAWAG Group for same-day financing. Today’s main analysis: Super high-interest loans in California have boomed. Today’s thought-provoking articles: How online branding can help businesses get a loan. Today’s […]

California triple-digit APR loans

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Russia

News Summary

United States

SoFi Offers CEO Spot to Twitter Executive Anthony Noto (WSJ), Rated: AAA

Anthony Noto, a top Twitter Inc. executive, is in discussions to become the next chief executive of Social Finance Inc., according to people familiar with the matter, as the online lender grapples with accusations of improper workplace culture.

The San Francisco-based company has offered the job to Mr. Noto, currently Twitter’s operations chief and before that a top Silicon Valley banker atGoldman Sachs Group Inc.,people familiar with the matter said. Mr. Noto is likely to make a decision in the coming days, the people said.

Twitter’s Noto offered CEO spot at SoFi (SeekingAlpha), Rated: A

He may turn down the offer, as terms haven’t yet been completed, or Twitter might lobby hard to keep him, especially with CEO Jack Dorsey splitting his time between the social-media service and Square.

How Your Business’s Online Brand Can Help You Get A Loan (Forbes), Rated: AAA

An increasing number of the largest online lenders, such as Kabbage (a ValuePenguin affiliate) and Funding Circle (also a ValuePenguin affiliate), are relying on online data in addition to traditional data points to gain a fuller picture of a business’s health.

Kabbage, which recently received $200 million in funding from Credit Suisse, uses a fully automated underwriting process (involving no humans) to approve applicants and requires business owners to link online accounts, which run the gamut from bank accounts to vendor accounts, to complete an application.

Even traditional lenders are getting in on this trend. JPMorgan Chase (a ValuePenguin affiliate), which recently renewed its partnership with online lender OnDeck (also a ValuePenguin affiliate), the largest online lender to small businesses, uses the latter’s underwriting technology, which considers online data points, to help it offer online business loans.

How super high-interest loans have boomed in California (Los Angeles Times), Rated: AAA

Not long ago, personal loans of this size with sky-high interest rates were nearly unheard of in California. But over the last decade, they’ve exploded in popularity as struggling households — typically with poor credit scores — have found a new source of quick cash from an emerging class of online lenders.

These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.

In 2009, Californians took out $214 million in installment loans of between $2,500 and $5,000, now the most common size of loan without a rate cap, according to the state Department of Business Oversight. In 2016, the volume hit $1.6 billion. Loans with triple-digit rates accounted for more than half, or $879 million — a nearly 40-fold increase since 2009.

The number of loans between $5,000 and $10,000 with triple-digit rates also has seen a dramatic 5,500% increase, though they are less common. In 2016, loans of that size totaled $1.06 billion, with $224 million carrying rates of 100% or higher.

Many of the loans can be tied to just three lenders, who account for half of the triple-digit interest rate loans in the popular $2,500-to-$5,000 size range. LoanMe, Cincinnati firm Check ‘n Go and Fort Worth’s Elevate Credit each issued more than $100 million in such loans in 2016, as well as tens of millions of dollars of loans up to $10,000 with triple-digit APRs.

CFPB To Reconsider Payday Lending Rules (Forbes), Rated: A

Within this large document, there are four key actions being proposed:

  • Affordability test: This imposes two burdens on payday lenders. First, conducting an affordability analysis would increase the cost of underwriting a loan. Second, people generally turn to payday lenders when they are broke.
  • Limit payday rollovers
  • Exemptions made for alternatives to payday lenders, including credit unions and community banks: If a lender derives less than 10% of its revenue from payday loans, it is exempt from some of the most onerous rules. This particular restriction is odd. Why is the hated payday lending product acceptable, so long as the institution making the loan only generates 9.99% of its revenue from such activities? Are high rates and frequent rollovers acceptable when coming from a bank? Or is there a presumption that payday lenders are evil while bankers are not?
  • Limit on the number of times a checking account can be debited. This rule limits the lender to two unsuccessful debit attempts. Afterwards, the lender can only attempt to debit the account if it receives authorization from the borrower.

The outrageously high APRs paid on payday loans can make anyone’s stomach churn. But why are APRs so high? I believe there are three main drivers:

  • Risks are high: The people using payday loans are very high risk borrowers.
  • Price competition is absent: For a payday loan, people value speed and access.
  • Good behavior does not get rewarded: Payday lenders generally do not report to credit bureaus.

Consumer protection bureau drops payday lender lawsuit (KYMA), Rated: A

The Consumer Financial Protection Bureau on Thursday dropped a lawsuit against four payday lenders.

Since 2012, two of the firms — Golden Valley and Silver Cloud Financial — offered online loans between $300 and $1,200 with interest rates of up to 950%. The other two firms — Mountain Summit Financial and Majestic Lake Financial — also offered similar terms on loans, according to the bureau.

Bank of America’s digital investments pay off (Business Insider), Rated: A

  • BofA added about 2 million users to its digital channels, predominantly to mobile. The bank’s active digital users jumped from 32.9 million to 34.9 million annually, an increase largely driven by mobile banking users, which increased by 2.6 million users year-over-year (YoY).
  • Engagement is rising too. Mobile channel usage rose 34% YoY to reach 1.3 billion interactions in the quarter.

BofA consistently updated its digital and mobile offerings throughout 2017, adding contactless ATM functionality, for example, and integrating tools like the popular peer-to-peer (P2P) offering Zelle. These innovations have likely contributed to rising interactions.

The Biggest Myths About the Underbanked (MicroBilt), Rated: A

Just under 30 percent of U.S. households are underbanked or unbanked, according to the FDIC. What these terms mean has been up for debate and subject to misconceptions. Let’s look at some of the most pernicious myths regarding underbanked Americans and debunk them:

Bank Earnings, GS Enters Home Improvement loan market, PeerIQ Hires (PeerIQ), Rated: A

in 6 years as its trading revenue was impacted by losses in commodities trading. GS, continuing on its strategic objective to generate $13 Bn in loans in 3 years, also announced that 

Zelle’s anti-fraud efforts trip up key group: Its users (American Banker), Rated: A

The person-to-person payments service Zelle differentiates itself from rivals by promising users that transactions sent over its network will clear in near-real time. Yet in recent months, the service has faced a number of complaints from consumers who say they are having problems sending or receiving money or setting up accounts in the first place.

Zelle has acknowledged the problems, but says the occasional delay is the price some users will have to pay as the big banks’ rival to PayPal and Venmo aims to create one of the industry’s strictest fraud-prevention programs.

Loanable is Working to Disrupt Student Loan Industry (The Student Loan Report), Rated: A

One of the biggest (and most unique) new companies working in the online lending space is Loanable – a platform that brings together crowdfunding and peer-to-peer lending, but with a twist.

According to Bernard Worth, who created Loanable along with co-founder Justin Straight, there is a whopping $1.3 trillion in American student loan debt.

This system, which just launched in October of this year, is designed specifically for loans from friends and families. Loanable is an innovative way to get a low-interest loan from multiple friends and family members, without of lot of the awkwardness and tension that’s typically involved with borrowing from people you know.

The friends and family loan set-up process is pretty straightforward. You simply need to enter some information:

  • The full amount of the loan
  • Each lender’s name, address and email
  • The borrower’s name, address and email
  • The interest rate – which is usually between 2% and 10% for friends and family loans
  • The loan term (normally 36 months)
  • A designated late fee
  • The start and end dates of the lending schedule

SoFi Parent Loan vs. Parent PLUS Loan: Which Is the Better Option? (Student Loan Hero), Rated: A

SoFi Parent Loans Parent PLUS Loans
Eligibility requirements Your child is enrolled full time in college; you’re a U.S. citizen or permanent resident Your child is enrolled at least half time in college; you’re a U.S. citizen or eligible non-citizen
Application process Apply for an instant rate quote with a pre-approval application (soft credit pull); submit full application when you choose a loan (hard credit pull) Submit the FAFSA; work with your college financial aid office to request a Parent PLUS Loan
Credit requirements SoFi considers your credit score, debt-to-income ratio, income, career, education, and other factors. Another parent or guardian can cosign You can’t have an adverse credit history. If you do, you can apply with an endorser who has strong credit
Borrowing limits $5,000 minimum, up to the total cost of attendance Up to the total cost of attendance, minus any other financial aid received
Rates Fixed APRs from 3.25% – 7.25%; variable APRs from 2.58% – 7.07% Fixed interest rate of 7.00% for the 2017-2018 school year
Origination fees None 4.264 percent for the 2017-2018 school year
When repayment begins Immediate repayment Immediate repayment, unless you request a deferment while your child is in school and for up to six months after they graduate
Repayment options Five- or 10-year terms Standard Repayment Plan (10 years); Graduated Repayment Plan (10 years); Extended Repayment Plan (25 years); Income-Contingent Repayment, if you consolidate first (25 years)

Tax Preparation Firms Use Zero Interest Loans As Lead Generator (Lend Academy), Rated: A

With tax season around the corner you might have noticed a deluge of Jon Hamm commercials for interest free tax refund advance loans. This is a newer product used by tax preparation firms to build their customer base around tax season.

H&R BlockJackson HewittLiberty Tax Service and more recently Credit Karma all market interest free advances on your tax refund. The process is simple and the loans are paid back to the tax preparer when your refund comes back from the government.

CSBG Applauds Senate Introduction of the Small Business Credit Availability Act (Coalition for Small Business Growth Email), Rated: B

The “The introduction of the Heller-Manchin Small Business Credit Availability Act is welcome news for America’s small and mid-sized businesses. The legislation recognizes that business development companies (BDCs) have become an important source of capital for Main Street businesses and modernizes the way BDCs are regulated. If passed, this bill could quickly result in billions of dollars of credit availability for companies often overlooked by traditional lenders,” said Joe Glatt, co-founding member of CSBG.

Learn more about the Small Business Credit Availability Act (H.R. 3868) here.

State of New York Poised to Empower New York Department of Financial Services to Study Online Lending (Crowfund Insider), Rated: B

There is legislation moving through the state of New York that shifts some responsibility regarding online lending to the New York Department of Financial Services (NYDFS).

This is according to a brief write up in Lexology and the change in approach may have an important impact regarding online lenders operating in the state of New York.

NYDFS does not necessarily have a reputation for being Fintech nor innovation friendly.

Read the New York Senate Act here.

United Kingdom

Peer to Peer Lender Zopa Increases Interest Rates Paid to Investors (Crowdfund Insider), Rated: AAA

Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015.

Bankers in fight to lure Softbank float to City (The Times), Rated: AAA

Softbank Group, the Japanese technology conglomerate, is considering the sale of 30 per cent of the shares in Softbank Corp, a subsidiary that is Japan’s third-biggest mobile phone operator, in an initial public offering.

The mega-deal could raise up to two trillion yen (£13 billion) and may take place this year in Tokyo and London, with the proceeds channelled into investments in new technology businesses, the newspaper Nikkei reported last week.

8 in 10 SMEs still prefer traditional bank loans over alternative finance (growth business), Rated: A

Research from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above. However, only a quarter said they were comfortable with accessing crowdfunding or peer-to-peer lending.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending (ABL), while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Despite this, traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.

UK Open Banking crew call on Contego to verify you (Fintech Futures), Rated: A

Contego, a regtech and compliance firm, has been chosen by the Open Banking Implementation Entity (OBIE) to verify its users and support open banking development in the UK.

Envestnet | Yodlee unveils API solution for PSD2 compliance (Fintech Futures), Rated: A

Envestnet | Yodlee has launched a single API solution to make it easier to comply with the UK’s PSD2 and open banking API specifications for account information services, reports David Penn at Finovate (FinTech Futures’ sister company).

Tech drives financial sector consultancy in the post-crisis era (Financial Times), Rated: A

“We’ve recruited more than 1,000 specialised consultants across BCG working on topics which didn’t exist just five years ago,” says Mr Morel. They are technologists, data scientists and process specialists who help banks decide what to prioritise and how to design and implement solutions. Most of those newcomers work in financial services, including 100 who work with UK institutions.

LendInvest seals £17m deal for first phase of 5,750 home site (Specialist Lending Solutions), Rated: B

LendInvest has been named the exclusive development finance lender on the first phase of a long-term development scheme that aims to build up to 5,750 new homes outside Dover in Kent.

The lender is funding the first 216 units on the first section of the site to be developed by Halsbury Homes – the largest number of units it has funded so far.

Astute investments for under $ 1,000 (Bankless Times), Rated: B

In fact, with real estate crowdfunding services like Fundrise Reviews you can invest with as little as £500 in commercial real estate. Something that means you could be looking at a return of over 10 per cent, not bad for such a small investment.
China

Shake-up in China’s online P2P lending sector (China.org.cn), Rated: A

The past New Year’s Day holiday might not have been a time of celebration for some Peer-to-Peer (P2P) investors in China.

Several Chinese online lending platforms announced a repayment delay or liquidation amid tightening government regulations.

On Dec. 26, 2017, a Beijing-based online lending platform ishoutou.com made an online announcement that it was going into liquidation due to compliance risks. It promised to pay back all loans by 30 percent, 30 percent and 40 percent respectively in the three months from February to April.

However, the company owner, Yang Yinghua, went missing the next day.

European Union

Orange Bank: is a phone company the future of fintech? (Financial Times), Rated: A

And yet it is Orange that has launched one of the most audacious attempts to break into mainstream banking and challenge tarnished incumbents. A couple of months ago Orange Bank was launched with a mission to attract 2m clients and shake up the staid world of French finance.

The shift to smartphone banking should put telecom operators, handset makers and the big technology groups in a strong position to go head to head with the traditional banks.

 

Springhouse Receives MOR RV2 Residential Vendor Ranking from Morningstar Credit Ratings, LLC for Asset Valuation (Yahoo! Finance), Rated: A

Springhouse today announced that it has received Morningstar Credit Ratings, LLC’s MOR RV2 residential-vendor ranking as an asset valuation provider. Morningstar’s forecast for the ranking is Positive.

As a member of the Altisource Portfolio Solutions S.A. family of businesses (“Altisource”), Springhouse leverages Altisource’s shared services.

EUROPEAN DIGITAL LENDING AWARDS (Eiffel Investment Group), Rated: A

Eiffel Investment Group actively supports the development of digital lending throughout Europe.

We are excited to sponsor the first EUROPEAN DIGITAL LENDING AWARDS.

The event will take place on February 1st, 2018, in Paris (25 Rue du Petit Musc, 75004 Paris) at 7 pm. If you would like to attend, please send us an email at contact@eiffel-ig.com (advanced registration is mandatory).

See voting categories here.

International

Transferwise Launches Borderless Bank Account (CLNews), Rated: AAA

Launched in January, the company’s ‘borderless’ account – coupled with a debit card –  allows users to hold up to twenty-eight currencies. Once signed up, account holders can carry out transactions in a currency of their choice as they travel around the world.

But there are other new players in the market. For instance, Revolut – which styles itself as a digital banking alternative, offers a prepaid debit card that allows users to hold up to sixteen currencies. Again, transactions can be carried out in the currency of choice.

Meanwhile, WorldFirst – a foreign exchange broker serving companies and relatively wealthy individuals –  last year announced that it was launching a World Account, Aimed at SMEs, the new account offers the ability to open local bank accounts overseas and hold dollars, sterling and euros.

To Illustrate the potential demand for its service, Worldfirst cited research suggesting that small and medium-sized companies were carrying out foreign-exchange trades to a value of £76bn every month.

Today’s Banks Need a Millennial Banking Technology Framework (Finextra), Rated: AAA

According to Bank of America’s Year-end Millennial Snapshot, 49% of Millennials believed that the Great Recession drastically altered their attitudes about banks, specifically with regard to their saving, investment and expenditure.

According to PwC’s Global FinTech Report 2017, FinTech startup funding is over $40 billion in cumulative investment, growing at a compound annual growth rate (CAGR) of 41% over the last four years.  

Embrace the Millennial Banking Revolution

59% of Millennials interviewed by BNY Mellon says they’ve never come across a financial product specifically meant for them. A report by The Millennial Disruption Index cited that all the four leading banks in the US are among the least-loved brands by millennials.

Spotcap partners up with major bank to offer same-day financing (Spotcap), Rated: AAA

Spotcap has entered into a market-leading strategic partnership with BAWAG Group to give Austrian small and medium-sized enterprises (SMEs) access to same-day financing.

More than 99 percent of Austrian businesses are small or medium-sizedand access to finance is a key challenge for SMEs in Austria, as it is for SMEs globally.

We will now provide Lending as a Service to major institutions in addition to our direct SME loan offering in the United Kingdomthe NetherlandsSpainAustralia & New Zealand.

AlfaToken ICO to Make Smart Contracts Accessible Even for Those with Zero Coding Skills (BTC Manager), Rated: A

AlfaToken, a service enabling startups and innovative entrepreneurs to create their own ICO tokens and smart contracts without coding skills, is gearing about to conduct its Initial Token Offering with the help of ICOBox, the world’s leading provider of ICO solutions. AlfaToken plans to offer services in 14 smart contract areas, from initial coin offerings and real estate rentals, lending and insurance, to business process management, smart homes and property transfers.

Founded in 2017, AlfaToken identified a gap in the ICO market where initial coin offerings are forecast to rise from 43 in 2016 to 537 in 2017, according to coinmarketcap.com. In particular, the company perceived an opportunity for its Ethereum smart contracts in the real estate rentals market, worth $2.8 billion (Airbnb forecasts), in the peer-to-peer lending market (including mortgages), worth up to $180 billion according to Business Insider, and also the insurance market valued at $4.5 trillion according to a 2016 report by the Institute of International Finance.

Australia

 

Eight big things coming to finance in 2018 (finder), Rated: A

1. Blockchain

Every digital financial transaction you’ve ever made in your life has had to go through a bank or large financial institution at some point. They authorise, facilitate and record the transaction, often taking a cut along the way. Blockchain essentially replaces the middleman in this process. It’s international, unregulated, instant and unhackable.

94% of economists surveyed by finder.com.au in November 2017 expect blockchain will have widespread use in the financial sector and economy.

2. Biometric payments

Although biometric payments are increasing, finder.com.au research shows 60% of Aussies – over 11 million people – either feel uncomfortable using biometric identification when logging on to their mobile banking apps, or aren’t really sure about it.

3. The end of our low-interest world

Australia’s cash rate sat stagnant throughout 2017 at a record low of 1.5%, producing low savings rates, cheap mortgages and escalating property prices.

4. The declining human face of banking

A sharp rise in mobile and online banking has meant Australians are less likely than ever to need to visit their local branch. We expect the number of branches to fall further in rural, regional and remote areas.

5. The rise of one-to-one lending

For example, the average three-year term deposit in December 2017 paid 2.55% interest. However, peer-to-peer lender RateSetter are currently offering 7.4% for the same period.

6. The disappearance of ATMs and cheques

The number of ATM withdrawals per month has fallen from a high of 73 million in 2010 to just 47 million in 2017.

7. Savings innovations for children

Finder’s 2017 Banking Innovation award went to Spriggy – an app which allows parents to pay pocket money onto debit cards.

8. And finally… instant banking and the New Payments Platform (NPP)

By far the biggest change to the financial industry in Australia will be the New Payments Platform (NPP), which will be switched on in phases from February 2018.

India

More millenials borrowing to travel; take micro loans (The New Indian Express), Rated: AAA

It has been noted that youngsters are averting eyes towards quick personal loans with lesser interest rates rather than the credit cards, says Aditya Kumar, founder of Qbera, a Bengaluru based fintech company. They recently compiled a stats on spending on travel loan trends in 2017. “Millennials, covering more than 50 percent of the Indian population are constantly looking for online digital platforms to plan their finances for holidays; unlike their predecessors who’ve always relied on savings. It has been a regular practice to narrow down their search to fintech lenders for financing their travel needs,” he adds.

According to his company’sstatistical report, out of 1700 applicants of travel loans till last year November, the age of 728 applicants is below 28 years and 105 female applicants within the age span of 20-28 years (both single and married), he adds.

Pre-budget 2018 Reaction Mr. Rajat Gandhi Founder & CEO, Faircent.com (Technuter), Rated: A

In 2015-16 more than 10,000 businesses across UK benefitted and an estimated 30,000 new jobs were created due to UK government’s favorable policies for the P2P lending sector.

