Thursday February 22 2018, Daily News Digest

Servicing portfolio recurring revenue

News Comments Today’s main news: LendingClub spared from sharing underwriting docs with investors. Wealthsimple raises $65M. Zopa warns investors of increased defaults. Raisin now operates in UK. RaboDirect to bow out of Ireland. Today’s main analysis: LendingClub’s Q4 2017 results. Today’s thought-provoking articles: LendingClub’s CIO issues an update on Q4 results. LendingTree ranks best places for fresh start. Faster payments mean […]

Servicing portfolio recurring revenue

News Comments

United States

United Kingdom

China

European Union

International

Other

News Summary

United States

Fourth Quarter 2017 Results (LendingClub), Rated: AAA

Source: LendingClub

View the reported Q4 2017 earnings results from LendingClub right here.

Q4 2017: An update from our CIO (Lending Club), Rated: AAA

A core strength of LendingClub’s marketplace model is the ability to incorporate data insights quickly in order to responsibly adapt for the benefit of borrowers and investors.

From 2009 to 2014, credit supply was tight, so consumer loans experienced better-than-average loss rates. Since then, credit supply has increased, and the industry has seen a return to long-term average delinquency rates and higher losses in higher risk populations.

As a result of cumulative actions taken, our loss forecast for newly originated loans remains unchanged in aggregate compared to last quarter.

Economic backdrop

U.S. economic growth remains slow but steady, with annual GDP growth rate increasing to 2.6% in the fourth quarter of 2017. A primary driver of GDP growth since the financial crisis has been a historically low unemployment rate, which is down to 4.1% from its peak of 10% in 2009.

Updated pricing and return forecast

We continuously refine our methodology and recalibrate interest rates based on shifts in risk across the portfolio. This quarter, interest rates are increasing for certain subgrades in grades D and E.

Loss forecasts are remaining stable in aggregate for the platform relative to last quarter.

Platform Summary and Projections as of February 20, 2018

Source: LendingClub

Judge Nixes LendingClub Investor Bid For Underwriter Docs (Law360), Rated: AAA

Morgan Stanley, Goldman Sachs and the other underwriters of LendingClub Corp.’s $1 billion initial public offering for now don’t have to produce roughly a thousand documents sought by a class of investors suing the peer-to-peer lending company for alleged stock fraud, a California federal judge ruled Tuesday.

 

 

LendingTree Ranks Best Places for a Fresh Start in 2018 (PR Newswire), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today released the findings of its study on the best cities for those seeking a fresh start.

First, the study looked at eight elements to consider when going through a financial recovery, such as the local median income and rents, and if the state has laws to protect debtors from aggressive collections and penalties, in case methods like debt consolidation or refinancing to lower rates aren’t enough to manage liabilities.

Next, to determine what opportunities there might be for people seeking a solid job and income, the study looked at the percentage of people in these metros who are between the ages of 35 and 64, single, employed, have health insurance coverage and are currently enrolled in school.

Lastly, to get an idea of how well people in an area are recovering from financial calamity, LendingTree calculated how quickly credit scores are rising after a bankruptcy by using proprietary data on the average credit score, on a geographic basis, of LendingTree customers who declared bankruptcy between three to four years earlier.

1. Buffalo, N.Y. – 67.6
At $738Buffalo has the lowest median rent among the 50 cities reviewed, and 94 percent of adults over the age of 35 are insured (second highest). Residents who declare bankruptcy have an average credit score of 664 three years on, tied for the second highest score for the cities reviewed, suggesting that conditions are favorable for financial recovery. However, Buffalo ranks poorly in two metrics: at $52,303, median income is the seventh lowest, and only one other city has fewer students over the age the 35.

2. Minneapolis – 62.9
At just 3.7 percent, the exceedingly low unemployment rate for citizens in Minneapolis between the ages of 35 and 64 helps push the city to the No. 2 spot. Not only are most over-35s employed, but they also earn a median salary of $70,915, the eighth highest in the cities reviewed, 94 percent have health insurance and median rents are relatively low at $963.

3. Salt Lake City – 62.6
Only two other cities have more over-35s enrolled in school (Virginia Beach and Washington), and only five have more unmarried over-35s (New Orleans has the most). That could be due to the lowest unemployment rate for over-35s of any city reviewed (3.6%), and higher-than-average median income of $64,564 for that same group. That combines nicely with a moderate median rent of $967.