Asia

OJK Set to Issue Regulation on Crowdfunding (Netral News), Rated: AAA

The Financial Services Authority (OJK) is planning to issue a policy in financial services institutions, including guiding principles for Digital Financial Services Providers that include registration and licensing mechanisms as well as the application of regulatory sandbox and policy on crowdfunding.

 

Building wealth management strategies for this year (The Star), Rated: A

Not only has the US Federal Reserve started to raise interest rates – a move mirrored by China’s central bank and the Hong Kong Monetary Authority with more developed countries expected to follow suit – but a market correction may be in the works following a strong run in both the US and Malaysian stock markets.

Yet despite its prices taking a plunge recently, its demand is still going strong. Similarly, ethereum, ripple, litecoin and Zcash continue to enjoy the mania status garnered by anything related to cryptocurrency. Equally enticing opportunities are abound with the rapid growth of equity crowdfunding (ECF) and peer to peer (P2P) lending platforms.

  • Review your holistic financial plan
  • Review your cashflow statement
  • Review your strategic asset allocation statement

Axiata invested US$ 200m in digital ventures (New Straits Times), Rated: B

Axiata Group Bhd is in the process of building one of the largest fintech companies in Asia to include five micro services – payments, remittance, lending, savings, and insurance.

President and group chief executive Officer Tan Sri Jamaludin Ibrahim said since 2013, Axiata had invested some US$200 million for its digital and internet ventures.

Out of the US$200 million, RM50 million worth of investment went into Axiata’s fintech business.

Russia

Russia’s Sberbank plans crowdinvesting platform for small firms, say sources (Gulf Times), Rated: AAA

Russia’s biggest lender Sberbank plans to help small firms raise funds from private investors with a peer-to-business platform, three sources familiar with the plans said, competing with two other ventures that support the cash-starved companies.

The state bank’s foray into p2b lending suggests it sees a revival in fortunes for small businesses as consumer spending picks up.

It also reflects the commitment of chief executive German Gref to enhance the bank’s use of new technology.

Authors:

George Popescu
Allen Taylor

2018 Predictions for MPL, SMB Lending, and Other Alternatives

Lending Club

In just over a decade, alternative lending has evolved from a niche fintech play into a hundred billion dollar industry. 2017 was somewhat of a bumpy ride. Growing competition, shrinking bottom lines, stringent regulations, and traditional banks’ willingness to take on alt-lending using their financial muscle were the key trends that emerged last year. It […]

Lending Club

In just over a decade, alternative lending has evolved from a niche fintech play into a hundred billion dollar industry. 2017 was somewhat of a bumpy ride. Growing competition, shrinking bottom lines, stringent regulations, and traditional banks’ willingness to take on alt-lending using their financial muscle were the key trends that emerged last year. It is difficult to be sure what 2018 will bring, but here is what experts and pundits are predicting.

Marketplace Lending

Ron Suber (Founder and former president, Prosper & chairman of the board, Credible) believes the marketplace lending industry has finally grown up. Companies will focus more on cash flow, profitability, and EBITDA. He encouraged online lenders to look for a lower cost of capital if they want to compete with the like of Marcus. He is also predicting the entrance of big technology companies like Amazon, Apple, Facebook, and Google.

Peter Renton (Lend Academy) believes five of the top 25 banks will launch their own platforms. He also believes Congress will pass a Madden fix and the IRS will modernize with its own API. One startling prediction he makes that one of the top online lenders (Lending Club, SoFi, Prosper, OnDeck, or Avant) will be acquired, and he believes a major platform will be hit by a cyber attack. Like everyone else, he believes the tech giants will solidify their positions in alternative lending, and more interestingly, he says messaging apps will integrate with online lending platforms.

Krista Morgan (CEO, P2Binvestor) makes predictions for MPL sector:

  • Companies will shift their focus on business models and unit profitability as hiring and spending decrease.
  • Mergers and shutdowns will continue as equity investors remain absent. She thinks it will be a tough year.
  • Investors believe the market is set for a correction; therefore, they will be looking at short duration assets for deploying their capital. Platforms will have to shift their focus to product development.
  • 2018 will be the year of increased diversity.

Adam Stettner (Founder and CEO, Reliant Funding) predicts a year of instability. He also believes market variables will counterbalance themselves this year. The Fed is expected to increase interest rates, which will have a ripple effect in terms of rates for various types of loans. If unemployment levels remain low, it will lead to wage inflation. So the order of the day for alternative finance and small business funding companies will be adaptability, he says.

Additionally, Stettner sees a year of increased fraud, and companies will have to invest in identification tools and fraud detection techniques.

Two more predictions he points to are increased consolidation as companies overextend themselves and more disruption from big business names entering the space.

The Motley Fool is predicting a Lending Club stock price turnaround.

Juan Tavares (LendingPoint) predicts balance sheet lenders will take over, there will be more collaboration, and payments and credit will intersect more.

Small Business Lending

Trevor Dryer (Co-founder and CEO, Mirador) made predictions on small business lending:

  • Banks will continue to increase small business lending and alternative lenders will struggle.
  • Crowdfunding got a boost last year when Title III of The Jumpstart Our Business Startups Act (JOBS Act) was implemented, opening the gates for crowdfunding. Dryer believes this sector will thrive in 2018.
  • Alternative lending has removed physical barriers that makes the lending process faster and more convenient. Alternative lending will continue to be more inclusive and encourage more people to start businesses.
  • Legislative barriers will continue to fall.
  • Alternative lenders will focus on experience and relationship building. Companies able to streamline and automate the application processes will thrive.

Alternative Lending in India

Rajesh Gupta (Founder and CEO, Cash Suvidha) made the following predictions for the Indian alternative lending market.

  • A significant increase in alternative lending market share.
  • Favorable regulations, cash benefits, ease of usage, and increased internet and smartphone penetration.
  • Investors and venture capitalists will remain optimistic about the Indian alternative lending industry since it is the second most funded segment in Indian fintech.

“2018 will witness a transformation in the Indian financial landscape, all thanks to alternative lending,” he writes.

Traditional Financial Services and Alternative Investing

Kevin McPartland (Greenwich Associates) says 2018 will be the year of digital. He believes product-agnostic investing will be huge, and passive investing will gain on active investing. 2018 will also be the year that alternative data goes mainstream, he believes while data will be more important than trading. He also believes wealth management will “come out of retirement” and, finally, a ton of innovation in the financial markets as banks focus on crypto.

Chris Skinner (The Finanser Blog) writes a lot about banking’s reaction to alternative lending. He believes 2018 will be the year of artificial intelligence for banks and that banks will continue to drive digital technology deeper into their core systems. Not surprisingly, he also predicts that banks will develop more proof-of-concept operations for distributed ledger technology. Finally, he predicts the banks will develop an Enterprise Data Architecture this year to clean up their fragmented systems.

Alexander Prokhorov (FinSight Ventures) made some general predictions for fintech that apply just as well to alternative lending:

  • Software will converge with financial products in the U.S. and Europe
  • Insurtech will be more prominent
  • Artificial intelligence will transform financial services
  • There will be a lot of innovation in emerging economies such as Africa, Latin America, and Asia
  • Wealth management will pick up speed
  • Crypo assets and blockchain will take center stage for retail investing

Mitek believes 2018 will be the year of the cyber criminal and predicts there will be 150 million attempts to set up fraud accounts this year.

Don Steinbrugge, CFA (Founder and CEO, Agecroft Partners) is predicting a banner year for the hedge fund industry. He believes hedge fund assets will reach an all-time high for the 10th straight year. He also believes there will be an increase in hedge funds shutting down. And there will be an increase in cryptocurrency funds. Strategies that will gain assets, he believes, include:

  • Asia long/short equity
  • Reinsurance
  • Those that blur the lines between private equity and hedge funds

The Lending-Times Prediction

Allen Taylor (Editor, Lending-Times) believes more U.S. platforms will open the doors to non-accredited investors. Blockchain will feature more prominently in alternative lending with more platforms focused on crypto-lending including a prominent alternative lender adding cryptocurrency to its list of core services. He also believes increased specialization will lead to platforms targeting specific industries, regions/states, and other narrow target markets.

Conclusion

2018 will surely see the alternative lending industry enter a consolidation phase to withstand the changes in market dynamics, and companies best able to cope with these headwinds would emerge bigger and stronger.

Authors:

Written by Heena Dhir and Allen Taylor.

Allen Taylor

Friday December 1 2017, Daily News Digest

interest rate sensitivity

News Comments Today’s main news: Affirm partners with Shopify Plus.The Fed is thinking about starting a cryptocurrency.Payday lending group sues Consumer Financial Protection Bureau (CFPB).Funding Circle gets first IFISA sign-up within 15 minutes of opening.Assetz Capital to launch IFISA with manual lending.KappAhl to offer mobile payments in store with Klarna. Today’s main analysis: How should […]

interest rate sensitivity

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Canada

News Summary

United States

Affirm Joins Forces With Shopify Plus to Help High Growth Retailers Rapidly Scale Online Store Sales (BusinessWire), Rated: AAA

Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced it has joined the Shopify Plus Technology Partner Program to help more retailers quickly scale their online store sales by giving their customers a quick and easy alternative to credit cards.

Affirm App Gives Loans For Designer Jeans, Holiday Flights And More (International Business Times), Rated: A

Affirm’s chief of staff and head of international expansion, Ryan Metcalf, told International Business Times the startup works with 1,200 retailers nationwide and issued $1 billion worth of loans in 2017.

“We are able to approve 126 percent more people than industry averages. A large portion of these people have no access to credit or if they do they are being mispriced in the market because their FICO score is outdated,” Metcalf said. “Around one in 10 Americans have ‘unscorable’ credit reports. That’s around 30 million people. So we’re also able to offer credit to those people as well.”

According to the Fair Isaac Corporation’s data, 20 percent of American credit card owners are ranked as “subprime” because their FICO score is 600 or lower.

Expert Commentary: how should equity investors position for a secular uptrend in rates? (INTL FCStone Email), Rated: AAA

In Four Interest Rate Myths, I made a theoretical case for higher rates by debunking the New Gospel of the New Normal. The Slow Agony of and Old Bull highlighted seven signs that the bond bull market was already over. This report discusses the most important question facing market participants for the next five years – how should equity investors position for a secular uptrend in rates?

The report reviews the performance of U.S. sectors, currencies, and international indices during prior hiking cycles and their recent correlations with yields. Six conclusions emerge:

  • Almost tautologically, bond proxies have consistently underperformed during prior hiking cycles.
  • Currently, only two sectors are positively related to interest rates: financials and energy. Since their valuations remain below average, these sectors are a cheap option against the risk of rising rates.
  • Investors should monitor the correlation between yields and tech stocks: higher rates would kill the bull market if the correlation between tech stocks and bond yields turned negative.
  • U.S. stocks and the dollar index have tended to fall in prior hiking cycles.
  • Korean equities and, to a lesser extent, Japanese stocks have outperformed during prior hiking cycles.
  • The performance of emerging markets and commodity-driven markets is mixed: they have outperformed massively during in the 2003-2006 cycles, but have suffered during the hiking cycles of the 90s.

Read the full report here.

Dudley Says Fed Has Started Thinking About Official Digital Currency (WSJ), Rated: AAA

Federal Reserve Bank of New York President William Dudley said Wednesday the U.S. central bank is beginning to explore whether it could adopt its own digital currency, in an appearance at Rutgers University where he also expressed optimism about the economy.

Bitcoin is “really more of a speculative activity,” Mr. Dudley said. But he said aspects of the technology are interesting and worthy of attention. “It’s premature to be talking about the Federal Reserve offering digital currencies, but it is something we are starting to think about,” he said.

Some academics have called for the Fed to offer its own digital currency. They believe it would afford the central bank better control over the economy by tweaking interest rates at the consumer level, bypassing fickle financial markets that often work at cross-purposes with Fed policy aims.

THE FINTECH EFFECT: AMAZON, GOOGLE, AND THE DISRUPTION OF SMALL BUSINESS LENDING (The Boss Magazine), Rated: AAA

If banking bigwigs and fintech entrepreneurs have seemed a bit queasy since October’s Lendit Europe conference, they might be blaming Karen Mills for daring to illuminate the elephants in the room: Amazon and Google, and their ability to disrupt the small business lending industry.

Mills, a former White House administrator for small business and current Harvard Business Review fellow, succinctly pointed out the obvious. With the tremendous amount of financial and personal data these behemoths collect, a broadening of scope into small business lending may be inevitable.

While Google hasn’t made any notable overtures into the lending business yet, Amazon launched its lending business to support its merchants in 2012. As reported by Bloomberg, the retailer issued $1 billion in loans in the 12 months between May 2016 and June 2017. To date, they have extended $3 billion to over 20,000 small businesses here, as well as in the U.K. and Japan.

The Magnificence of Micro Loans

Merchant services provider Square has given its merchants loans of over $1.5 billion since its in inception in 2014, and PayPal’s Working Capital program has loaned over 115,000 global businesses a total of $3 billion.

Amazon and Square merchants repay the loans automatically based on the amount of sales they make. PayPal’s maximum small business loan amount is 30 percent of a merchant’s annual PayPal sales, not to exceed $97,000 for the first loan.

Small Business Domination

Small businesses account for roughly 99.9 percent of all businesses in the U.S., and are responsible for 61.8 percent of the new jobs established from Q1 1993 to Q3 2016. About 80 percent of the nation’s 29.6 million small businesses are nonemployers.

Payday lending group plans to sue the Consumer Financial Protection Bureau (USA Today), Rated: AAA

The Community Financial Services Association of America plans to challenge one of the federal watchdog’s signature achievements could signal how the consumer bureau’s previous enforcement policies will shift under new Trump administration leadership.

The anticipated battle would target a new rule that was indeed published in the Federal Register on Nov. 17, capping a contentious 18-month public comment and lobbying battle between the payday loan industry and consumer advocates.

Federal budget director Mick Mulvaney, installed by Trump as the bureau’s acting director, has been critical of the payday lending rule and has received campaign backing from the industry. He received $31,700 in 2015-2016 federal campaign cycle contributions from payday lenders, ranking ninth among all congressional recipients, according to data analyzed by the Center for Responsive Politics.

Federal judge refuses to block Trump’s designation of Mulvaney as interim head of CFPB (Legal NewsLine), Rated: A

A federal judge on Tuesday rejected arguments by Leandra English, who was named the deputy director of the Consumer Financial Protection Bureau by outgoing director Richard Cordray, in a lawsuit she brought over the agency’s interim leadership.

Judge Timothy J. Kelly for the U.S. District Court for the District of Columbia, according to a minute order and entry on the case docket, denied English’s emergency motion for temporary restraining order after a motion hearing held Tuesday.

English filed her lawsuit Sunday night in attempt to block President Donald Trump’s naming of Office of Management and Budget Director Mick Mulvaney as the bureau’s acting director.

In a minute order filed Wednesday, Kelly said the parties will meet, confer and submit by Dec. 1 a joint proposed schedule for briefing the merits and/or for briefing a preliminary injunction, or separate schedules.

Payday lender going public as new sheriff takes over at CFPB (Seeking Alpha), Rated: B

Curo Group is looking to raise about $100M with the sale of 6.7M shares at hoped-for range of $14-$16 each. Prospectus here

Marlette Funding President Offers Insight on Personal Loan Market (LendEDU), Rated: A

Q: So we know that Fintech personal loan lenders are starting to attract more consumers and take up more of the market. How do you expect traditional banks to react to this over the next couple of years if the trend continues?

A: You’re starting to see banks wake up to this new way of lending. They’ve been impacted by a regulation-focused environment in recent years, driving them towards a compliance mindset. However, banks are starting to think of ways to grow their consumer lending businesses, and technology is a big part of this.

Q: What sort of future do you see for blockchain technology in the Fintech personal loanmarket? What sort of challenge would its implementation pose to Fintech lenders?

A: One use that I could see for Fintech lending is creating a more secured identity verification process for the customer. From the recent Equifax news, you have a single source of data where all relevant info is in one location, and a breach creates both chaos as well as problems with trust. Distributed ledger tech creates an interesting opportunity to limit this concern, but it’s going to take a long time before it can be implemented fully.

For Workers In A Pinch, Start-Ups Experiment With No-Interest Loans (Forbes), Rated: A

Dave is part of a new crop of financial technology companies that are trying to help consumers avoid nasty overdraft fees, as well as payday loans, pawn shops and other expensive forms of debt, via zero-interest loans. They’re going after workers who may struggle to make ends meet, but who could benefit from a minor influx of cash at the right time.

Dave analyzes a consumer’s bank account history to issue warnings about potential overdrafts up to seven days in advance. Then, for users who still find they’re in a pinch, it may approve a loan of up to $75. Dave doesn’t charge interest, but the app costs $1 a month and users are asked to leave a tip on advances. The Mark Cuban-backed service has amassed 100,000 users since it launched in April.

In 2016, financial institutions hauled in $33.3 billion on overdraft fees alone, according to Moebs Services, an economic research firm.

Dave, in addition to companies like Even and Earnin (formerly Activehours), are attempting to do away with the high interest rates and fees that they say put a financial institution’s incentives in contrast with those of the borrower. Their answer: Small, zero-interest advances on a person’s next paycheck with no hidden or punitive fees.

According to one study of low and moderate income families, household income spiked — or fell — by more than 25% in six months out of every year.

YieldStreet CEO Milind Mehere: Excited about Growth and YieldStreet’s Future (Crowdfund Insider), Rated: A

Launched in NYC in 2015, YieldStreet aims to allow people to invest in alternative investments that are backed by real collateral. With a world-class advisory board which recently added three new members Ron Suber (Prosper Group), Mitch Jacobs (On Deck)Alexandra Wilkis Wilson (Gilt Group) and a growing leadership team, including Volfi Mizrahi who just joined as Managing Director of Originations and Ivor Wolk as General Counsel, the platform’s growth is undeniable.

Erin: On what other elements of your YieldStreet street vision are you currently working?

Milind: Continuing to expand our product and audience offering – AutoInvest will let users choose their investment preferences such as asset class, yield and duration, then the algorithm our platform uses will match them as offerings become available. In 2018 we hope to open the platform to non-accredited investors, and we are working to provide liquidity on our platform, as well as creating products for the Financial Advisor/RIA market and IRA market.

Erin: How do you expect YieldStreet to grow? How do you source deals?

We work with a network of originators and asset managers, as well as many funds (from $50M to $10B) in the private credit space.

Erin: What lessons from Yodle — from its beginnings to its $342M sale to web.com in 2016 — have you applied to YieldStreet?

Milind: We have been incredibly efficient at YieldStreet because of that. We have just raised $3.7M in seed capital to reach $200M in originations, where some of our peers have raised anywhere from 6x-25x to achieve the same results. Yodle taught me to be extremely disciplined about where to invest and when.

Erin: What are YieldStreet’s future plans for growth by 2018? by 2020? by 2025?  How do you predict the sector will change and be disrupted?

Milind: According to a recent report by PricewaterhouseCoopers (PwC), the asset management industry is set for “transformational change” and booming growth in the next decade. Alternative asset classes, such as real estate and private debt are expected to grow to about $21.1 trillion by 2025.

Innovative Approaches to Expanding Home Availability and Affordability (Lend Academy), Rated: A

It seems like almost every day I see a story about increasing real estate prices in the major metropolitan areas of the US. Prices in cities like San Francisco, New York, Seattle, Washington DC have made homeownership unobtainable for many people.

SoFi comes to mind with their jumbo mortgage which allows borrowers to put just 10% down and offers loans up to $3 million.

Landed is taking a different approach. I spoke with Alex Lofton who is Head of Growth and Co-founder at the company. They first came on my radar this summer when TechCrunch profiled them. They are similar to companies like Unison (who recently was on the Lend Academy podcast) and Point with a slight twist. Currently, the company focuses on teachers to help purchase a home, providing up to 50% of the down payment. Like other similar products, Landed participates in either the upside or downside when the home is sold.

PWC CHARGE: ASSET MANAGERS ARE DIGITAL TECH ‘LAGGARDS’ (AllAboutAlpha), Rated: A

In filling out the particulars of this claim the authors of the new report make four more specific points: one, asset management is a buyers’ market and will become more so, in large part because “institutional investors have the tools to differentiate alpha and beta,” and they want to pay for the former not the latter. They also say that asset managers have been filling gaps in the financial system that emerged in the wake of the global financial crisis – they’ll need to capitalize on and expand these once-niche markets. Thirdly, while they make the common point that traditional active managers feel a squeeze between passive management on the one hand and alternatives on the other, they go further in that direction than other analysts have, saying that the way to react to this squeeze is not to try to beat back the competing forces but to join them, to turn a management firm into a “multi-asset solutions firm.”

But perhaps the most surprising of the four points is the contention that asset management has been a refuge of digital technology “laggards,” and that this will change in the near future, as “technology giants … enter the sector, flexing their data analytics and distribution muscle. The race is on.”

Lincoln Financial Network Launches Integrated Technology Platform to Drive Greater Client Engagement and Collaboration in Financial Planning (BusinessWire), Rated: A

Lincoln Financial Network (LFN), the retail wealth management affiliate of Lincoln Financial Group (NYSE:LNC), today announced that it has successfully launched a meaningful enhancement to its fully integrated wealth management platform for financial advisors and their clients – Automated Account Opening (AAO). AAO encompasses a full suite of new capabilities, integrated tools, and client-servicing solutions that will increase client satisfaction and collaboration with advisors.

Banks resist pressure to raise rates, but for how long? (American Banker), Rated: A

Online banks have been aggressively raising the rates they pay on consumer deposits, and that is putting pressure on mainstream banks to consider following suit or risk losing valuable deposits to their more nimble competitors.

A recent survey of 100 banks conducted by MoneyRates.com found that online banks such as Ally Bank, Goldman Sachs’ GS Bank and Sallie Mae Bank are paying significantly higher rates on savings and money market accounts than their brick-and-mortar counterparts.

U.S. regional banks delve deeper into advisory services to boost growth (NASDAQ), Rated: A

Smaller banks, like their bigger Wall Street rivals, have aggressively cut costs since the 2008 financial crisis and trusted ultra-low interest rates to increase loan volumes.

U.S. Bancorp, BB&T Corp, SunTrust Banks Inc, Fifth Third Bancorp, KeyCorp and Citizens Financial Group Inc together earned $6.97 billion in non-interest income in the third quarter, up 10.6 percent from a year earlier and 15.2 percent from the second quarter.

That compares with growth in net interest income of 7.7 percent and 2 percent, respectively.

RICH PICKINGS

The number of millionaires in the United States is at the highest since Chicago-based research company Spectrem Group started measuring it in 2004, but thresholds of – for example $250,000 to invest – mean many are too small to get personal attention from the big Wall Street firms.

Born between the early 1960s and 2000, Americans from Generations X and Y who have an average annual income of about $200,000, account for 18 percent of millionaires compared with 8 percent in 2012.

Yet only 58 percent have financial advisers compared to 72 percent five years ago, according to a study by Fidelity Investment.

KeyBank Forms Strategic Partnership With Snapsheet To Provide Powerful Insurance Claims Payment Solutions (PR Newswire), Rated: A

KeyCorp (NYSE: KEY) announced today its strategic investment and partnership with Snapsheet, an innovator of self-service claims solutions for insurance carriers. This investment follows the joint launch and announcement of Snapsheet Transactions, a payment platform on the back end of Snapsheet’s existing claims solution.

Snapsheet Transactions provides carriers with a payment hub that features a variety of payment options, without adding complexity or risk to insurance carriers’ back-end processes. Key and Snapsheet will continue to partner with each other to support the rollout and execution of enhancements and innovations related to Snapsheet Transactions.

Concord President & COO Shaun O’Neill to Lead Panel at Marketplace Lending Conference in New York City (PRWeb), Rated: B

Shaun O’Neill, President and COO of Concord Servicing Corporation, a leading force in the portfolio servicing and financial technology industry, has been invited to serve as moderator of a finance-related panel during the upcoming Information Management Network’s 3rd Annual Investors’ Conference on Marketplace Lending. O’Neill’s panel will focus on the highly topical “Trends and Best Practices for Loan Servicing” during the conference, to be held December 1st at the Marriott New York Downtown, in New York City.

LendingTree Logo To Appear On Greensboro Swarm Jerseys As Part of Company’s Partnership With Hornets (NBA.com), Rated: B

The Charlotte Hornets, Greensboro Swarm and LendingTree announced today that the LendingTree logo will appear on the jerseys of the Swarm as part of the Founding Level Partnership announced earlier this month between the Hornets and LendingTree.

Family loans: How to dodge the drama (Work IT, SOVA), Rated: B

There are advantages of a family loan for a borrower: no credit check, low or no interest and flexible payback terms.

Family loans may also come with tax considerations, whether the lender charges interest or not. Charge zero interest, and you may face a gift tax; a borrower who receives a gift may have to report it as taxable income. Tack on an interest charge and you must follow IRS-specified guidelines for the rate you charge and report it as income.

BORROWERS: EXHAUST OTHER OPTIONS FIRST

When weighing the pros and cons of a family loan, also consider alternative options, including a personal loan borrowed from a bank, credit union or online lender that can be used for any purpose.

Personal loans from credit unions and online lenders typically have more flexible qualification requirements than a bank loan.

LENDERS: ASSESS THE REASON FOR THE REQUEST

If you are lending the money, try to set your emotions aside and look at the reason for the loan. Has your family member been rejected by banks and other lenders? If so, why? Will your loan help promote good financial decisions?

United Kingdom

Funding Circle IFISA motors ahead with instant sign-ups (P2P Finance News), Rated: AAA

Funding Circle has begun rolling out its Innovative Finance ISA (IFISA) to investors and had a customer sign up within 15 minutes.

The peer-to-peer business lending giant started emailing users on Thursday morning, in order of when they opened accounts and started investing.

The IFISA account is a flexi-ISA, meaning you can withdraw any available funds without affecting your annual £20,000 ISA subscription limit, providing you transfer them back in by the end of the tax year.

Assetz Capital Announcement: Soon to Launch IFISA Set to Include Manual Lending (Crowdfund Insider), Rated: AAA

The online lender reported that the IFISA will be launched next month, with users able to use their £20,000 annual tax-free allowance on the Assetz Capital platform. Users will be able to transfer in past years’ ISA savings from their cash and shares ISAs. Assetz Capital also noted that new and existing investors will be able to open an IFISA wrapper on the platform and then invest into any automated Assetz investment account. The IFISA is also set to include the popular Manual Loan Investment Account (MLIA) in the New Year.

Digital banking: a tough way to make money (Financial Times), Rated: A

It’s been a busy period for the UK’s fledgling digital banks. Since January, eight UK digital banks have collectively raised $600m and two challenger banks were acquired for $2B+. Digital banks have built out the tech, landed banking licenses, and started winning customers – but they have arrived at a ‘now what’ moment. How can they capture a large enough customer base to validate their significant collective investment?

Monzo reported that its prepaid card scheme loses around £50 per active customer per year, and other digital banks face similar costs. While on the one hand the cost to acquire these current account customers is not very high, given the ‘buzz’ around the sector and banks’ word of mouth-driven growth – these current accounts, with their low average balances, are also inherently unprofitable. So it’s a steep climb for digital banks to recoup their operational costs, much less make a lot of money per customer.

P2PGI unveils new strategy that speeds up timetable for target returns (P2P Finance News), Rated: A

P2P GLOBAL Investments (P2PGI) has brought forward its timetable for reaching its target returns of six to eight per cent after unveiling its new portfolio strategy on Thursday morning.

The investment trust said it now expects to provide a dividend of at least 15p per quarter by the end of the second quarter of 2018, which analysts say reflects an annualised yield of 7.8 per cent.

LendInvest: How our BTL launch will fill the portfolio landlord lending gap (Mortgage Solutions), Rated: A

The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of stamp duty on second homes and the changes to mortgage interest tax relief.

In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.

Countrywide’s letting index in August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.

Three reasons why investors must consider alternative lending (Money Observer), Rated: A

With cash held at the bank slowly being eroded by inflation, many investors have been attracted to the enhanced return prospects offered by alternative – or ‘peer-to-peer’ – lending.

Alternative lending is very interesting from this perspective, as it is one of the few income options available to retail investors that may be shielded from market volatility. This has grown in importance recently as many markets are currently trading at historically high valuations. Markets follow a supply and demand dynamic and the traditional asset classes are definitely vulnerable to sudden downside pressures in stressed market environments.

China

Was 2017 the year that Chinese fintech grew up? (Ecns.cn), Rated: A

While investments in the Chinese fintech sector tripled to almost 10 billion US dollars in 2016 compared to the year before, 2017 has seen a significant drop in corporate fintech investments across Asia. KPMG reports that corporates have only put 840 million US dollars into the sector in 2017, compared to 6.8 billion US dollars in 2016.

Decline of P2P, robo-advisors

One other area that has struggled in 2017 has been robo-advisors. In 2016, China Merchants Securities predicted that by 2020, some 5.22 trillion yuan (758 billion US dollars) worth of assets would be managed by robot financiers.

China leverage and shadow banking biggest threats to growth (The Asset), Rated: A

FINANCIAL system leverage and shadow banking pose the biggest threat to China’s economic growth, according to a live poll of attendees at the Fitch on China Forum.

The forum was organized by The Asset in association with Fitch Ratings and held on November 30 at the Four Seasons Hotel in Hong Kong.

Source: The Asset

Ant Financial and QCash scoop FT fintech awards (Financial Times), Rated: B

A big Chinese group and a US not-for-profit have triumphed in the second annual Financial Times fintech awards, with Ant Financial taking the “impact” prize and QCash winning for “innovation”.

European Union

KappAhl first to offer mobile payments in store with Klarna (NB Herard), Rated: AAA

KappAhl is the first major fashion chain to offer its customers digital payment solutions in stores via their smartphones. Customers will have the option to make their purchases with Klarna In-Store, paying either on the spot or upon invoice.

This new payment solution will become one of the cornerstones in KappAhl’s digital transformation, with customers in stores benefitting from the same payment options that they have in Shop Online.

The service has been rolled out gradually and, as of 1 December, will be available in all 173 KappAhl and Newbie stores in Sweden. From 1 December, the service will be available in all 96 Norwegian stores, and, from 4 December, in all 58 stores in Finland.

Fintech company Deposit Solutions raises $ 20 million from existing investors (Tech.eu), Rated: A

Deposit Solutions, a German fintech company, has raised $20 million in a round led by e.Ventures and Greycroft, both existing shareholders.

The new funds will be used to grow the Hamburg-based company’s Open Banking platform for savings deposits for both B2B and B2C services, and to expand internationally. Its APIs allow banks to connect to the platform to build and offer deposit services. It has partnered with more than 50 banks.

Why Scandinavia’s Biggest Bank Is Setting Up Its Own Fintech Startup Fund (Forbes), Rated: A

The bank has announced that it’s setting up Nordea Ventures, to make strategic investments in fintech start-ups.

A case in point is Tink the Swedish-based fintech company, where Nordea provided capital and advice and integrated some of Tink’s own technology into its own digital products while preserving Tink’s name and brand.

Tink’s app helps consumers to aggregate financial transactions in one place, to compare and switch mortgages to a partner bank or open a savings account, for instance. Another Tink app for banks and payment services like Klarna provides account aggregation and payment capabilities.

Nordea invests in fintech company Betalo (Nordea), Rated: B

Nordea is investing in the fintech company Betalo. This takes our partnership with the Swedish company to the next level after a cooperation agreement was signed in March 2017.

PSD2 BRINGS DELAYED DISRUPTION TO THE FINTECH ECOSYSTEM (TechSavvy), Rated: A

A new EU-directive is about to force banks to open up their data vaults and allow third parties to access their user data. Nordea has chosen to embrace the change with open eyes, and a fintech startup predicts tough competition embarking on the opportunities it brings along.

The release of bank data is bound to cause a stir in an otherwise traditional and established sector. One of the incumbents that have already made an imprint is the fintech startup Spiir.

American tech giants might end up owning the financial space. Rune Mai looks to China to catch a glimpse of what the financial future might hold. The retail giant Alibaba owns half the payment market here with an all-encompassing app that offers everything from dating, financing to shopping.

Nordea is more inspired than afraid of Amazon. The bank has more than 10 million customers in the Nordic region, and they have decided to face the coming change with open eyes. They are actively pursuing a first mover strategy and has allocated more than 100 people to ready themselves for the coming digital disruption.

International

Blockchain P2P Lending, Sending, and Spending: Etherecash Garners Support from Over 40,000 Contributors During Pre-ICO (Digital Journal), Rated: AAA

A little over three weeks are left in the Etherecash token sale and it’s been a fantastic run so far; the success they have seen comes after a big appearance at the World Blockchain Summit, Dubai, which was closely followed by a heated Pre-ICO.

The platform is the remedy to the overly-complex and lengthy process of getting a traditional bank account, and will provide access to finances through a cryptocurrency-backed P2P (Peer-to-Peer) fiat currency loan marketplace. P2P loans are backed by the borrower’s own crypto-wealth allowing them to borrow up to 80 percent of their wallet’s value.

On top of this, once the crypto debit card is available, users will be able to store multiple types of cryptocurrency on it, allowing them to shop anywhere and everywhere as they please, even abroad.

Based on the Ethereum standard token ERC20, purchasable with Bitcoin or Ethereum, the exciting ICO Launch began 15th November, 2017 – ending December 19th, 2017.

Australia

Treasurer of Australia Scott Morrison Visits Online Lender Prospa’s New Office in Darlinghurst (Crowdfund Insider), Rated: AAA

Prospa, an online lender serving SMEs in Australia, had a visit from the Honorable Scott Morrison yesterday. The Treasurer of Australia help to open up Prospa’s new high tech Darlinghurst office, which apparently is quite large extending over two floors housing a team of 150.

Prospa expects to add another 50 hires over the next 12 months as it accommodates platform growth.

India

KrazyBee looks to expand in Tamil Nadu (The Times of India), Rated: A

Online lender KrazyBee says it is rapidly expanding its business in Tamil Nadu and its focus in the state will be on solving unique needs of the student community.

KrazyBee, which earlier operated in five cities (Bengaluru, Hyderabad, Pune, Vellore and Mysore), said that is expanding aggressively in over 11 cities, including Chennai. With more than four lakh registered student borrowers on its platform, KrazyBee says it currently processes over 3,000 loan applications and disburse around 1,700 loans per day.

Asia

Asian banks’ operating income could be hit by fintech disruption (Channel News Asia), Rated: A

Asian banks that do not take any action against the rise of financial technology (fintech) could see their operating income take a hit, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 30) in its latest Financial Stability Review.

For lenders in Singapore that do nothing to stave off the disruption, that could mean a 5 per cent loss in operating income over the next five years, the central bank warned.

 

Mobile wallets taking hold in Asia (The Asset), Rated: A

WHILE the development of digital payments started with the launch of the first universal credit card in the 1950s, the space has rapidly evolved, and now the mantle is being passed to e-wallets, otherwise known as mobile wallets.

In 2014, credit and debit cards accounted for more than half of e-commerce payments in terms of transaction value. However, that share is predicted to drop to 49% in 2019 as mobile wallet options start to gain ground, according to a report by the United Nations Conference on Trade and Development.

Canada

Activists across Canada demand fair banking for low-income people (TheStar), Rated: AAA

At the Toronto rally held outside Finance Minister Bill Morneau’s constituency office, a 46-year-old man was holding the loan he got in August from a payday loan company and was trying to get pedestrians to look at it.

He took out a $5,500 loan to pay his rent in August, to be paid back at 60 per cent interest by 2020.

Don is a member of the grassroots activist group called Association of Community Organizations for Reform Now (ACORN), and one of thousands of people who, on Tuesday, rallied across Canada demanding fair banking.

Mobetize’ CEO to speak at first BC Tech Association FinTech Day (Globe Newswire), Rated: B

Mobetize Corp. (OTCQB:MPAY), a leading fintech service provider for payments, remittances and mobile banking solutions, today announced CEO Ajay Hans will be the keynote speaker at BC Tech’s Fintech Day event on December 5.

Authors:

George Popescu
Allen Taylor

Tuesday October 3 2017, Daily News Digest

blooom

News Comments Today’s main news: blooom passes $1B in assets under management. SoFi rolls out new deal. DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-E LLC. The P2P Power 50. PeerStreet funds over $500M in loans with zero losses to investors. Today’s main analysis: LendingClub, Prosper after 10 years. FT Partners’ CEO monthly alternative lending market analysis (a […]

blooom

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United States

blooom Becomes Fastest Independent Robo-advisor to Pass $ 1 Billion in Assets Under Management (BusinessWire), Rated: AAA

According to monthly Securities and Exchange Commission (SEC) ADV filings, blooom, inc. reached $1 billion in assets under management (AUM) faster than any other independent robo-advisor. blooom achieved this milestone faster than Betterment and Wealthfront – and with less capital raised.

blooom, a first-of-its-kind robo-advisor, helps anyone with a 401(k) or comparable employer-sponsored retirement plan. blooom’s mission is to make “do-it-for-you” financial advice available, simple and affordable, regardless of the client’s account size.

The $1 billion AUM milestone is one of many key achievements for blooom over the past year.

  • In mid-2016, Sheila Bair, FDIC Chair under two U.S. Presidents and “the second most powerful woman in the world in 2008 and 2009” by Forbes, joined the company as an Advisory Board Member.
  • In February 2017, blooom raised $9.15 million in Series B funding and surpassed the $500 million mark in AUM.
  • Since 2014, as part of its free product evaluation, blooom has analyzed the health of more than $2 billion of individual 401(k) plan balances.
Source: BusinessWire

SoFi rolls out new deal amid exec reshuffle (GlobalCapital), Rated: AAA

SoFi filed documents with the Securities and Exchange Commission on Friday for the upcoming deal, under its SOFI shelf. Deutsche Bank, Goldman SachsJP Morgan, Bank of America Merrill Lynch and Morgan Stanley have been named in the documents as banks on the deal.

DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-E LLC (DBRS), Rated: AAA

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-E LLC (SoFi 2017-E):

— $72,850,000 Class A-1 Notes at AAA (sf)
— $303,000,000 Class A-2A Notes at AAA (sf)
— $161,000,000 Class A-2B Notes at AAA (sf)
— $55,000,000 Class B Notes at AA (sf)
— $34,500,000 Class C Notes at A (sf)

SoFi Unlikely To Damage Digital Lending Sector (Market Intelligence), Rated: AAA

The recent exit of Social Finance Inc. CEO Mike Cagney represents the third departure of a big-name digital lending CEO since the start of 2016. Social Finance, more commonly known as SoFi, was long considered a bright spot in the digital lending industry after making it through a rough 2016 unscathed.

Everything unravels

Heading into 2016, investors started to notice higher-than-expected defaults on loans from large marketplace platforms, especially in lower-graded loans. In order to compensate for these higher losses, some lenders increased interest rates to keep investors on their platforms. For institutions that had been purchasing loans and packaging them into asset-backed securities, the underperformance of loans in previous securitizations became a concern. By April, Citigroup Inc. was having trouble marketing a new securitization of loans from personal-focused lender Prosper Marketplace Inc., leading the two firms to end their partnership. Without this important source of capital, Prosper saw originations fall 55.5% during the second quarter of 2016.

Source: Market Intelligence

Past problems lead to a brighter future

Digital lenders entered 2017 with a renewed focus on operational efficiency and loan quality. For some, these measures are starting to pay off. LendingClub and On Deck both reached targeted profitability measures in the second quarter of the year. Prosper has reignited loan growth thanks to a $5 billion commitment to fund new loans, and the company reported positive adjusted EBITDA for the second quarter. Ex-LendingClub CEO Renaud Laplanche has launched a new personal-focused lender called Upgrade. Student-focused lender Earnest has taken a different approach and according to Bloomberg is seeking a buyer for its business. Originations have started to rebound as large lenders in the industry regain confidence in their models and continue to ramp up volumes.

Source: Market Intelligence

Lending Club and Prosper Data: 10 Years In (Lend Academy), Rated: AAA

Lending Club and Prosper have both been around over 10 years now. A lot has changed since both companies were founded, including the performance of the loans. In this blog post we’ll share the performance of each platform over the last 10 years. The fact that we have access to this data set is one of the things that makes marketplace lending unique. The screenshots from this post are taken from NSR Invest, a marketplace lending robo advisor that is also a sister company to Lend Academy.