Source: LendingTree

The full report is available here: 

Why faster payments mean faster fraud (Tearsheet), Rated: AAA

Less than a month ago Early Warning Services, the network that powers peer-to-peer payments platform Zelle, touted $75 billion in funds moved through its bank-supported platform with plans to expand its member network. One member bank, however, also reported a fraud rate of 90 percent shortly after implementing Zelle last year, said someone familiar with the statistics who wished to remain anonymous.

Fraud detection in banks, however, is no longer just about building a wall to keep outsiders out; cybersecurity teams need to install a filter that can identify who can and should enter the system.

Bank of America will spend $600 million this year on cyber defense alone, its chief operations and technology officer Cathy Bessant recently told Tearsheet. In December Menlo Security, a company that provides malware isolation solutions, raised $40 million in Series C funding, bringing its total funding to $85 million. JPMorgan Chase, HSBC and American Express Ventures are among its investors.

Greenlight raises $ 16m for kids’ debit card (Finextra), Rated: A

Greenlight Financial Technology, the startup behind an app and debit card for kids and college students, has raised $16 million in a Series A funding round joined by SunTrust Bank, Ally Financial and the Amazon Alexa Fund.

 

7 COMPANIES REIMAGINING REAL ESTATE INVESTMENT AND FINANCE (Builder Online), Rated: A

Companies like Better Mortgage, Blend and LendingHome are reengineering the way mortgages are applied for and underwritten. While Cadre and Fundrise are moving real estate investments from Excel spreadsheets to the digital world.

GreenSky offers on-the-spot loans of up to $65,000 for home improvement projects with generous zero-interest promotional periods. Lemonade offers urban renters and homeowners insurance for as little as $5 and $25, respectively. LendingHome provides financing for house flippers, and more recently, homeowners.

Enodo delivers quantifiable insights for property investors (Realty Biz News), Rated: A

With the Enodo platform investors can cut to the chase with a platform that supports their decision-making through acquisition all the way to renovation, with features including rent price forecasting. In other words, Enodo is a real estate investing platform that provides quantifiable data, meaning investors no longer have to rely on hunches alone.

Enodo allows investors to carefully analyze any property in the country using basic physical and investment parameters. Users can also identify comparable properties, predict operating expenses and more. Parameters include things such as the year the home was built, number of units, amenities, market demographics and more.

Savings and Deposit Rates in a Rising Rate Environment (Lend Academy), Rated: A

This thread called Cash Parking on the Lend Academy Forum was created back in December 2016 and since then, forum members have discussed opportunities at banks and credit unions.

The discussion caught my eye when one user posted a 3% 5 year CD which happened to be offered by my local credit union.

Signing Up for a Savings Account at Marcus

Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS Bank. Rates are now 30 basis points higher at 1.5% on Marcus accounts.

Their investment has paid off and it was recently reported that they had $17 billion of deposits. Since Goldman Sachs acquired GE Capital’s retail deposits, deposits have grown a whopping 90%.

 

Kabbage’s Kathryn Petralia Talks Small Business Loans (LendEDU), Rated: A

She’s been hailed by Forbes as one of the most powerful women in the world, and TechCrunch recognized her for “crushing it” last year. Both sources refer to her success as a leader at Kabbage, Inc. which has financed over $4 billion to more than 130,000 businesses to date.

Q: What sets Kabbage apart from other online small business lenders?

A: Our focus on real-time access to third-party data and our ability to stay connected to our customer’s data all the time. This technology allows us to provide an automated experience.

Q: So, user experience seems to be a big advantage for non-traditional lending sources. While that’s an advantage, what disadvantages does a lender like Kabbage have against a traditional lender?

A: There are lots of things. First, traditional lenders like banks have well-known brands; they have access to really cheap capital. They have a lot of customers already. They already have access to a framework which they operate with the ability to move funds. 

The only thing they don’t have is the ability to serve the market, because it’s too expensive for them to serve our customers with the type of product they need.

Q: Was there a typical small business customer that you would lend to? Do you lend to certain business more often than others today?