Lending Club Data

For Lending Club investors, most loan grade returns peaked in 2013. As you look at this chart it is worth noting that the 2017 numbers are somewhat meaningless because the loans there have not seasoned yet.

Source: Lend Academy

Prosper Data

Prosper launched in 2006 as the first p2p lending platform in the U.S. Initially, they operated with a very different model allowing deep subprime borrowers on to their platform.

When they relaunched Prosper grew very slowly, they needed to prove out their platform to the many retail investors who had lost money in Prosper 1.0. Even in 2009 and 2010 originations were just $8 million and $27 million respectively. Prosper began to scale significantly in 2011 and onwards.

Prosper’s C grade loans are the closest to Lending Club’s D grade loans so this is the best side by side comparison.

Source: Lend Academy

FT Partners’ CEO Monthly Alternative Lending Market Analysis (October ’17) (FT Partners), Rated: AAA

Source: FT Partners

September was another active month for the FT Partners team as we announced three significant FinTech transactions and the appointment of two additions to our senior team.

We are pleased to announce our role advising:

  • Source: FT Partners

    Download the full report here.

    PeerStreet funds over half a billion in loans, maintains zero losses to investors (PeerStreet Email), Rated: AAA

    PeerStreet, the real estate investing platform for real estate debt, has just hit the milestone of having funded half a billion in loans and with zero losses to investors since the company launched in 2015.

    Platforms in the P2P and crowdfunding space are seeing increasing competition and scrutiny, but PeerStreet has continued to offer investors access to quality loans and high yields, earning the public testimonial of some high-profile users, such as 

    College Ave Student Loans Completes $ 161MM in Inaugural Securitization (BusinessWire), Rated: A

    College Ave Student Loans, the leading next-generation student loan marketplace lender, announced it has completed a $161 million securitization of private student loans, its first securitization. The CASL 2017-A transaction, completed over the summer, received an ‘A’ rating from DBRS and a ‘BBB’ rating from S&P for its highest-rated senior notes. The transaction was four-times oversubscribed. Barclays was the underwriter on the transaction.

    The securitization also marks a year of growth for College Ave Student Loans. To date, the company has secured more than $2 billion of committed loan purchasing power from multiple sources.

    Why are Amazon, PayPal meeting with bank regulators? (American Banker), Rated: A

    Technology giants like Google, Amazon, Facebook and Apple are showing an increasing interest in engaging with federal banking regulators, a move that underscores Silicon Valley’s growing involvement in the financial services arena.

    Amazon lobbyists met with the Office of the Comptroller of the Currency starting in the second quarter of 2016, and again this year to discuss “issues related to mobile payments and payment processing, financial innovation, and technology,” according to publicly available lobbying disclosures.

    PayPal, meanwhile, met with OCC officials in the second, third and fourth quarters of last year to discuss “mobile payment innovation” issues related to underserved customers and remittances and money transfers, according to its disclosures.

    Vestwell Raises $ 8 Million in Series A Funding led by F-Prime Capital Partners (Business Insider), Rated: A

    Vestwell, the industry’s first and only fiduciary-backed retirement platform for the financial advisor community, today announced $8 million in Series A Funding led by F-Prime Capital Partners, the venture capital group associated with the parent company of Fidelity Investments, with participation from Primary Venture Partners, FinTech Collective, and Commerce Ventures. Launched in late 2016, Vestwell received $4.5 million in its initial Series Seed of financing in September 2016.

    So far this year, the company has signed over 50 registered investment advisor (RIAs) firms, as well as independent broker-dealers, asset managers, and bank/trust custodians, with plans to onboard several thousand advisors this year.  The funding will be used to grow the team while further enhancing the technology.

    YieldStreet Adds Three Tech Disruptors to Its Advisory Board (YieldStreet Email), Rated: A

    YieldStreet, the fintech company seeking to change the way we invest and accumulate wealth, announced the addition of three new members to its advisory board: Ron Suber of Prosper Marketplace, Alexandra Wilkis Wilson of Gilt, and Mitch Jacobs of OnDeck.

    The three new members join an elite team of advisors whose deep expertise spans technology, investing, policy and financial services. The current members include economic policy expert Donald Marron Jr. of the Urban Institute, Rahul Gupta former Group President of Fiserv (NASDAQ: FISV), Mark Gerson founder of GLG, former House  Majority Whip Tony Coelho, and Todd Deutsch formerly of Goldman Sachs.

    The Risk Of Playing Alt Lending’s Rate Limbo (PYMNTS), Rated: A

    And while there are myriad explanations, one clear issue – according to Quick.me CEO Ola Okeshola – is the simple fact that access to capital for small businesses has dried up significantly since the Great Recession, as banks have either gone out of business or lost interest in lending to that sub-segment of the market.

    FinTech, Okeshola said, can offer SMBs streamlined access to funds in ways that are unprecedented. That’s the good news: There is a large, hungry and addressable market out there.

    The more challenging news is that finding ways to address that market isn’t necessarily as easy as flipping a switch – it’s addressing the right problem in the right way.

    For small business loans, he explained, giving an SMB a low interest rate or a very fast approval time nearly guarantees they will sign on, regardless of how much it cost the alt lender to acquire that customer.

    In Quick.me’s case, that means working with POS providers as their referral source, to basically cut their customer acquisition costs as much as possible. Because they can’t make money back spending hundreds of millions to acquire customers, they instead decided to explore how to work with someone who’s already spent that money.

    The Source Code: Max Levchin (Marketplace), Rated: A

    Max Levchin knows a thing or two about money. He helped found PayPal almost 20 years ago, and his new startup, Affirm, is in the business of lending.


    Source available: Finance Industry Files Lawsuit to Overturn CFPB Arbitration Rule (Ballard Spahr Email), Rated: A

    A coalition of chambers of commerce and consumer financial services associations, including the U.S. Chamber of Commerce and the American Bankers Association, filed a lawsuit in federal court on Friday seeking to block the implementation of the Consumer Financial Protection Bureau’s final arbitration rule. The rule would prohibit the use of class action waivers in consumer financial services arbitration agreements. Class action waivers preclude consumers from participating in class action lawsuits and instead require them to individually arbitrate their disputes with companies.

    Fintech startup Curve partners with accounting software Xero to make filing expenses ‘frictionless’ (TechCrunch), Rated: A

    Curve, the London fintech startup that lets you consolidate all your bank cards into a single card and track your spending, has partnered with accounting software Xero to remove much of the friction involved in filing expenses. The move is part of the newly-launched ‘Curve Connect’ feature that will see Curve connect to a growing list of third-party apps and services to make managing your money easier.

    Specifically, the Xero feature gives you the option to connect the Curve app to Xero so that spending on your Curve card (and therefore any of the underlying cards you’ve linked Curve to) can be automatically added to the accounting software without the need to enter each expense manually.

    Here’s How Blockchain Will Change the Financial Services Industry (Business.com), Rated: A

    The blockchain is, essentially, a vast, distributed ledger capable of recording anything of value. It can record deeds, rental agreements, equities, contracts, money, titles and, realistically, any kind of asset. These records can be stored and moved privately between two parties independent of any financial intermediary. It is essentially a peer-to-peer transaction tool that does not rely on an intermediary for verification or identification of the involved parties.

    If financial intermediaries are not required for transactions, banks are the supposedly biggest losers in this equation.

    Lawyers, investment bankers, and venture capitalists come with high attached costs, but the emergence of peer-to-peer lending schemes and equity crowdfunding schemes have derailed this market for over a decade.

    First Data, Live Oak team up on fintech startup to take on big banks (Biz Journals), Rated: A

    A New York technology firm and a North Carolina banking company have joined forces on a startup that could help community banks compete with mammoth firms such as Bank of America and Wells Fargo.

    Checking account fees surge. Here’s how to dodge them (Bankrate), Rated: A

    There is a paradox in banking right now: Fees have never been higher, but it’s also easier than ever to sidestep them.

    The average cost of an out-of-network ATM withdrawal is $4.69, up 2.6 percent from a year earlier, according to the 2017 Bankrate checking account survey. Meanwhile, overdraft fees rose 1 percent to $33.38.

    But if you tweak your habits, assess priorities and lean on technology, you can dodge these charges altogether.

    Overdraft fees

    Source: Bankrate

    Link a savings account. This will serve as a backstop to your checking account. Your bank may charge you to move money when you overspend, but that fee might be $5 to $10, McBride says — significantly less than the cost of an overdraft. If you have an alert on, you can move money from your buffer account into your checkingwithout a charge.

    Instead, look for no-fee or low-fee accounts, like those offered by online banks and fintech companies, like Dave.com, Chime and Qapital.

    ATM fees

    The average ATM surcharge — the fee levied by the other bank — was $2.97, up 2.4 percent from a year earlier, according to our survey. The average fee banks charge to use another bank’s ATM was $1.72, up nearly 3 percent from a year earlier.

    Source: Bankrate

    If it is unwilling or if you want better options, shop around for other accounts. Some online banks not only have no out-of-network fee, but cover a set amount — say $15 — of ATM surcharges each month.

    Tamarack Launches 5 Clients with Lease/Loan Origination Accelerator (Monitor Daily), Rated: A

    Tamarack Consulting, a provider of independent software solutions in the equipment finance and commercial lending industry, has taken five new clients live on Salesforce utilizing Tamarack’s proprietary Lease/Loan Origination Accelerator.

    With more than 40 Salesforce clients utilizing the Lease/Loan Origination service, Tamarack added VFI Corporate Finance, TEAM Funding Solutions, Centra/4 Hour Funding, BSB Leasing and Dimension Funding to its list of clients that launched through the Lease/Loan Accelerator and are now processing leases and loans via Salesforce.com.

    Tamarack’s Lease/Loan Origination Accelerator on Salesforce is a scalable solution offering users the ability to automate work queues, increase throughput of loans without additional head count and customize notifications from lead generation through to funding.

    Average CEO Pay at Big RIAs Nears $ 800K (Financial Advisor IQ), Rated: B

    If you’re trying to break away or simply want to see what the big boys are doing on The Street in terms of compensating key employees, then Fidelity has some salary benchmarking figures that might be of interest.

    In a new research report, the asset manager and custodian surveyed large RIAs and multi-family offices to see what they’re paying in 20 different job categories.

    Participants were handpicked by Fidelity and required to have at least $1 billion in assets under management. Compensation ranges from CEOs getting on average $458,900 in base pay — $797,300 with cash and other bonuses included — to $285,200 for a typical big company chief investment officer ($469,600 total).

    By contrast, chief financial officers have “a significantly lower portion of their compensation based on incentives,” the survey adds. Base pay for a typical CFO is listed at $243,100 with total compensation topping $328,000.

    Angelo State University Students Graduate With Very Little Debt (San Angelo Live), Rated: B

    Angelo State University has been ranked among the nation’s top 150 “Public Colleges That Give Students the Least Private Student Loan Debt” by The Student Loan Report (SLR), a news and information guide dedicated exclusively to college student loans and financial aid.

    ASU is ranked No. 57 in the nation, which puts ASU in the top 12 percent of the 480 public colleges in the U.S. that left students with private student loan debt. According to the SLR rankings, only 3 percent of ASU graduates leave school with outstanding private student loan debt, and their average debt load is $14,431.

    The fintech name generator (Vested Ventures), Rated: B

    Vested has launched a fintech name generator with categories for banking, investment management, lending, payments, personal finance, tax & accounting, wealth management, blockchain, private equity, insurtech, and more. Check it out here.

    United Kingdom

    What’s £38m of “other expenses” between friends? (Financial Times Alphaville), Rated: AAA

    Take Funding Circle, for example.

    The accounts showed sales up 59 per cent to £50.1m, while its operating loss worsened at a slower rate of 30 per cent to £51.8m.

    Despite the progress, operating expenses at £103m still stand at double the company’s sales.

    Rent on land and buildings, as well as depreciation and amortisation, make up another £9m or so of operating expenses.

    Source: Financial Times

    The P2P Power 50 (P2P Finance News), Rated: AAA

    So, who are the key players influencing the UK’s P2P sector? The inaugural Peer2Peer Finance News Power 50 list aims to identify the big names in the industry who have helped it grow into a force to contend with over the past decade and who will play a key role in its future.

    Our top 10 list gives particular acknowledgement to the most influential individuals that we believe have helped establish the P2P brand or will be the biggest drivers in its future.

    Source: P2P Finance News
    Source: P2P Finance News

    Read the full list of P2p powerbrokers.

    £200m UK SME funding programme launched by ThinCats (RealBusiness), Rated: A

    Lending platform ThinCats and parent company ESF Capital have introduced a £200m SME funding programme for British growth businesses.

    The launch of the SME funding scheme by ESF and ThinCats will support loans from £100,000 right up to £5m for leaders looking for an injection to take their companies to the next level.

    The company is joined by New York-headquartered Waterfall Asset Management, which has added £70m to the pot, a firm that currently manages $6bn of assets.

    Why financial services should be terrified of dispensing wealth management robo-advice (Banking Technology), Rated: A

    Robo-advice costs less than “bricks & mortar & human” services, hopefully harvesting a bigger market. Today it primarily invests clients’ money in mainstream investments aimed at generating attractive risk-adjusted returns over time.

    With mutual distributed ledgers (aka blockchains), there are going to be immutable versions of what was advised, what happened, and what the robo-code at the time decided. Robo-advice with blockchain leaves a permanent trail.

    London-Based Fin-Tech Platform Nebeus Championing Banks as Public Utilities (Business Insider), Rated: A

    London-based Nebeus.com – a crypto-currency platform enabling customers to buy, sell, store, remit, lend and borrow crypto-currency funds – is launching a pre-ICO campaign to fund its ambitious plans.

    Developed over the last three years, the company currently operates as a crypto-currency wallet, allowing consumers to buy, remit, loan, borrow and exchange. They are also proud to have recently joined LEVEL39 – the world’s most connected community for finance, cybersecurity, retail and smart-city technology businesses.

    Having raised over £1.5M GBP in private funding in previous years, the company wants to open up its platform to third-party developers; creating a ‘supermarket’ of financial products and services based on blockchain and smart contracts, while providing full transparency and security as it serves individual, corporate and developer communities.

    Download the Nebeus whitepaper.

    Landbay makes five new hires following record lending month (Financial Reporter), Rated: A

    Landbay has reported a record month of buy-to-let lending in September, with a total of £6.31 million lent across 31 mortgages.

    In response to the growth, as well as to the new PRA regulation surrounding portfolio landlords, Landbay has made five new hires.

    Among them, James Cooper-Smith and Joela Jenvey both join the lending team as Senior Lending Officer and Key Account Manager respectively, while Wing Chan joins the wider team as Operating Manager.

    How To Raise Finance For Your Business (The Voice), Rated: B

    1. THE SOURCE

    Equity has massive implications for dilution – so don’t ignore the debt option.

    2. THE FINANCIAL MODEL

    Put your figures into a spreadsheet and test them. Try out different scenarios – see what happens to the numbers.

    3. THE VALUATION

    To get a sensible, realistic idea of the value of your company, compare the most recent valuations for transactions in the space.

    4. THE MONEY

    For example, Sola Bank and Baldetton Capital work in the £100million arena. Whereas EIS/SEIS and VCT funds generally work in the £1-5million sphere. For smaller amounts contact angel investors.

    5. THE CONTACTS

    6. THE DOCUMENTS

    It is essential to prepare a one-page summary of the opportunity. Too much information is not helpful.

    China

    CBRC cautions on surging consumer loans (China.org), Rated: A

    China’s top banking regulator on Friday warned surging consumer loans may pose potential risks to the country’s lending system.

    It also cautioned against a fast rise in consumer leverage ratio.

    Recent inspections on banks by CBRC branches and the People’s Bank of China, the central bank, have found that some consumer loans were used to make a down payment for home purchases or as an investment, rather than using them for travel, education, home renovation or to buy consumer durables.

    International

    Souqalmal.com raises $ 10m in Series B funding with investment from UK’s GoCompare (The National), Rated: A

    Price comparison website Souqalmal.com has raised US$10 million in Series B funding to expand its regional presence and increase its offline service offering, with leading UK firm GoCompare joining the funding round.

    GoCompare Group, which operates the popular UK comparison site GoCompare, is a minority investor in the funding, which is led by Saudi-based Riyad Taqnia Fund (RTF), with UAE Exchange Group also participating.

    Asia

    TrueMoney finds a niche in Myanmar’s mobile fintech space (Myanmar Times), Rated: AAA

    TrueMoney, one of the newest additions to the string of fintech firms vying for a slice of the mobile money market in Myanmar, is upping its game in the face of rising competition.

    TrueMoney, a Thai company, provides mobile financial services allowing users to deposit cash in mobile accounts online or at physical point-of-sale outlets and transfer cash equivalents to a network of agents domestically or overseas.

    In ASEAN, TrueMoney is the only fintech company to have established a mobile money network in Thailand, Cambodia, Vietnam, the Philippines, Indonesia and Malaysia, allowing users to transfer money between these countries.

    TrueMoney is also the only mobile payments firm that allows Myanmar workers in Thailand to send money home, all within the hour.

    Around 80 per cent of the population do not have bank accounts in Myanmar, where most prefer to carry large wads of cash. With mobile money technology, many operators see the country leapfrogging bank accounts altogether.

    Middle East

    This UAE Startup Secured an Investment of US$ 5M, and is Planning on Expanding to Saudi Arabia (Startup Magazine), Rated: A

    The leading MENA’s peer to peer lending platform, Beehive, has managed to secure US$5 million investment as part of a Series A round Riyad TAQNIA Fund.

    Up to now, Beehive has successfully arranged the lending of over US$ 35 million (AED 130 million) to more than 200 business finance requests. In addition to that, it also registered more than 5,000 international investors.

    Authors:

    George Popescu
    Allen Taylor

Monday October 2 2017, Daily News Digest

marketplace lending uk

News Comments Today’s main news: CEO-less SoFi will have to wait to get a bank. Zopa partners with Saffron Building Society. Zopa updates credit risk model. Assetz Capital lowers commercial mortgage interest rate to 6.9%. RateSetter reports 56% of investors switch from cash. Beehive raises $5M. African billionaire invests in digital bank. Today’s main analysis: UK marketplace lenders struggle to find […]

marketplace lending uk

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United States

SoFi’s CEO Hiatus Stalls Its Big-Time Banking Ambitions (The New York Times), Rated: AAA

One of the most valuable private financial technology startups in the United States, SoFi’s $4.3 billion valuation was based on expectations it could develop into a major lender but Cagney’s departure this month and the circumstances around his exit complicate efforts to create a new-generation bank that could compete against JPMorgan or Bank of America.

The company has hired headhunters over the past few days to help find his replacement, but an appointment is not expected to take place until the end of the year, a source familiar with the matter told Reuters.

The gap at the top is likely to stall SoFi’s application for a banking license, according to the source, because regulators assess whether a company has a capable CEO before allowing it to accept deposits.

A banking license was a key part of Cagney’s push to grow SoFi beyond its core business of student loans and unsecured personal loans.

But without Cagney at the helm, the emphasis is expected to shift.

The company will be more disciplined about testing new products before selling them widely, a source close to the company said.

Square Wants To Be A Bank, And Real Banks Are Pissed (BuzzFeed), Rated: AAA

Small businesses love Square because it charges them less than the bigger, bank-owned payment processors, and the little white card-swipes that plug into a smartphone are easier and more convenient than handheld credit card terminals. Square also — through a partnership with a tiny bank in Utah — makes loans to small companies and entrepreneurs banks would turn away.

As much as small merchants love Square, smaller banks distrust it, particularly now that the company, which is based in San Francisco, has applied to become an industrial loan company (ILC), a controversial type of banking license offered in Utah and a few other states.

And while Square insists it only wants to make small loans to the merchants it serves, banks see this as a backdoor way into their bread-and-butter business of taking deposits and making loans, both to businesses and consumers.

And Square, with its at least 2 million merchant customers, may look to today’s bankers a lot like Walmart did a decade ago. The company has been aggressively soliciting the merchants who use it as a payment processor, offering them small-dollar loans by email.

Take Courtney Foster, who runs a one-chair salon in the Murray Hill neighborhood of Manhattan and has used Square to accept payments for years. One day she got an email from Square Capital with an offer of a loan of $1,000 to $1,500, which would be paid back directly out of her payments processed through Square.

She has since borrowed about $3,000 in total from Square using the money (supplied by Celtic Bank) to start her own line of hair products.

The average loan approved by Square is about $6,000, and the company has either advanced or loaned almost $2 billion since 2014. The amount due back is typically 10% to 16% more than the amount loaned out — which is on the low end for similar types of small business finance  with payments coming out of a fixed percentage of the merchant’s receipts received through Square. The whole balance is due after 18 months, though Square customers can repay early.

Utah has 16 industrial banks, and most fall into the latter category, while some are retailers that issue their own loans, like BMW. Other companies that operate Utah industrial banks include American Express, USAA, UBS, and Sallie Mae.

Acting OCC Head Noreika Comments on FinTech Charter and Online Lending (PeerIQ), Rated: A

Also, in a major shift from prior OCC Head Tom Curry, Noreika affirmed that the proposed FinTech charter could be granted to commercial firms. Former Chair of the FDIC, William Isaac, was also constructive on the concept of enabling commercial firms to engage in banking to drive greater competition, customer choice, and expand access to credit to the 60% of Americans that cannot access a loan from a US bank. Historically, the separation of banking and commerce under the Bank Holding Company Act has prevented commercial firms (outside the ILC charter) from offering banking services. Our interpretation of the above is that, under the FinTech charter, commercial firms such as Walmart, Amazon, Google, and Facebook would have a path to offering banking services.

Cross River Bank CRO Adam Goller moderated a panel including PeerIQ (Ram Ahluwalia), Affirm (Alex Karram), Marlette Funding (Jeff Meiler), and former Massachusetts Commissioner of Banks, David Cotney. PeerIQ cited data and research from Columbia and Harvard Law concluding that the lack of regulatory clarity stemming from Madden-Midland has reduced the availability of credit in District 2.

On Timing for Issuing Charters:
“Interest also remains in the possibility of the OCC offering special purpose national bank charters to nondepository fintech companies engaged in the business of banking. … We have not, however, decided whether we will exercise that specific authority to issue special purpose national bank charters to nondepository fintech companies. We will keep you posted.”

PeerIQ Context: The Conference of State Bank Supervisors and NYS Dept of Financial Services have challenged the OCC’s authority to issue charters. Also, the OCC may be waiting for the nominee of Head of OCC Joseph Otting to be confirmed by the US Senate before introducing the FinTech Charter. Otting was approved by the Senate Banking Committee in early September.

Will They or Won’t They: The OCC’s Fintech Charter (Payments Journal), Rated: A

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 non- depository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.”

“Acting U.S. Attorney Joon Kim, representing the defendants, argued that DFS lacks standing in the complaint because the OCC’s regulations addressing the special-purpose national bank charter have resulted in no injury-in-fact, because the office has not reached a final decision on whether it will offer the specific type of national bank charter that does not take deposits and conducts activities other than fiduciary activities. The U.S. Attorney’s Office also argues that the complaint should be dismissed for failure to state a claim.”

Scott Robinson of Plug and Play Fintech (Lend Academy), Rated: A

One of the leading accelerator programs today is Plug and Play, they claim to be the world’s largest startup accelerator. Lending Club and many other big names have gone through their program. In 2014 they started a dedicated fintech accelerator program, founded by Scott Robinson, who is our latest guest on the Lend Academy Podcast.

The Massive Hedge Fund Betting on AI (Bloomberg), Rated: A

Man Group, which has about $96 billion under management, typically takes its most promising ideas from testing to trading real money within weeks.

What spooked him was an experiment at his firm, Man Group Plc.Engineers at the company’s technology-centric AHL unit had been dabbling with artificial intelligence—a buzzy, albeit not widely used, technology at the time. The system they built evolved autonomously, finding moneymaking strategies humans had missed. The results were startlingly good, and now Ellis and fellow executives needed to figure out their next move.

The program stayed in quarantine until 2014, when a senior portfolio manager with a Ph.D. in mathematical logic named Nick Granger decided it was time to take it out of testing. He gave the AI system a small amount of money from a portfolio he was managing—then more, then more again. At each step, the program was profitable.

Source: Bloomberg

Matic Insurance Services and LendingQB Team Up to Eliminate Stress, Mortgage Delays Related to Homeowner’s Insurance (PR Newswire), Rated: B

Matic Insurance Services (Matic), a digital insurance agency that enables borrowers to purchase homeowner’s insurance during the home-buying transaction, today announced a new partnership with LendingQB, a provider of “lean lending” loan origination technology. Matic announced the news as part of a live demonstration at San Francisco’s Digital Mortgage conference.

Matic’s integration with LendingQB’s flagship loan origination software (LOS) makes it easy for borrowers to upload or secure a homeowner’s insurance policy during the mortgage application process. The result is a less stressful experience for borrowers and the elimination of costly insurance-related delays for LendingQB’s lender clients.

Is Yahoo a fintech company now? (Quartz), Rated: B

Fintech generally refers to companies like SoFi, TransferWise, and Revolut, whose ambition is to use technology to challenge traditional banks. What Yahoo Finance is doing is a little different—its app will add online brokers like Fidelity and E-Trade to its platform, but it won’t make any money from the brokerage charges. Instead, Yahoo Finance (now part of Oath, a Verizon-owned company), which has about 41 million mobile users, is trying to boost usage of its app.

The platform is targeted at devoted investors and provides more financial data for free than you can get outside of a Bloomberg terminal, according to Michael La Guardia, Yahoo Finance’s head of product.

Alipay almost accidentally started the world’s biggest money market fund (paywall) when it gave users a way to park their money from mobile payments. Amazon, meanwhile, offers credit to its merchants and has made more than $3 billion of loans, according to the World Economic Forum (WEF). Facebook has ambitions for its app to do just about everything, including financial activities. Tencent’s WeChat in many ways already does.

United Kingdom

Zopa searches for new borrowers through Saffron Building Society loan partnership (City A.M.), Rated: AAA

Zopa is partnering with a building society to offer its loans as it seeks to add more borrowers to the platform.

The online peer-to-peer lender will provide loans at 11 bricks-and-mortar branches of Saffron Building Society across Hertfordshire, Essex and Suffolk, as well as online.

Zopa Announces Credit Risk Model Update (Crowdfund Insider), Rated: AAA

On Friday, online lending platform Zopa announced the latest update of its credit risk model. This news comes just a few weeks after the lender announced updated on improving loan sale time progress, rebate period, and ISA transfer-in. Chief Product Officer at Zopa, Andrew Lawson, revealed he and his team are continuing to monitor leading macroeconomic indicators carefully alongside how Zopa’s loans are performing compared to expectation:

Marketplace lenders struggle to find borrowers (Financial Times), Rated: AAA

Zopa, the world’s first peer-to-peer lending company, hoped the partnership whereby drivers for the ride-hailing app were directed to its website for loans would mark its entry into a multibillion-pound market for secured loans in the UK.

But barely six months after the deal was struck it collapsed, with the partnership failing to attract as many drivers as expected.

Zopa’s experiment with Uber underlines the enormous difficulty faced by marketplace lenders attempting to find new borrowers. These borrowers are crucial for the platforms to grow at a time when there is strong interest from institutional investors to provide crowdfunded loans.

Source: Financial Times

According to Mr Zhang, institutional investors such as hedge funds, asset managers, pension funds and family offices now account for between 30 and 40 per cent of peer-to-peer consumer and business lending, compared with less than 5 per cent before 2014. BlackRock, the world’s largest asset manager, made its first significant retail investment in peer-to-peer loans last year when it bought a stake in Funding Circle’s investment trust.

So far, however, they have struggled to attract borrowers to match this demand. Competition is increasing from traditional banks — Goldman Sachs has its own online lending platform — especially for prime and super-prime debt that is less likely to default.

Source: Financial Times

Assetz Capital Lowers Commercial Mortgage Interest Rate From 7.9% to 6.9% (Crowdfund Insider), Rated: AAA

Assetz Capital, one of the UK’s fastest growing peer-to-peer finance platforms and the largest property backed peer-to-peer lender, announced on Friday it has lowered its entry interest rate for commercial mortgages from 7.9% to 6.9% in an unprecedented move to give access to even lower rates for lower-risk borrowers looking for commercial mortgages. This is one of the lowest rates available from any alternative finance providers.

Three million small businesses still don’t accept cards, despite move away from cash (The Telegraph), Rated: AAA

Around three million of Britain’s small businesses do not accept card payments, despite the UK rapidly becoming a nation of card-only shoppers.

One in six British shoppers now uses cards only to pay. A further 38pc would typically try to pay with a card first before they have to pay with cash, according to a study by Square, the payment company belonging to Twitter founder Jack Dorsey.

Small companies could be missing out on millions of pounds’ worth of business by not offering card payment facilities, Square warned.

Card payments overtook cash payments as the main method of purchases in the UK for the first time in July this year, according to the British Retail Consortium. The average Brit has just £32.54 in cash in their purse or wallet right now – not enough to cover more than one of the average transaction size of £18.42.

Wonga on course for profit this year after major changes (Express), Rated: A

The company, which has been overhauled under new management after being accused of targeting the vulnerable and being forced to compensate nearly 200,000 borrowers who overpaid owing to “system errors”, cut its annual pre-tax loss from £80.2million to £64.9million.

Revenue grew by 18 per cent to £76.7million as more products boosted customer numbers by 6 per cent.

Wonga confirms £64.9m loss in year it ended Newcastle United sponsorship (ChronicleLive), Rated: A

Britain’s biggest payday lender Wonga has revealed it remained deep in the red last year with losses of £64.9m, but confirmed plans to return to profit in 2017.

Nutmeg loss widens to £9.3m as it develops advice offer (Citywire), Rated: A

Nutmeg’s 2016 losses have widened £9.3 million as it continued to invest heavily, as it presses ahead with developing the ‘most approporate’ advice proposition for its customers.

The loss, revealed in its accounts published on Companies House, follows the £8.9 million loss it posted in 2015. Its operating expenses rose from £10.8 million to £11.9 million over the year.

At the end of the year Nutmeg managed around £600 million in assets under management on behalf of 25,000 clients.

Turnover rose by almost 50% from £1.72 million to £2.56 million.

Wealthtech is coming to the High Street (Banking Technology), Rated: A

One area of fintech that is of interest is wealthtech. This sub-sector is likely to become more visible over the next few months. Wealthtech has become defined as utilising technology to enhance wealth management and the retail investment process.

The most visible players in the UK are the robo-advisors with Nutmeg the best known (and RiskSave following behind!) but other concepts are also deserving of attention, such as Munnypot.

These developments will soon be more visible at branch level.

An offering of automated financial advice from the retail banks could go a long way towards alleviating this. Santander and HSBC have already launched product offerings in this space, RBS is trialling a service through its Coutts’ sub-brand and Lloyds (with a quarter of the UK market) are sitting on the sidelines awaiting the results of the regulator’s Financial Advice Market Review (FAMR).

Fintech start-up Curve adds cloud-based accounting software to its app to simplify expenses (CNBC), Rated: A

Fintech start-up Curve will now let users claim business expenses across multiple bank cards through its app.

The London-based firm’s app allows its users to link all of their bank cards to one contactless MasterCard. Curve said it hopes to automate the tedious process and remove any friction associated with business expenses. It is predominantly targeted at small business owners and the self-employed.

Curve said Monday it would add online accounting software developer Xero to the app, meaning users will now be able to claim business spending across all their accounts.

The hottest startups in London (Wired), Rated: A

As London’s startup community awaits the result of Brexit negotiations – and its impact on single-market access – one might think tech would have ground to a halt. But growth continues: the last 18 months have seen billion-dollar valuations for TransferWise, Funding Circle and Improbable, and a near-unicorn valuation for Deliveroo.

Monzo

Monzo wants to make banking smarter. Founded in 2015 by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman, it offers pre-paid cards connected to an app that tracks spending and lets its customers analyse their financial activity.

Nested

One of a growing number of UK property – or proptech – startups, Nested guarantees that it will sell your house within 90 days, or buy it themselves.

Habito

Habito scours more than 15,000 mortgage products to suggest the best option, and takes a commission from the eventual lender. In January 2017, the startup raised £5.5 million in a Series A round led by Ribbit Capital.

Ravelin

Founded in 2014, Ravelin analyses online behaviour in real time to reduce payment-related fraud. According to its clients – including Deliveroo, Karhoo, and Easy Taxi, its technology reduces fraud incidence by more than 50 per cent. The company has raised £4.3 million to date from backers including Passion Capital and Errol Damelin.

P2P needs the FSCS stamp of approval (Citywire), Rated: B

Some commentators estimated nearly half a million new investors would try their hand at P2P lending when the Innovative Finance ISA brought eligible platforms into the ISA fold.

This is unsurprising given that, according to government statistics, British consumers have around £500 billion either saved or invested in ISAs.

However, the stampede has not arrived yet.

Plenty of people think the FSCS offers an insurance policy against poor investment performance. It does not. If a share portfolio tanks, for example, the scheme will not be there to save you. That is the risk you run by choosing to invest in the equity markets.

The FSCS is, however, on hand to compensate investors if a provider has been shown to mismanage its product, and has subsequently gone bust. Only then does it offer up to £50,000 (2017/18 tax year), not the larger amount doled out to savers.

Hull has fast become a profitable city for buy-to-let landlords (Mortgage Introducer), Rated: B

LendInvest’s buy-to-let index ranked the city as the fifth best buy-to-let postcode for landlords in the third quarter of 2017, up from 33rd in the second quarter.

“Cities such as Hull and Nottingham making significant gains in the Index (up #33 to #5 and #35 to #12 respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.

The top 10 areas for investors in order of ranking are Luton (#1), Colchester (#2), Manchester (#3), Rochester (#4), Hull (#5), Stevenage (#6), Romford (#7), Southend-on-Sea (#8), Ipswich (#9) and Ilford (#10).

China

Wealth-Management Industry at Turning Point (Caixin), Rated: AAA

China’s wealth-management industry is undergoing profound changes, shifting away from short-term, fixed-income products to longer-term, equity-based investment, said Tang Ning, chief executive of Beijing-based fintech conglomerate CreditEase.

Last year, the Forbes listed a record 400 billionaires from the Chinese mainland, compared to 335 a year ago. The listed members held a total of $947 billion assets, a 14% rise from the previous year. Meanwhile, China’s per-capita GDP exceeded $8,123 in 2016, up from $8,069 a year earlier, according to the World Bank.

Unlike investors in the U.S. and other developed market, Chinese investors have long favored most the fix-income products like bonds and bank bills, betting on governments’ implicit payment guarantee. But as China’s economy slows and its financial market liberalizes, the government has become increasingly hesitant to offer such sweeping guarantees.

A number of wealth management companies including CreditEase have launched private equity FOF over the past few years. In early September, the China Securities Regulatory Commission (CSRC) approved the first batch of six firms including China Asset Management, China Southern Fund Management and Manulife Teda Fund Management to set up publicly offered FOF products.

Tang estimated that there are 200 million active investors in China who do not have access to human advisers and asset managers because of their hefty fees.

Alibaba’s Jack Ma places bet on China’s online insurance market (Asian Review), Rated: A

When the heads of three of China’s most prominent companies join hands to launch a start-up, investors notice.

Jack Ma Yun of Alibaba Group HoldingTencent Holdings‘ Pony Ma Huateng, and Peter Ma Mingzhe of Ping An Insurance Group — collectively known as the “three Ma’s” — did just that. Looking to turn Ping An into a full-blown financial technology company within ten years, Peter also enabled the growth of Lufax, which started as a peer-to-peer lending platform in 2011 and became one of the most valuable e-finance company worldwide as of September.

Four years ago they founded China’s first online-only insurer. It was a company with an untested business model and making no money, but it sparked an investor frenzy.

Source: Asian Review

HSBC: Mobile banking in China begins with your face (Enterprise Innovation), Rated: A

Mobile banking continues to soar in China. According to China Internet Watch, total transactions of China mobile banking clients totaled 55.63 trillion yuan (US$44 trillion), up 5.1% quarter on quarter. China Construction Bank (26.1%) and Industrial and Commercial Bank of China (21%) have a combined market share of close to half of mobile banking in Q2 2017.

European Union

French Real Estate Crowdfunding Grows Steadily and Delivers (Crowdfund Insider), Rated: AAA

The French real estate crowdfunding market grew by 50% in 2016 and keeps growing at the same linear growth pace in 2017. While new platforms continue to join, first entrants strongly dominate the nascent market. With €160 million worth of real estate projects funded, the French platforms have a positive record of delivering expected returns.

It has since grown at a fast, but more linear pace of +53% to reach €68 million in 2016, and is expected to grow by 50% again in 2017.

French real estate crowdfunding attracts new platforms. In 2016, their number grew from 26 to 42, with 19 new entrants and 3 withdrawals. Indeed, more than 90% of real estate crowdfunds are raised by the top 10 platforms and 75% by the top 5. Between them, the two leaders, WiSeed and Anaxago, account for more than 50% of the market.

Top 10 French real estate crowdfunding platforms
Platform

Regulatory Status

Regulated Real estate since

Projects

Value

Repaid

Wiseed

PSI

2014

123

€53,197,600

33 %

Anaxago

CIP

2014

83

€38,908,333

18 %

Lendix

IFP

2014

14

€15,875,000

7 %

Clubfunding

CIP

2015

30

€10,075,500

27 %

Lymo.fr

CIP

2015

29

€8,196,500

45 %

Fundimmo

CIP

2015

23

€7,734,900

26 %

Homunity

CIP

2016

22

€6,732,200

18 %

Koregraf

CIP

2015

17

€4,935,500

47 %

Proximea

CIP

2015

5

€3,490,000

20 %

Immovesting

CIP

2016

7

€2,932,000

Source : , September 2017

 

Source: Crowdfund Insider

WINNERS ANNOUNCED FOR INVESTOR ALLSTARS EVENT (BusinessCloud), Rated: A

The winners of the 15th annual Investor Allstars awards were announced this week, with Funding Circle co-founder and CEO Samir Desai being crowned Entrepreneur of the Year and CoderDojo winning the Tech4Good award.

The Entrepreneur of the Year award went to Samir Desai of Funding Circle and online property lending and investment platform LendInvest was announced as Europe’s Allstar Company.

The full list of award winners is:

  • Exit of the Year: Skyscanner (Scottish Equity Partners)
  • Growth and Buyout Fund of the Year: Livingbridge
  • Entrepreneur of the Year: Samir Desai (Funding Circle)
  • VC Fund of the Year: Idinvest Partners
  • Europe’s Allstar Company: LendInvest
  • Corporate Development Team of the Year: Sage Group
  • Investor of the Year: Benoist Grossmann (Idinvest Partners)
  • VCT of the Year: Octopus Ventures Specialist
  • Debt Provider of the Year: Kreos Capital
  • Seed Fund of the Year: LocalGlobe
  • Service Provider of the Year: Orrick
  • Tech4Good Award: CoderDojo Foundation (part of Raspberry Pi Foundation)
  • Digital Innovation in Art: Articheck

That viral ‘mermaid dog’ video was too good to be true (The Daily Dot), Rated: B

It seemed too good to be real. A hairy creature, which some people guessed was an afghan hound, effortlessly floats underwater and moves its arms with the grace of a ballet dancer. It’s pure euphoria, captured in a video that lasts only a few seconds.

When Klarna, a tech bank with a focus on online shopping, posted the video to its Instagram account on Sept. 17 with the caption, “When you’re swimming into the weekend like… #noworries,” many people assumed it was a video of a real animal swimming in a pool. Or maybe they just wanted to believe.

It’s an animation that is part of an ad campaign for Klarna, which is trying sell people on the company’s “smooth” payment system.

International

Regtech Startups On Pace For Record Deals, Against Backdrop Of Shifting Regulatory Landscape (CCB Insights), Rated: AAA

Deals to regtech startups have increased steadily (if at times slowly) over the past few years, from 83 deals in 2013 to 147 last year. At the current run rate, deals in 2017 are on track to hit a new high, while funding is on pace to grow 14% to nearly match record funding levels set in 2015.

In 2017 YTD, regtech startups have seen 103 deals worth $894M in disclosed equity funding. At the current run rate, deals in 2017 are on track to reach a new high of 148 (up slightly from 147 in 2016). Funding is also on pace to grow, potentially bringing total disclosed equity investment over the last 5 years to more than $5B.