A: Well, we got our start making loans to eBay sellers which you may or may not know. The reason we started there was because that’s where the first API was available, so we could get information on a business’ performance. Then as more APIs became available, we were able to expand our business. So for a long time, all of our customers were eCommerce businesses.

But about three years ago, we began expanding to service brick & mortar businesses, and today, about 85% of our customers are brick & mortar businesses. 

Q: Over the last 5 years, fintech lending has grown to take up more of the small business lending market. Where do you see the market share in 5 years? Where’s Kabbage in this equation?

A: If you’re talking about businesses seeking less than half or a quarter million dollars, I think it’ll stay the way it is with largely non-traditional players, like Kabbage, filling that space. And I think banks could serve that market through partnerships, but overall, I think it’s going to look much the same as it is now.

The Expanded Military Lending Act Regulations (The National Law Review), Rated: A

The Military Lending Act’s (“MLA”) lending restrictions are expanded to apply to consumer credit card issuers and unsecured consumer lenders. Compliance in most areas was mandatory as of October 3, 2016, but as to credit cards the mandatory compliance date is October 3, 2017.

The MLA applies to active-duty military personnel, active Reserve and National Guard personnel serving on Title 10 orders, and their dependents with a valid military identification card.

How to Invest in Private Loans (The Student Loan Report), Rated: A

The $1.45 trillion student loan market is made up of public and private student loans.

We now live in a world where crowdfunding and P2P investment opportunities are everywhere. The student loan market is no different. Companies like Sofi are shaking up what it looks like for both students and investors alike.

Sofi (short for Social Finance) has funded over $25 billion in student loans, with over 437,000 members around the country.

As challenger banks seek to enter the US, the business model still faces hurdles  (Tearsheet), Rated: A

European digital banks N26 and Revolut will launch in the U.S. later this year, and there are reports that U.K. challenger bank Monzo is mulling a move into the U.S. market. Meanwhile, three U.S. banking startups — Varo Money, Square and Moven — recently announced plans to apply for or acquire U.S. banking licenses.

For N26, winning means customers loving N26 like in Europe. U.K.-based Revolut, which plans to launch in the U.S. later this year with a multi-currency bank account, said winning means acquiring millions of customers, particularly those who travel often; and to San Francisco-based Chime, a win is to bring large numbers of customers away from traditional institutions.

Why BankMobile has launched an online magazine (Tearsheet), Rated: B

BankMobile has launched a content marketing website called Paradigm Money to help customers navigate personal finance.

The site, which launched this month, includes news, opinion pieces, interviews and advice.

BankMobile, which was born as the mobile-only offshoot of Customers Bank which sold it last year, has 1.8 million customers to date and opens about 300,000 new accounts each year.

WHAT FAMILY OFFICES WANT FROM ALTERNATIVE INVESTMENT MANAGERS (All About Alpha), Rated: A

Competition within the alternatives sector for family office investments is at an all-time high, as these investors get more comfortable with the range of assets available to them and their general understanding of alternatives rises. Fund managers want to win these wealthy investors over, but often find they are unsure of how best to pursue them. The family office client is increasingly demanding a more tailored approach to wooing them over. Managers who can adapt their prospecting tactics stand a better chance of winning a partnership with these prized investors.

A Q4 2017 research study, “Single-Family Offices and Alternative Investments,” by Institutional Capital Network, provides a framework for the changing dynamics in family office activity within the alternatives space. Some of the research findings that stand out in particular include:

First-generation founders have a “stay-rich” mentality, while second-generation are more likely to have a “get-richer” perspective.

About 40% of second generation single-family offices are investing 15% or more of their total portfolios into alternatives, compared to 20% of first generation single-family offices that are investing at similar levels. In 2017, 71% increased their direct allocations relative to 2016, and 82% intend to do so in the future.

33% of Americans do not have more savings than credit card debt (KHOU), Rated: A

In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.

While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.

Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.

US Mobile Payment Market to Reach $ 3 Trillion by 2020, Fintech Stocks Lead the Way (Investing News), Rated: A

A new Market Research Reports Search Engine report states the US mobile payments will grow from $550 billion in 2015 to reach $2.8 trillion by 2020, representing a compound annual growth rate (CAGR) of 39.1 percent over the course of that period.