Source: CB Insights

Last quarter saw 34 deals, dipping 13% from Q1’17 to hit a 6-quarter low. Though deals were down, funding was up 14% from the previous quarter — and grew 64% year-over-year — to reach $326M.

H1’17 has seen 73 investments, up 3 deals from H1’16, while funding is up approximately 54% over the same period.

Source: CB Insights
Australia/New Zealand

Yield-hungry investors switch their cash to peer-to-peer lenders (The Sydney Morning Herald), Rated: AAA

Peer-to-peer lender, RateSetter, says 56 per cent of money invested with it is from savers withdrawing their money from their bank savings accounts.

Yield-hungry investors are understandably frustrated with earning next-to-nothing on their cash held at their banks, with interest rates at historic lows and likely to stay that way for the foreseeable future.

With the the advent of peer-to-peer (P2P) lenders, online platforms that match investors and borrowers, investors can get up to  three times the interest paid by term deposits.

NZ named Asia Pacific’s fintech champ (NZ Adviser), Rated: A

New Zealand has the highest per capita fintech lending volumes of any country in the Asia Pacific, and has embraced fintech faster than any other neighbouring Asia Pacific countries.

According to the research, peer-to-peer consumer lending forms the bulk of market activity in here. The second largest was donation-based crowdfunding, for which US$16.8 million was raised in 2016 – an increase of around 100% over the previous year. Equity-based crowdfunding was the third largest model in New Zealand with US$13.85 million across 2016 – up from US$11.86 million in 2015.

Appetise’s ASX listing; Study Loans & RateSetter close funding (Deal Street Asia), Rated: A

UK startup Appetise looks to list on the ASX, Study Loans has secured seed funding and P2P lender RateSetter Australia has closed additional funding from a private equity (PE) fund.

Melbourne-based fintech Study Loans, which offers a credit engine targeted at the student loans sector, has raised A$2 million ($1.56 million) in seed funding from investors that include the Simonds family and RMY Corp, as well as A$5 million ($3.9 million) in debt equity.

RateSetter Australia, a peer-to-peer (P2P) lending platform, has secured A$8.5 million ($6.65 million) from private equity fund Five V Capital. The deal values the company in excess of A$100 million. Existing equity investors in RateSetter are RateSetter UK, Carsales and Strattons.

India

Chqbook – Gurgaon Based Fintech Startup Raised Funds (Bizztor), Rated: B

Chqbook – a fintech startup that allows customers to explore, compare, book and get personal finance products like home loans, personal loans and credit cards, raises undisclosed funds from Youwecan backed Startup Buddy, Apurva Chamaria, global head of corporate marketing, HCL, Sachin Arora, ex-CTO Myntra, Bharat Gupta, Founder of Net Asset Consulting LLP, Amit Manocha, Private equity professional based out of Singapore, and others.

APAC

Indonesian P2P lending platforms recorded 496.5 per cent year-to-date growth of funding allocation (e27), Rated: AAA

Indonesian Financial Services Authority (OJK) revealed that peer-to-peer (P2P) lending platforms in Indonesia in total has channeled up to IDR1.4 trillion (US$106 million) in funding for small and medium enterprises (SMEs) in the country. The number is a 496.5 per cent year-to-date (YTD) growth from December 2016’s number of IDR242.48 billion (US$17.9 million).

Funding Societies Dubbed First Southeast Asian Company to Win Global SME Excellence Award from United Nations’ ITU Telecom (Crowdfund Insider), Rated: A

Singapore’s and Southeast Asia’s SME crowdfunding platform Funding Societies announced on Friday it was named the first southeast Asia company to win the Global SME Excellence Award from United Nations’ ITU Telecom, which was held this year in Busan, South Korea. 

PLDT unit disrupts businesses (Manila Standard), Rated: A

Vea, 67, now heads Voyager Innovations Inc., the digital arm of PLDT and the one behind digital platforms such as Smart Padala (mobile remittances), PayMaya Philippines Inc. (formerly Smart e-Money), Freenet (free sponsored data platform), VYGR (digital performance-based marketing), Tackthis! (electronic commerce platform), Hatch, (marketing technology and innovations platform), Lendr (digital consumer loan platform), FINTQ (financial technology unit) and Voyager DX (digital transformation).  Voyager, which has 600 employees, introduces solutions that allow customers to participate in the digital economy such as by using digital money.

Marzan presented data showing that 60 million or 58 percent of the Philippines’ 103 million people are Internet users.  Active social medial users are 60 million as well.

“In the Asia-Pacific region with 4.2 billion population, 46 percent are already Internet users and active social media users are 1.5 billion or 36 percent.  Mobile connection is 3.99 billion and active mobile social users are 1.44 billion. This is exponentially growing and we have to prepare for it,” Marzan said.

How FinTech uses technology to help the ‘unserved’ (Manila Bulletin), Rated: B

TrueMoney, a new financial technology player, seeks to have one TrueMoney center in each of the country’s more than 42,000 barangays to serve those who need a remittance network but have no bank accounts.

To meet that goal, TrueMoney teams up with cooperatives and groups in different regions. Its latest partnership is with Cebu People’s Multi-Purpose Cooperative (CPMPC), a community-based savings and credit cooperative with over 55,000 members to-date.

At this point, TrueMoney has over 5,000 centers in the Philippines.

MENA

Fintech Peer to Peer Lending Platform, Beehive, Raises $ 5m Investment (PR Newswire), Rated: AAA

Beehive, MENA’s leading peer to peer lending (P2P) platform, has secured $5m investment as part of a Series A round led by Riyad TAQNIA Fund and supported by the Mohammed Bin Rashid Fund (MBRF), the financial arm of Dubai SME, as well as several other regional investors. This latest fundraise brings the total raised by Beehive to $10.5m since its launch.

To date, Beehive has successfully facilitated finance over $35 million (AED 130 million) to more than 200 business funding requests and registered more than 5000 international investors.

South Africa

African Billionaire Patrice Motsepe Invests In Digital Bank (Forbes), Rated: AAA

South Africa’s first black billionaire Patrice Motsepe has reportedly invested in TymeDigital, an online lender that has recently been awarded an operating license by the South African Reserve Bank.

African Rainbow Capital (ARC), an investment firm founded by Patrice Motsepe, recently acquired a 10% stake in TymeDigital, which is a subsidiary of the Commonwealth Bank of Australia, one of the world’s largest banks.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

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United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Friday September 29 2017, Daily News Digest

C-PACE financing

News Comments Today’s main news: LendingClub completes 2nd self-sponsored loan securitization with $323M deal. Funding Circle restates IPO ambitions. Robo.cash tops 2M Euro, 1000th investor. AutoGravity surpasses $1B USD in finance amount requested. Singapore banks closing cryptocurrency, payments accounts. Today’s main analysis: Risk evaluation of commercial PACE securitizations differs from residential deals. Goldman Sachs’ aggressive push into consumer banking. Today’s […]

C-PACE financing

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United States

LendingClub Completes 2nd Self Sponsored Loan Securitization with $ 323 Million Deal (Crowdfund Insider), Rated: AAA

LendingClub (NYSE: LC) has sponsored and contributed to its second securitization deal following the the last successful self sponsored deal this past June. The “Consumer Loan Underlying Bond” (CLUB) Credit Trust 2017-P1 (CLUB 2017-P1) issued $323.1 million in prime notes backed by consumer loan assets originated via the LendingClub platform. This is the sixth securitization supported or sponsored by LendingClub, and the fourth rated securitization of LendingClub facilitated loans overall. LendingClub described the deal as further expanding investor access.

LendingClub reported the transaction was backed by approximately $350 million of collateral and includes $217.3 million of Class A notes rated “A-(sf)”, $51.0 million of Class B notes rated “BBB (sf)” and $54.7 million of Class C notes rated “BB (sf)”.

Orchard’s Online Lending Ecosystem Update: “Lendscape” (Crowdfund Insider), Rated: AAA

Orchard Platform, the nexus of loan originators and institutional investing, has updated their ongoing graphical view of the online lending  world or “Lendscape”.  As the online lending universe has moved from peer to peer lending, to marketplace lending to all forms of online lending, the Lendscape has changed and grown. New lending platforms have been launched, new verticals targeted, and a growing number of ancillary services have joined the space.  Orchard points to the addition of lenders like LendingPointLiberty LendingLendmartAllegro CreditUpLiftArtMoneyAscendOppLoans, and Lendistry.

Perhaps the most important shift in online lending is the growing participation by traditional finance firms.

Source: Crowdfund Insider

Risk Evaluation of Commercial PACE Securitizations Differs From Residential Deals (Morningstar), Rated: AAA

Morningstar Credit Ratings, LLC believes the next iteration of property assessed clean energy securitizations will be in the commercial sector. While securitization of residential PACE assessments tops $3 billion, there have been no public transactions consisting primarily of commercial liens.

Evaluating Property Income Generated to Pay Debts In analyzing the credit risk of transactions backed by commercial assessments, Morningstar considers the debt service coverage ratio, because PACE lending is tied to the property rather than the owner’s creditworthiness.

Evaluating Property Income Generated to Pay Debts

Morningstar evaluates a property’s net operating income in relation to its annual debt-service payments. Among securitized commercial mortgages, the average DSCR is approximately 2.14x, according to Morningstar. C-PACE lenders and aggregators typically require a minimum total DSCR in the 1.00x to 1.15x range. Although, in some cases, the DSCR has dipped below 1.00x, especially if total debtto-value is low when operating expenses are higher than revenue. Factors possibly mitigating a lower DSCR, which include county support, property ownership affiliations within a network, liquidity account and equity position require case-by-case analysis. In addition, DSCR of the lien is more important than the DSCR of the overall debt.

Evaluating Divergent Leverage Metrics

The lien-to-value ratio is another leverage metric that Morningstar analyzes. Although a PACE assessment raises a property’s lien-to-value ratio, the increased risk to the underlying mortgage is likely minimal, as the obligation is usually small in comparison to the mortgage.

It can be more challenging to calculate the lien-to-value ratio for C-PACE levies, because the properties can run the gamut from hotels, farmlands, nursing homes, and gas stations to nonprofit buildings such as churches. Across residential PACE deals, we have seen lien-to-value ratios around 6.7% and combined PACE-lien-plus-mortgage-tovalue ratios at around 62.7%. In C-PACE, lien-to-value ratios hover around 25.0%, not including mortgage debt.

While we scrutinize total debt-to-value, the distribution of leverage offers insight into the financial health of the property. For example, we view a property with a 90% debt-to-value ratio that is composed of an 89% mortgage loan and a 1% PACE assessment more favorably than a property whose debt is composed of an 89% PACE obligation and a 1% mortgage because of higher subordination levels.

Growing Market Size

C-PACE financing has grown to about $482 million as of Sept. 1, encompassing 1,097 commercial projects, according to PACENation. More than 2,500 municipalities have C-PACE programs.

Compared with residential programs, C-PACE is in its infancy, as R-PACE financing totaled about $3.67 billion and R-PACE securitizations totaled around $3.40 billion. A sliver of
commercial assets was included in one of those securitizations, GoodGreen 2016-1, with commercial PACE levies representing approximately 4.8% of the pool’s assets.

Source: Morningstar

Get the full report here.

The Top Sources Of Small Business Financing Based On Approval Rates (Forbes), Rated: AAA

According to the latest Biz2Credit Small Business Lending Index, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Loan approval percentages of institutional investors have continuously reached new heights this year in terms of approval rates. In August Institutional lenders’ loan approval rates in August reached 63.9%.

Alternative lenders’ approval percentages continue to decline; in August the rate dipped to 57.1%. Approval percentages have dropped every month for more than a year.

Approval percentages at small banks rose one-tenth of a percent in August to 49.0% from July’s 48.9% figure. It is conceivable that the number may cross the 50% benchmark.

Big banks improved one-tenth of a percent to 24.6% in August, setting a new high for the Biz2Credit Index, which has tracked loan approvals since January 2011. The number is creeping up to one-in-four. It’s a good time for bank lending.

Loan approval rates at credit unions dipped to 40.3% in August, falling to a new low for this category of lenders on Biz2Credit’s index.

AutoGravity Surpasses $ 1 Billion USD In Finance Amount Requested, Launches Real-Time Dealership Inventory Nationwide (PR Newswire), Rated: AAA

AutoGravity, a FinTech pioneer on a mission to transform car shopping and financing, today announced that it has reached $1 billion USD in finance amount requested on the AutoGravity platform. Additionally, AutoGravity has announced the launch of real-time inventory for new and used cars from partner dealership groups across the nation. Car shoppers can browse real vehicle inventory on dealership lots, find the specific car that’s right for them and secure up to four finance offers in minutes on the AutoGravity smartphone app.

More over 750,000 car shoppers have downloaded AutoGravity, collectively requesting over $1 billion USD in financing. These users can now search inventory by car brand and model year – as well as characteristics such as body type, drivetrain and color. Car shoppers can find their desired car waiting for them on the showroom lot for the payment they want. With car selected and offers in hand, users can pick up their car and drive off the lot with the confidence of knowing they have secured a fair deal.

AutoGravity partnered closely with the largest dealer groups in the country to design a seamless process by which dealers can easily load inventory feeds, including vehicle details and pictures, to AutoGravity’s secure platform. Inventory is updated and shown to users in real time.

ID-verification firms seize on Equifax moment (American Banker), Rated: A

The Equifax hack, combined with the rise of online lending, may have turned 2017 into a golden age for companies with new ideas for ID.

The software company Mitek plans to roll out a product in the coming year called Mobile Verify for Lending, which offers lenders a five-step process to quickly verify customer identities. Borrowers first share their online bank account information with lenders. They then submit four pictures taken from their smartphones: the front and back of their driver’s licenses, a selfie and a pay stub.

Other players are offering digital lending solutions to make it easier for banks to keep pace with speedy fintech competitors. Upstart, for example, is marketing software, called Powered by Upstart, to banks wanting to get into digital lending.

DFS to Court: OCC Fintech Charter ‘Undermines’ Its Authority (New York Law Journal), Rated: A

The U.S. Office of the Comptroller of the Currency’s plan to offer a special-purpose bank charter for financial technology companies “undermines” the Department of Financial Services’ regulatory authority in New York, the state agency argued in court documents.

“The Fintech Charter Decision is an unlawful assertion of power that usurps New York consumer protection laws and would preempt plaintiff’s ability to regulate any number of the over 600 nondepository institutions she currently regulates,” wrote Matthew Levine, the executive deputy superintendent for enforcement at the department.

Stockpile Raises $ 30 Million to Make Stock Investing Easy for Everyone (PR Newswire), Rated: A

Stockpile, a brokerage popular with millennials that is pioneering fractional share stock investing, announced today that it has raised $30 million in Series B funding led by Fidelity backed Eight Roads Ventures, with participation by Mayfield, Arbor Ventures, Hanna Ventures, Wang Ventures, and others.

This latest investment brings the total raised by Stockpile to more than $45 million.  Mayfield led Stockpile’s $15 millionSeries A in October 2015, with participation by Arbor Ventures, Stanford University, and actor Ashton Kutcher.  Stockpile will use the new funds to bring stock investing to more millennial customers and expand its unique features, Lele said.

Chime raises $ 18 million for mobile banking without the fees (TechCrunch), Rated: A

Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.

It’s a bank account and debit card built for the digital age.

Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.

Shinola’s new pitch: the installment plan (Crain’s Detroit Business), Rated: A

Shinola/Detroit LLC is targeting millennials by adding an option to pay for its watches and other luxury goods in an old-fashioned way: the installment plan.

The average order value for Affirm customers is 70 percent higher than the sitewide average, Kopitz said. And about half of those using the service with Shinola are 18-34 years old, the release said.

Around 1,000 retailers now accept payment through Affirm.

Is marketplace lending maturing? (Banking Exchange), Rated: A

As new as fintech and marketplace lending—once known as “peer to peer lending”—may still seem, Noreika suggested that the online lending fraternity may be moving toward maturity.

Noreika said the sweat that went into those ideas has hit $40 billion in consumer and small business credit, with volumes doubling every year since 2010. He noted that some project that at that rate, marketplace lending will hit $1 trillion by 2025—versus the $3.7 trillion in unsecured consumer lending as of yearend 2016.

Noreika pointed out that marketplace lenders have been seeing cracks in their credit since the fourth quarter of 2015.

‘Fintechs tend to march to their own rules’: former SEC chair Levitt (American Banker), Rated: A

“Hardly a day goes by where there isn’t a recording of some scandal or another,” Levitt said. “I think that’s generally true of emerging cultures and emerging standards and cultures. That makes the odds of winning much less than in well established companies with better established cultures.”

His fellow fintech panelists, Sarah Friar, chief financial officer at Square, and Scott Sanborn, CEO of Lending Club, both pointed out that established companies have had their own share of scandals.

Levitt said it’s difficult for startups to attract the kind of quality board members that larger, more mature companies are able to attract.

“Regulators are always playing catch up,” he said. “Regulation today trails the fintech world and often presents impediments and costs that are unnecessary. Regulators are constantly protecting their space so they don’t get caught up in a scandal they’re held accountable for, so there’s a tendency to over-regulate.”

McHenry and Booker Introduce Fintech Bill to Automate Income Verification (House.gov), Rated: B

Today, Chief Deputy Whip Patrick McHenry (R, NC-10), the Vice Chairman of the House Financial Services Committee, and Senator Cory Booker (D-NJ) introduced the IRS Data Verification Modernization Act of 2017. This bipartisan bill will require the Internal Revenue Service (IRS) to automate the Income Verification Express Services process by creating an Application Programming Interface (API) allowing small businesses and consumers to access accurate credit assessments more efficiently. Joining McHenry as an original cosponsor of H.R. 3860 is Congressman Earl Blumenauer (D, OR-03), a senior member of the House Committee on Ways and Means.

Plug and Play Selects Their Winter 2017 Batches (PR Newswire), Rated: B

Plug and Play formally announces the startups accepted into their Winter 2017 batches. Plug and Play will run five programs this quarter focused on Health & Wellness, Insurtech, Internet of Things, Mobility, and Travel & Hospitality.

Wunder Brings on Rich Mauro as Director of Capital Markets (Wunder Capital), Rated: B

We’re incredibly excited to welcome the newest member of Wunder Capital’s team, Rich Mauro. As Director of Capital Markets, Rich will lead Wunder’s institutional fundraising activities, bolstering our capital stack and helping us scale Wunder’s platform to the next level.

United Kingdom

Funding Circle hits £50 million in revenue as CEO restates IPO ambitions (Business Insider), Rated: AAA

Accounts for 2016 filed with Companies House this week show:

  • Revenue rose 59% to £50.9 million;
  • Operating expenses rose by 43% to £103.1 million;
  • Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
  • £1 billion lent last year;
  • Loans outstanding rose by 61% to £1.37 billion;

‘It goes without saying that international is really hard’

While Desai is bullish on international expansion, the accounts show Funding Circle stopped operations in Spain at the start of the year, a market it entered through the acquisition of Zencap in 2015.

International revenues grew slower than UK revenues last year and Funding Circle parted ways with the head of its continental Europe operations in the middle of last year.

In the UK, economic growth is slowing and consumer debt is ballooning, leading to fears of a possible economic slowdown that could hit lenders.

Funding Circle remains a loss-making business (accumulated losses stand at £116.6 million to date) but Desai says it is on a long-term path to profitability.

Funding Circle is onto a winning strategy (Business Insider), Rated: AAA

Funding Circle, however, has remained a firm market leader, and its annual results for 2016 show it continues to do well.

Its losses narrowed 3% from £37 million ($50 million) in 2015 to £36 million ($48 million) in 2016, as revenue grew 59% year-over-year (YoY) from £32 million ($43 million) to £51 million ($68 million), and originations saw a 61% boost from £846 million ($1.1 billion) to £1.4 billion ($1.9 billion).

Source: Business Insider

Funding Circle posts 59% revenue rise (Bridging&Commercial), Rated: A

Post year-end highlights:

Ranger Direct Lending fund expecting substantial dividend cut (AltFi), Rated: A

The £220m Ranger Direct Lending fund could see its dividend pay-out for the second half of 2017 fall to nearly half of that in the first six months of the year, according to a statement by Ranger.

It is expecting NAV returns in H2 2017 to average 0.4 per cent-0.5 per cent per month (c.5-6 per cent pa), and then recover to 0.6 per cent-0.7 per cent per month (c.7 per cent-9 per cent pa) in 2018, assuming the resolution of Princeton this year.

As a result aggregate dividends of c.25p are expected for H2 2017, compared to 46p in H1.

Source: AltFi

‘Oscars of the start-up world’ has an exciting new winner looking to disrupt property finance (CNBC), Rated: A

LendInvest, an online marketplace platform for property lending and investing, was named the most valuable tech company at the prestigious Investor Allstars event in London on Wednesday evening.

These 20-something Oxford grads just raised $ 30 million for their fintech startup (Business Insider), Rated: A

A “RegTech” — regulation technology — company founded by three Oxford grads all under 30 has raised $30 million (£22.4 million) from investors including Microsoft’s venture capital arm.

Onfido, an identity verification startup, has raised the “Series C” fundraising from Crane Venture Partners, Microsoft Ventures, and Salesforce Ventures, as well as existing investors. It takes the total raised by the London startup to over $60 million.

Onfido’s latest $30 million funding injection follows a $25 million investment last April. Kassai says the latest funding will go towards technology investment and global expansion.

Payday lender Wonga records £65m loss amid overhaul (BBC), Rated: A

Wonga – Britain’s biggest payday lender – posted pre-tax losses of nearly £65m in 2016, but claims its business has been “transformed”.

The lender, which operates in the UK, South Africa, Poland and Spain, saw its losses shrink from £80m in 2015 to £65m in 2016.

How Fintech Is Disrupting Traditional Banking Models (Minute Hack), Rated: A

One of the biggest changes in the financial sector in the UK has been the introduction of challenger banks.

Crucially, these banks have not been mired by the many recent scandals and still rely on customer deposits to build their balance sheets. That’s why fledgling banks such as Metro Bank, Aldermore, Tesco Bank and United Bank UK and currently dominating the best buy tables.

Retail banking is the area that has seen the biggest change as a result of the FinTech sector, but that’s not to say there hasn’t also been a significant impact in the commercial banking sector.

A perfect example is Barclay’s mobile payments service Pingit, designed to compete with Apple Pay, while other banks have launched new mobile banking businesses away from their legacy businesses in an attempt to compete in a digital age.

Bringing financial services to small businesses

One example is peer-to-peer lending, a sector that has sprung up from nothing ten years ago to lend a total of £2.9bn in 2016. This is now filling the capital void for many growing businesses and lending at lower rates than many firms would be able to access elsewhere.

New trustees join Finance Innovation Lab’s board (P2P Finance News), Rated: B

SIX new trustees have been appointed to the board of the Finance Innovation Lab.

The new trustees include Caroline Ellis, a social and organisational change consultant who is taking on the role of chair of the board, and Kate Ormiston Smith, director of finance and operations at The B Team, who is taking up the post of treasurer.

The other new members of the board are: Hanna McCloskey, founder and chief executive officer of Fearless Futures; Toyin Ogundana – investment manager at CAF Venturesome; Paul Riseborough – chief commercial officer at Metro Bank and Julian Thompson, social innovation and fundraising strategist.

How and where to get Crowdlending to fund your Business (TechBullion), Rated: B

When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.

Investors will usually seek to get more information about you and your business from social networks like FacebookTwitterand LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending.

Going by the FundingKnightresearch, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity.

China

More Chinese fintech firms to eye Hong Kong IPOs, says JP Morgan (SCMP), Rated: AAA

More Chinese fintech firms vying to go public could choose Hong Kong as their listing venue, after the city’s first fintech IPO received a hot response from investors, and that Hong Kong has unique advantages compared with other global financial hubs, said JP Morgan’s head of global investment banking in China.

Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, closed nine per cent up from its IPO price on Thursday in its Hong Kong debut. With an oversubscription of nearly 400 times from retail investors, the company had priced its IPO at the top end of the expected range, raising US$1.5 billion in the city’s biggest ever fintech offering.

“The next Zhong An could show up in online payment, P2P lending, [financial] product distribution, or online insurance.”

In particular, revenue from online payment is estimated to increase to 202 billion yuan by 2020. Revenue from online distribution of financial products could grow to 52 billion yuan by then, while that for online lending and online insurance may reach 142 billion yuan and 60 billion yuan respectively.

ZhongAn Insurance Starts Trading on the Hong Kong Stock Exchange (Lend Academy), Rated: AAA

ZhongAn’s IPO will likely make the company the 4th most valuable fintech company in the world with a market cap of about US$10.4 billion, following the top three fintechs, which are Paypal ($78bn), Ant Financial ($68bn) and Lufax ($18bn).

Peter Renton interviewed the CEO of ZhongAn Insurance, Jeffrey Chen, on the Lend Academy Podcast over the summer. Jeffrey said in the interview that ZhongAn has 492 million insurance customers as of December 31, 2016. That is more than four times that of insurance giant AXA’s customer base (107 million, as of December 31, 2016). By this measure, ZhongAn truly is the world’s largest insurance company. And this is just a four-year old company!

Why ZhongAn is So Succesful

For the technology part, ZhongAn has been using artificial intelligence and big data analytics in each step of the insurance value chain, from marketing, underwriting, pricing to claims processing.

Another example is that ZhongAn has partnered with a Chinese automaker to develop internet of things (IoTs) and telematics solutions. Telematics devices can capture drivers’ behavioral data, which can be fed to algorithms using big data techniques to tailor product pricing to observed risk levels.

In ZhongAn’s early days, the revenue generated by shipping return policies accounted for almost 90% of the total revenue. This product would not have been such a success were it not for its partnership with Alibaba. Ant Financial, the financial affiliate of Alibaba, is also the single biggest shareholder (16.04%) of ZhongAn.

Source: :Lend Academy

KKR Invests in Shenzhen Suishou Technology (BusinessWire), Rated: A

Shenzhen Suishou Technology Co. (“Suishou” or the “Company”), a leading personal finance management platform in China, and global investment firm KKR today announced the signing of a definitive agreement under which KKR will invest in Suishou’s Series C funding round to support the Company’s expansion across China.

European Union

Robo.Cash Tops €2 million with 1000th Investor (Crowdfund Insider), Rated: AAA

Emerging peer to peer lender Robo.Cashhas topped €2 million in loans with the advent of the 1000th investor.  According to Robo.Cash, investors are spread across most of Europe with lenders now coming from 28 different countries. The short term loans are coming from Spain and Kazakhstan.

The total sum of earned interests has amounted to more than €50,000 since the start of the platform’s work.

The End of Fintech Is Nigh (FiNews), Rated: AAA

Switzerland is one of the major global fintech centers and the industry is booming: Swisscom counted fewer than a hundred fintech startups in 2015, today there are 208 companies active in wealth management, comparative consulting, crypto finance, data management, payment services and lending (see illustration below).

Blurred Dividing Line

And this may also spell the end of fintech as we know it, in Switzerland, and abroad. That’s at least what Armands Broks (pictured below) believes. The founder and CEO of Twino, a peer-to-peer lending platform, thinks that the fine line between finance industry and fintech is about to be blurred and that fintech eventually will disappear.

The only way forward for fintech is through cooperation agreements and in doing so, «the fintech industry is signing its own death sentence,» Broks said.

PWC consultants said that about 60 percent of Swiss banks have links to fintechs. Four out of five banks are eyeing partnerships in the near future or are planning to expand existing ones.

International

Goldman Sachs’ foray into consumer banking is getting aggressive (Tearsheet), Rated: AAA

The same year it launched GS Bank, it began building a digital-only consumer loan product, Marcus, that was fully developed and on the market 12 months later. Without having the legacy infrastructure under previously existing consumer products and services, the overhaul other major banks have been experiencing don’t exist for Goldman.

“[The] platform approach has not been an obvious approach on Wall Street. Our competitors are generally structured in deep vertical silos and we have a different architecture: these shallower silos built on top of many layers of software, tech infrastructure, cybersecurity, enterprise platforms and increasingly, client platforms,” Marty Chavez, an engineer and Goldman Sachs CIO-turned-CFO this year, said in a keynote at Harvard University earlier this year.

46 percent of Goldman jobs are in technology 
CB Insights analyzed more than 2,000 open Goldman Sachs job listings by division and business unit to confirm it’s focused on building its technology and digital finance units.

Many of the jobs are in digital finance. Earlier this month it reportedly poached 20 employees from New York-based online lending startup Bond Street — engineers, product developers, and risk and marketing specialists — presumably to build out a lending product.

According to the research, published Tuesday, 46 percent of all of the firm’s jobs as of Sept. 14 are in technology, with the highest amount for core platform roles, followed by operations engineering and then equities technology.

Source: Tearsheet

Marcus is expanding in the U.K.

Marcus, the online lending startup built inside the investment bank, has been growing tremendously in the eight months since it launched in October 2016. It has one product: a customizable personal loan for Prime borrowers, with at least a 660 credit score, of up to $30,000. It promises no fees and straightforward repayment terms. It recently passed $1 billion in loan originations with expectations to originate $2 billion by the end of this year. By comparison: SoFi, which launched in 2011, reached its first billion after 14 months; Avant, founded in 2012, took 28 months; 10-year-old Lending Club took 65 months; and Prosper, launched in 2006, passed $1 billion in 98 months.

Goldmoney Inc. Adds Bitcoin and Ethereum to the Goldmoney Holding (Globe Newswire), Rated: A

Goldmoney Inc. (TSX:XAU) (“Goldmoney”) (the “Company”), a precious metal financial service and technology company, today unveiled the addition of vaulted Bitcoin and Ethereum as secure and fully-reserved offline investable assets within the Goldmoney® Holding, a major enhancement that allows qualified clients to buy, sell, and exchange cryptocurrencies with nine global currencies as well as gold, silver, platinum and palladium bullion. With today’s launch, Goldmoney becomes the world’s first publicly traded and regulated financial service to offer insurable, auditable, and Anti-Money Laundering (“AML”) compliant exposure to cryptocurrencies.

  • Buying and selling of digital assets that are safely secured in vaulted cold storage. Cryptocurrency offerings currently include Bitcoin and Ethereum; additional leading digital assets will be added over time.
  • Funding of Goldmoney Holdings with 50 types of cryptocurrency, enabling wallet holders to sell a variety of cryptocurrencies and fund their Goldmoney Holding with fiat currency to access precious metals and other Goldmoney service offerings.
  • Will seek the establishment of peer-to-peer (“P2P”) lending capabilities on digital assets in partnership with Lend and Borrow Trust, allowing owners of Bitcoin and other assets to safely borrow against their positions.

HNWs Would Use Amazon for Wealth Management (Financial Advisor IQ), Rated: A

The majority of high net investors would turn to GoogleAppleFacebook and Amazon for wealth management, Bloomberg writes.

If one of the four tech giants were to enter the advice space, 56.2% of wealthy individuals would entrust them with their money, according to a Capgemini survey of 2,500 individuals with a net worth of $1 million or more in North America, Latin America, Europe and Asia-Pacific cited by the news service. And among people under 40, more than 81% would use one of the four tech firms, according to the survey.

Australia

New fintech “Study Loans” aims to help cash-strapped students (Mozo), Rated: AAA

It’s called Study Loans and is said to be the first online platform dedicated to providing loans to students for both vocational and higher education.

Working closely with education providers, the fintech will track student performance and provide funds as you study through ‘tranches’ – which are based on the number of units you do and when they are completed.

Think of tranches as a ‘pay as you go’ kind of deal. So whether you pass one unit or four, Study Loans will release the funds according to your course progression.

Study Loans has raised $5 million debt equity so far, which is ready to be distributed as the first tranche to Aussie students who have already applied through the platform.

Financing options for students: 

  • Student loans – Student personal loans are designed to help fund your education. They often have a more lenient application criteria and have lower interest rates than standard personal loans. But you are expected to make monthly repayments – so you’ll need to make sure your budget can handle the amount.
  • Peer-to-peer lending
  • HECS-HELP – This is a Government funded scheme for students enrolled in Commonwealth supported institutions with no real interest charged on the loan. You won’t have to pay your student fees upfront, however, you are expected to make repayments once you start earning a salary of $54,869.

MONEFLY LAUNCHES FREE FINTECH PLATFORM WITH ENVESTNET | YODLEE FINANCIAL DATA (Yodlee), Rated: A

Monefly is an innovative new Fintech platform in Australia, focused on providing tools and resources that empower its members to grow income, reduce expenses, build assets, eliminate debt and protect themselves from risk. Some of these exciting tools include free property valuations, automated budgeting, credit scores, bank account consolidation and much more.

Monefly has partnered with Envestnet | Yodlee to help its members access comprehensive financial data available across banking and wealth management from over 15,500 data sources globally.

The data being integrated into Monefly includes superannuation, cash, credit cards, personal debts, mortgages, assets, shares, real estate, credit scores and other investment data.

India

MyAdvo Ties Up with Online Loan Advisor Square Capital for Loan Services (newKerala), Rated: AAA

MyAdvo, India’s leading Legal Tech Startup has entered into an agreement with Square Capital, the digital lending arm of India’s largest real estate transaction platform Square Yards to enable loan facilitation for lawyers on its panel.

Square Capital currently facilitates USD 30- 40Mn(INR 200cr – INR 260cr) of loan disbursals every month, contributed majorly by secured mortgages spread across 50+ banking partners for their different products in home loan, loan against property and business loan.

This exclusive tie-up will benefit MyAdvo registered lawyers in receiving immediate loan solutions without any hassle.

Indians are warming up to robo-advisers (livemint), Rated: A

Robo-advisers, or automated services based on computer algorithms, are catching on in the Indian market due to the relatively lower penetration of financial products in India compared to developed markets.

According to a Business Insider Intelligence forecast, robo-advisers (with some element of automation) will manage investment products worth $1 trillion by 2020, which will go up to $4.6 trillion by as early as 2022.

Scepticism notwithstanding, financial institutions in the country are realising the benefits of robo-advisory services by either building the product in-house or partnering with fintech companies to develop robo-advisers. Take the case of FundsIndia.com, which has a robo-advisory service for which it is forging partnerships with financial biggies. “We have a partnership with Axis Securities and one more company. There is a growing acceptance from the industry, and we are trying to enable better product design,” said Srikant Meenakshi, co-founder, FundsIndia.com. According to him, 15% of his company’s overall portfolio comprises robo-advisory services. Similarly, 5nance has an agreement with HDFC Mutual Fund for its robo-advisor.

Robo-advisory start-up ArthaYantra uses a patented methodology called the Personal Financial Lifecycle Management on its online platform, Arthos. Since its launch in 2008, the site claims to have helped 120,000 customers across more 650 cities and 30 countries.

Asia

Singapore Cryptocurrency Firms Facing Bank Account Closures (Bloomberg), Rated: AAA

Singapore banks have closed accounts of several companies which specialize in providing cryptocurrency and payments services, according to two local bodies which represent financial-technology firms.

Chia Hock Lai, president of the Singapore Fintech Association, which has broader membership than Access, said some of his organization’s members also experienced account closures, though he didn’t provide figures.

Access has 106 members and the Fintech Association has 185, though the two organizations said some companies belong to both groups.

How technology drives a new Taiwanese banking landscape (The Asset), Rated: A

According to Joseph Huang, president of E.Sun Bank, speaking in an interview with The Asset, payments is one area that every bank is looking to explore, although it does not generate huge profits for most banks.

Banks are also more frequently working with technology companies. E.Sun Bank partnered with IBM Taiwan in building its digital branch, which opened in February 2017, making it the first digital branch in Taiwan. Similarly, CTBC partnered with LINE Pay to help merge its banking services with communication apps and social media.

Taishin Bank’s e-banking application, Richart, which attracted over 120,000 subscribers, is targeting young Taiwanese users, while Cathay United Bank is also providing its products to retail customers through its platform My MobiBank.

Authors:

George Popescu
Allen Taylor

Thursday September 28 2017, Daily News Digest

Chinese billionaires

News Comments Today’s main news: PayPal likely to buy big target like Square or Klarna soon. LendingTree acquires non-lending assets of SnapCap. Funding Circle boost revenues, narrows losses. ZhongAn raises $1.5B in Hong Kong IPO. Funding Societies intros first crowdfunding chatbot in Southeast Asia. Today’s main analysis: Hong Kong private wealth sees double-digit growth. Today’s thought-provoking articles: The next […]

Chinese billionaires

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Middle East

Canada

News Summary

United States

PayPal A Buyer, Not Seller, And May Seek A Big Target (Investors.com), Rated: AAA

Cash-rich PayPal Holdings (PYPL) is likely to pull the trigger on a big acquisition soon, and may be eyeing Europe or a big target like Square (SQ), says a Wall Street analyst.

Ellis says PayPal has $6 billion in cash on its balance sheet and could raise $4 billion or more by selling off its consumer credit business.

“While there are a number of potential candidates, we see the acquisition of a European payments asset as the most likely,” added Ellis in the report. “We believe the top candidates are Adyen, Klarna, Square and Stripe.”

Both Square and Stripe, however, would be costly acquisitions. Square’s market valuation tops $10 billion, while privately-held Stripe’s latest funding round in December gave it a whopping $9.2 billion valuation.

LendingTree Acquires Non-Lending Assets of SnapCap (PR Newswire), Rated: AAA

LendingTree, Inc. (NASDAQ: TREE) announced today that it has acquired certain assets of Snap Capital LLC, a tech-enabled online platform connecting business owners with lenders offering small business loans, lines of credit and merchant cash advance products through a concierge-based sales approach.

The acquisition purchase has a possible total consideration of $21 million, which consists of $12 million in cash at closing, and contingent consideration payments of up to $9 million.

The Next Billion-Dollar Startups 2017 (Forbes), Rated: AAA

Every year for the past three, Forbes has gone looking for 25 young U.S. companies with a strong shot at reaching a valuation of $1 billion or more. This year, with the help of TrueBridge Capital Partners, we asked venture firms which companies they thought most likely to hit the billion-dollar mark soon. Then we cut that list down to a final 25, evaluating strategies, funding and competitive challenges as well as estimating current revenues.

Blend

Founders: Erin Collard, Nima Ghamsari (CEO), Eugene Marinelli; Equity raised: $160 million; Estimated 2017 revenue: $27 million; Lead investors: 8VC, Founders Fund, Greylock Partners, Lightspeed Venture Partners

What it does: Makes cloud-based software that lenders use to originate mortgages online. Today, Blend works with about 30 mortgage originators, including Wells Fargo, U.S. Bancorp and Mason-McDuffie Mortgage. It also plans expansions into student and auto loans.

Fundbox

Founders: Yuval Ariav, Tomer Michaeli, Eyal Shinar (CEO); Equity raised: $108 million; Estimated 2017 revenue: $55 million; Lead investors: General Catalyst, Khosla Ventures, Spark Capital

What it does: Provides short-term financing to small businesses. Fundbox intends to reduce the cash-flow headaches of small companies, both those waiting for payment and those that need short-term credit to pay what they owe. Fundbox started as an invoice-financing company, lending money to small businesses against their accounts receivables at rates lower than those for cash advances and without prepayment penalties. Its new model, expected to launch in 2018, is meant to work like a credit card for business-to-business transactions. A company that owes money has Fundbox pay the invoice. The company that is owed gets its cash immediately (minus a small interchange fee). Meanwhile, the first company has 60 days to repay Fundbox before being charged interest. With U.S. businesses doing some $41 trillion in business-to-business transactions a year, the potential market is enormous, but setting up such a network is hard.

Plaid

Founders: William Hockey, Zach Perret (CEO); Equity raised: $60 million; Estimated 2017 revenue: $40 million; Lead investors: Goldman Sachs, New Enterprise Associates, Spark Capital

What it does: Makes software that helps technology startups and banks work together. Plaid’s products provide authentication of accounts and routing numbers, income validation and real-time balance checks. Among its customers: Venmo, Robinhood, Coinbase and Clarity Money.

Shinola Finds Kindred Partner in Affirm (BusinessWire), Rated: A

Affirm, Inc., the company started by Max Levchin to provide fair and honest consumer financing, today announced that Detroit-based design brand, Shinola, is using Affirm’s point of sale service to put customers first in an era when a merchant’s values often outstrip price for shoppers’ making a buying decision — especially among millennials.

Known for its dedication to thoughtful manufacturing by creating jobs and making watches, bicycles, leather goods, journals, jewelry, and audio equipment of the highest quality, Shinola is obsessive about customer experience to ensure a high-touch shopping experience that accurately matches the finely crafted watches, bicycles, jewelry, bags, accessories and gifts for sale on its website.

Since Shinola began offering Affirm’s financing to its shoppers, the company’s average order value (AOV) has increased by 52 percent. Also, 50 percent of the Affirm users on Shinola’s site are now between the ages of 18 and 34, a market Shinola has been working to grow.

Nearly 90 percent of marketers said customer experience would be their primary differentiator this year, according to a recent study by research and advisory firm Gartner, Inc. And, the majority of respondents — 55 percent — in a recent survey conducted by Affirm and Qualtrics of more than 1,000 22 to 44-year-olds in the U.S. said they prioritize a company with high values and ethical business practices, over minimizing their out-of-pocket costs.

How CRE Fundraising Is Changing and Why (Commercial Property Executive), Rated: A

Jason Burian: The number of closed-end private real estate funds in the market raising capital over the past three years:

  • January 2015 – 478
  • January 2016 – 492
  • January 2017 – 525 (record high)

Closed-end private real estate dry powder over the past three years:

  • December 2015 – $229 billion
  • December 2016 – $237 billion
  • July 2017 – $255 billion (record high)

CPE: Is the real estate crowdfunding industry a solution? What are the risks?

Burian: I see real estate crowdfunding as an alternative to traditional private equity real estate and an alternative source of investors and not as a solution to any problem. As we know, it is just an avenue for every day individual investors seeking exposure in their portfolios to real estate without acquiring shares of REIT’s.

Government regulation is always a risk for this relatively new industry sector. There are questions about the amount of government regulation and whether there is enough to make it a safe playing field. Until crowdfunding matures, with the proper level of regulation, there is always a risk that someone is taking advantage of that gap that currently may exist.

A new survey has concluded that then it comes to researching mortgages, Millennials prefer the D.I.Y. aspect of the online world, while Baby Boomers prefer to communicate with people.

According to the survey, “The Digital Mortgage Experience: A Study of Shifting Borrower Expectations,” from Los Angeles-based Velocify, more than one-third of all borrowers prefer self-service websites, especially during the research stage of getting a mortgage. But as the process evolves, demographic shifts occur. The survey found Millennials were 45 percent more likely to find their lender online than Baby Boomers, who were 87 percent more likely to use their current bank or lender for their home loans.

Boost Insurance Raises $ 3M in Funding (Finsmes), Rated: A

Boost Insurance USA, a NY-based technology-enabled insurtech development platform provider, raised $3m in funding.

The round was led by Norwest Venture Partners with participation from IA Capital Group, Greycroft Partners, and re/insurance industry leaders State National Companies (NASDAQ: SNC) and Nephila.

3 Stocks That Could Double Your Money (The Motley Fool), Rated: A

Company Recent Stock Price
Lending Club (NYSE:LC) $5.97
Fitbit (NYSE:FIT) $6.52
Etsy (NASDAQ:ETSY) $17.01

DATA SOURCE: TD AMERITRADE. PRICES AS OF SEPT. 26, 2017.

Finally starting to grow again

Peer-to-peer lending platform Lending Club has lost roughly three-fourths of its market value since its first trading day in 2014, thanks to several quarters of stagnant growth and a scandal that worried investors.

However, the company’s most recent earnings report shows that things may finally be starting to pick up, with 10% growth in loan originations, higher profit margins, and impressive revenue growth. In addition, the company said it could be on the verge of profitability by the start of 2018, and it expects double-digit sequential revenue growth in the third quarter of this year.

Lending Club’s current loan portfolio represents roughly 0.4% of the U.S. consumer lending market, and if the company could even manage to boost its market share to one or two percent, it could mean a big payday for the company’s investors.

Sumero Leads $ 45M Growth Equity Round in Treasury Fintech Kyriba (Xconomy), Rated: B

After raising $23 million in a Series D funding round last September, Kyriba says today it has raised $45 million in a growth equity round led by Sumeru Equity Partners, a tech-focused private equity firm that specializes in mid-market deals. Previous investors Bpifrance, Iris Capital, Daher Capital (all growth equity funds) joined the deal, along with HSBC.

The venture rounds are over for Kyriba, a cloud-based provider of corporate treasury and financial management software that is based in New York and San Diego.

Amazon effect’ makes advising smaller clients less profitable (Financial Times), Rated: B

Daniel Ketchum prides himself on his low fees and independence, but after 27 years as a financial adviser he is finding it harder to make a living working with smaller clients.

Increased government regulations and savers becoming more knowledgeable about investing have created what he calls the “Amazon effect” for US financial advisers.

But the US Department of Labor’s fiduciary rule, which came out this year, is making it harder for him to make a profit from advising small plans, he says.

The regulation requires advisers servicing retirement accounts to work in the best interest of the client and has disrupted the wealth management industry.

“I am trying to see if there’s an area where we can do this online and don’t need to leave the office,” he says. “If every plan had the economics of the smaller guys, it would be tough to pay staff, office rent and marketing.”

PayPal’s Cofounder Says Amazon Is “Not Yet” A Monopoly (BuzzFeed), Rated: B

Max Levchin, a cofounder of PayPal and former chairman of Yelp who is now CEO of the online lending startup Affirm, told BuzzFeed News on Wednesday that Amazon has “not yet” become a monopoly because of competition from major retailers like Walmart as well as from smaller brands, which are investing in ways to attract and keep customers in the real world as well as online.

Walmart is still much larger than Amazon in terms of net sales. During 2017 fiscal year, Walmart reported$485.9 billion in revenue and $481.3 billion in net sales. Amazon, on the other hand, reported about $136 billion in net sales in 2016.

United Kingdom

Funding Circle boosts revenues, narrows losses in 2016 results (AltFi), Rated: AAA

The UK’s largest marketplace lending platform marginally narrowed its losses in 2016. Funding Circle, a business loans marketplace, lost £35.7m in 2016, slightly down from £36.9m in the previous year. Meanwhile the platform boosted revenues by 59 per cent to £50.9m, and saw its total loans outstanding climb 61 per cent to £1.37bn, according to a Companies House filing.

Funding Circle has also flagged that its group operating results for the first half of 2017 demonstrate that revenue growth has accelerated further, approximately doubling year-on-year.

The UK Punches Above its Weight in Alternative Finance & Crowdfunding Can Provide a More Robust Funding Ecosystem (Crowdfund Insider), Rated: AAA

Crowdfund Insider recently spoke with Raghavendra Rau to better understand his perspective on the crowdfunding market. Rau is the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School. He is also a founder and Director at the Cambridge Centre for Alternative  Finance (CCAF). At the most recent CCAF annual conference in Cambridge, Rau shared some insightful research he had recently completed on the global crowdfunding market.

First, to clarify, in the UK crowdfunding encompasses both debt and equity so peer to peer lending (IE Marketplace Lending) is included in aggregate terms. It is more about many people (and perhaps some institutions) funding a single project. Rau, in his research, emphasizes that in the UK the debt crowdfunding market is far larger than the equity side. This makes sense and mirrors the public markets. Yet access to capital at a very early stage may require equity capital. But globally, over 90% of the crowdfunding market is debt, not equity. It is a debt financed world, at least for SMEs, said Rau.

“Yes, there is definitely potential here. Usually you have two types of firms. Most small enterprises do not require equity. They require debt. Debt means you have to have approximately stable cash flows. Equity means you have to convince the investors that you have an amazing idea that is going to pay off in several years and I am going to let you (the investor) share in this. This is more risky for the investor and so all SMEs are not suitable candidates to raise equity.”

Rau said there are two different paths. Banks or crowdfunding. With crowdfunding there is less paperwork. It is easier to process and in some instances less risk averse. Banks are pulling back from lending across the spectrum. SMEs, the engine of economic growth, are not getting the necessary capital via the traditional route.

So has the UK crowdfunding system been effective?

In the broader scope of things, China is the largest alternative finance market in the world. The US comes in a distant second. The UK is a strong third. But given the relative size of the UK economy, Rau calls the UK performance “extremely impressive.”

The UK is recognized as the top Fintech hub in the world but this required policymakers to be more creative and to take some chances. So far, it has paid off.

How FAs Engage Third-Party Services is Changing (Financial Advisor IQ), Rated: A

Wealth Mosaic aims to build “a resource covering all of the main business needs of wealth managers” in about a dozen verticals, says its co-founder Stephen Wall, who has worked as a wealth management consultant with Boston-based Aite Group and Scorpio Partnership in London. At first, though, he says the service will focus where it’s needed most: on technology and data resources as well as consulting and research options.

Though Wall sees a role for Wealth Mosaic with all “different types of wealth managers,” he sees particular growth opportunities helping “smaller independent” firms that lack in-house consulting arms to help them match their needs to third-party providers, whether the services in question are critical to the firm’s core mission or add value around the edges.

Advisers warned of robo-advice ‘cliff edge’ (FT Adviser), Rated: A

A panel of experts at the Chartered Institute for Securities and Investment’s financial planning conference in Newport today (26 September) said robo-advice did not necessarily pose a risk to financial advice as long as advisers adapted.

George Rooke, head of UK portfolio management at Wealthsimple, said there were advisers who would “struggle” because of their refusal to engage with robo-advice.

Michelle Pearce, co-founder of robo-adviser Wealthify, said advisers did not necessarily have to worry about being replaced by companies such as hers.

British Business Bank reaffirms support for fintech in new report (P2P Finance News), Rated: A

THE BRITISH Business Bank (BBB) has published a new report underlining the importance of diverse sources of funding for smaller businesses, including peer-to-peer lending.

The report, titled The Benefits of Diverse Finance Markets for Smaller Businesses, explains why and how the state-backed lender works to increase the number of providers and finance options available to small firms in the UK.

“To date £135m is committed to five fintech alternative lending partners. These partners cover a wide range of products including P2P term loans, invoice finance and merchant cash advances.”

Spotcap Announces UK Fintech Fellowship Winner (Crowdfund Insider), Rated: B

Spotcap, an online lender for SMEs, has announced Mohammed Hussan as the winner of its Fintech Fellowship 2017. The Fellowship awards one aspiring masters or MBA student with a £8,000 stipend towards their studies.

China

Online Insurer ZhongAn Raises $ 1.5 Billion in Hong Kong IPO (Caixin), Rated: AAA

ZhongAn, the online insurance seller with ties to China’s two largest internet companies, raised $1.5 billion from its Hong Kong IPO as investor flocked to the biggest listing to date by a new generation of Chinese financial technology (fintech) companies.

Shares of ZhongAn Online Property & Casualty Insurance Co. Ltd. were priced at HK$59.70 ($7.64) apiece, representing the top of their previously indicated range, according to a company announcement on Wednesday to the Hong Kong stock exchange. The offering raised HK$11.5 billion after being nearly 400 times oversubscribed.

ZhongAn Surges in HK Debut, Boding Well for Future Tech Listings (The New York Times), Rated: A

ZhongAn Online Property & Casualty Insurance Co jumped 18 percent on debut on Thursday after the biggest ever IPO by a financial technology firm in Asia, boosting Hong Kong’s hopes of luring future Chinese technology startups away from New York.

It also bodes well for expected listings from other fintech giants in Hong Kong, including Alibaba affiliate Ant Financial and peer-to-peer lending and wealth management platform Lufax.

Both Ant Financial and Lufax are considering IPOs in the city, sources previously told Reuters, although the timing for the deals is uncertain.

Private wealth in Hong Kong sees double-digit growth in 2017 (The Asset), Rated: AAA

THIS July, Hong Kong’s private wealth management industry recorded a 14% increase in assets under management (AUM) compared to a year ago. Hong Kong’s wealth management professionals believe that the growth is primarily driven by mainland China’s growing wealth, according to a recent report.

The estimated total private wealth in terms of AUM in Hong Kong is over US$800 billion as of July 2017, according to a survey by Private Wealth Management Association (PWMA) and PwC. This is an increase of 14% from US$700 billion in July 2016. PWMA’s annual members survey was produced with PwC in July 2017, with 33 out of 45 PWMA member firms participated.

In the survey, 100% of respondents cited mainland China as the main driver of growth in Hong Kong’s private wealth AUM. This may be unsurprising, as China has become home to the highest number of billionaires in the world. According to Hurun Report in 2016, China now has 568 billionaires, surpassing the 535 billionaires in the US, and now ranks first globally.

China’s Ant brings in CK Hutchison as Hong Kong payments partner (Reuters), Rated: A

Ant Financial, the payment affiliate of Alibaba Group Holding Ltd, said it will create a joint venture this year with CK Hutchison Holdings Ltd to operate its payment app in Hong Kong, ending Ant’s solo management of the service.

The new venture will allow Ant Financial’s Alipay to offer services via companies under CK Hutchison, which operates ports, retail, infrastructure and telecommunications businesses across 50 countries.

Ant Financial currently operates its payment app under the Alipay brand in Hong Kong, which offers transaction services at around 4,000 outlets in the city. The new joint venture will take over operation of the app, though it will still be branded Alipay, it said on Tuesday.

European Union

Fintech Group signs Kommunalkredit (Finextra), Rated: A

Kommunalkredit is a specialist bank for infrastructure financing based in Vienna, with a branch office in Frankfurt am Main. Its new online offering KOMMUNALKREDIT INVEST targets retail investors, who want to deposit their savings at attractive conditions. Their funds will be used to support key infrastructure investments made by Kommunalkredit such as schools, hospitals, care homes, wind farms, solar energy installations, waste-to-energy facilities, and transport projects.

FinTech Group provides a broad range of fully digital solutions and interfaces for KOMMUNALKREDIT INVEST: they include frontend processes such as online account openings, e-banking, and identification solutions such as video identification, e-signature and mTAN. On the backend side, FinTech Group will also run a data warehouse and carry out compliance monitoring as well as regulatory reporting.

Milan opens ‘Fintech District’ (Finextra), Rated: B

Thirty firms – ranging from start-ups to established corporates – have already selected the Fintech District as their home; they include businesses working in crowdfunding, peer-to-peer lending, blockchain and cryptocurrency-based technologies, and robo-advisory.

International

FinTech Has Yet To Make Impact On Trade Finance Gap (PYMNTS), Rated: AAA

Trade finance revenue is slipping at the world’s largest banks, especially as companies struggle in a global trade environment operating with a $1.5 trillion gap in trade finance availability.

According to the ADB’s latest survey findings, though, outlined in its Trade Finance Gaps, Growth and Jobs report, FinTech players have yet to make a meaningful impact on the trade finance industry.

The survey polled more than 515 banks and 1,336 companies across 103 countries, finding that FinTech innovators can, indeed, help address the $1.5 trillion trade finance gap which disproportionately impacts small- and medium-sized businesses (SMBs).

Approximately one-fifth of the companies surveyed said they had used some type of digital finance, alternative lending or FinTech platform to access trade finance, according to the ADB results.

Leveraging Alternative Data to Energize Your Lending Portfolio (LendIt), Rated: A

Banks aren’t just dealing with customers who want lending and credit information faster. Government regulations are also requiring them to do so, such as Australian banks requiring affordability checks as part of new consumer loans.

Venkat Srinivasan, Head of Lending at Monzo, said that as a new digital bank, they began to question why it was often a month or two months before consumers could see the transaction come through on their banking or credit card. Venkat noted that while technology is improving and customers are evolving, data availability is evolving at the same time.

Roger Vincent, Head of Banking and Innovation at Equifax, discussed how they’re finding new ways to store data, facilitate data movement, and turn data into insights in the form of scores and characteristics.

Phil Grady, CEO of Castlight Financial, discussed how they created a business that has taken traditional credit data from consumers and integrated it with transactional data. This involves categorizing income and expenditures, and then determining essential expenditures versus non-essentials. This enables Castlight to determine consumers’ real disposable income, which in turn helps lenders make better lending decisions. This type of granular level data has allowed Castlight to create the first real-time Financial Capability Formula.

Only three per cent of advisers offer robo-advice (AltFi), Rated: A

Only three per cent of 162 advisers surveyed said they offered fully automated wealth management services, the research found.

The study, which was conducted by research firm Platforum on behalf of JP Morgan, also found that only 14 per cent plant to implement it in the next two years.

Australia

Alternative Finance: Australia Becoming Regional Leader (Canstar), Rated: AAA

Australia’s alternative finance market has grown by 53% over 12 months according to a report released by KPMG, becoming the second largest in the Asia-Pacific region.

The report revealed Australia’s alternative finance market increased from US$27 million in 2015 to US$610 million in 2016 as Aussies turn to peer-to-peer lending (P2P), balance sheet business lending and crowdfunding.

In the US$245.28 billion Asia-Pacific alternative finance market, China was found to be the leader, accounting for 99.2% and representing 85% of the total global market.

P2P consumer lending was Australia’s second most popular alternative finance model behind balance sheet business lending, increasing from US$43 million in 2015 to over US$158 million in 2016.

India

Funding Societies introduces Miyu, the friendly Chatbot (Business Insider), Rated: AAA

Funding Societies, Singapore’sand Southeast Asia’s leading crowdfunding platform, has announced the launch of its chatbot Miyu. This is the first such chatbot created by a crowdfunding company in Southeast Asia. Miyu works round the clock to answer queries that a business owner or an investor may ask about the products and services offered by Funding Societies.

“We created Miyu via self-learning with guidance from our seniors. She is different from most other chatbots in the financial services space. Personally, I like that Miyu can escalate to human support whenever required, giving our users a seamless experience,” said Sherman Lim, who is a Singaporean and majors in Economics and Strategic Management at Singapore Management University (SMU).

The future plans for Miyu include acting as a Virtual Relationship Manager who can assist SMEs in loan application, and help investors navigate through the platform, initiate video chats with real customer experience managers as well as perform account opening and management activities such as investments, deposits, withdrawals, etc. without human intervention at any time of the day.

Fintech firms look to disburse loans, offer digital expertise under Mudra (livemint), Rated: A

Financial Technology (Fintech) firms are in early discussions with the government and Micro Units Development & Refinance Agency Ltd (MUDRA), exploring opportunities under the Pradhan Mantri Mudra Yojana (PMMY), said three people close to the development.

So far, PMMY loans have been extended by all public sector banks, regional rural banks (RRBs), cooperative banks, private sector banks, foreign banks, micro finance institutions and non-banking finance companies. Fintech companies have not been involved yet.

Under Shishu, refinancing is provided for loans up to Rs50,000. Kishor offers refinancing for loans above Rs50,000 up to Rs5 lakh whereas, Tarun provides refinancing for loans above Rs5 lakh up to Rs10 lakh. Mudra also offers services like credit guarantee for micro units and securitization of loan assets against micro enterprise portfolios.

Middle East

Dubai Economy signs new deal to develop emCash (Tahawul Tech), Rated: A

Emcredit, a subsidiary of Dubai Economy, and the UK-based Object Tech Group have signed a partnership deal to facilitate financial transactions through contactless payment.

Emcredit and Object Tech will develop a competitive, accountable and legally compliant emCash ecosystem together. Several associated products to protect emCash wallet and digital documents, enable direct real-time settlement and peer-to-peer lending, and provide credit rating based on the distributor ledger of emCash will also be developed.

emCash is based on blockchain technology and will be the digital currency in emPay wallet. The payment method, according to Dubai Economy, will allow the UAE residents to make varied payments through the near field communication (NFC) option on their phones. With emCash, emPay users will have the option of a secure digital currency, and merchants can receive such payments in real time without going through intermediaries.

Canada

The Digital Banking Underdog: Toronto Emerges as Global FinTech Leader (Let’s Talk Payments), Rated: A

It’s estimated that in 2017 alone, nearly $60 billion worth of payments will be made on mobile platforms. Comparing these figures to just two years ago, only $8.71 billion worth of transactions were made digitally in 2015.

In line with other frontrunners in the industry, such as London, Silicon Valley and New York City, Toronto, Canada, my hometown, stands apart as an emerging FinTech ecosystem, and it’s become a well-recognized leader amongst the largest and most stable financial centers in the world.

Ontario has been a global leader in digital payments for more than a decade, with Toronto leading in a high concentration of cryptocurrencies,blockchain, alternative lending and e-commerce growth verticals.

Authors:

George Popescu
Allen Taylor