Marlette Funding Named a Finalist in Top Consumer Lending Platform in LendIt Fintech Industry Awards Competition (Business Wire), Rated: B

LendIt Fintech, the world’s leading event in financial services innovation, announced today that they have selected the Best Egg Personal Loan Platform provided by Marlette Funding, LLC, as a finalist in the Top Consumer Lending Platform category for the LendIt Fintech Industry Awards. The Top Consumer Lending Platform finalists were selected from companies that demonstrate a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.

Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B

Klarna, a global payments provider, is a sponsor of and will be exhibiting at next week’s eTail West 2018 in Palm Springs, Calif.

Carl Gish Joins Varo Money as Chief Marketing Officer (PRWeb), Rated: B

Mobile banking startup Varo Money, Inc. today announced the hire of Carl Gish as Chief Marketing Officer. Gish is a marketing and general management executive with more than 20 years of experience across well-known, high-growth consumer brands and e-commerce businesses, including Amazon, Unilever, Dyson, eBay and Affirm. He will lead all aspects of the company’s branding and marketing, and will work directly with CEO Colin Walsh to drive large growth in Varo’s customer base across multiple marketing channels and partnerships.

United Kingdom

Zopa warns over defaults as investor returns decline (Financial Times), Rated: AAA 

The UK’s oldest peer-to-peer service is warning investors that defaults on its recent loans will be running at a higher rate than during the financial crisis.

Fintech Raisin Crosses the Channel to Offer Services to UK Savers (Crowdfund Insider), Rated: AAA

Savings marketplace Raisin has launched in the UK.

Revolut’s Nikolay Storonsky on long hours and high staff turnover (Financial Times), Rated: AAA

Over the past three years, and with the backing of Balderton Capital and Index Ventures, two European venture capital firms, Mr Storonsky’s company has raised about £60m and had a valuation of £300m last year.

How Startups Can Gain Traction In The Financial Services Market (Forbes), Rated: A

The United Kingdom’s financial technology sector attracted a record £1.34bn in venture capital  investment in 2017, with 90% of that money going to startup and early stage businesses based in London.

Those raising cash last year included peer2peer lending platform Funding Circle (£81.9m); payments company, Transferwise (£211m) and challenger bank, Monzo (£71m).

Last week I spoke to two fintech entrepreneurs – Ollie Purdue of online bank account provider, Loot and Jared Jesner, CEO of currency exchange, WeSwap – about their reasons for entering the fintech arena and how they hope to carve out a niche in a crowded market.

Lloyds Bank Marks $ 4.1B for Digital Strategy (Bank Innovation), Rated: A

British bank Lloyds has put aside £3 billion ($4.1 billion) for digital development and growth, the bank announced today.

The  £3 billion is a 40% increase on the spend Lloyd marked for its previous three-year expansion plan.

P2P lending to form part of inquiry into SME finance (P2P Finance News), Rated: A

POLITICIANS are going to consider the availability and uptake of peer-to-peer lending as part of an inquiry into finance for small-and-medium-sized enterprises (SMEs).

 

Ultimate guide to Innovative Finance ISAs: Part two (P2P Finance News), Rated: A

Lending to small- and medium-sized enterprises (SMEs) has soared in recent years. Members of the Peer-to-Peer Finance Association have cumulatively lent a total of £5bn to businesses versus £3bn to individuals, as of the end of 2017.

Loans to SMEs tend to produce a higher rate of return than loans to consumers, but they can also be riskier in some cases. The average size of loan is also much higher.

How Short Term Lender Wonga Went Worldwide (Silicon India), Rated: A

Today the brand eclipses its competition, with many of its 400 failing to survive in 2016 as fresh price caps on loan and repayment charges came into action.

With UK-domination taken care of, the lender has been expanding rapidly overseas, starting its journey by launching in Canada, South Africa and Poland, before going on to purchase and assimilate a number of foreign short term lenders as part of its global growth.

To launch Wonga Spain, the lender purchased Spanish credit agency Credito Pocket in 2013, going on to purchase German “pay later” payment firm BillPay (with two million users to its name) and a stake in Indian firm Nahar Credits Private in October of the same year.

China

China tries to bring order to sprawling online finance sector (Asian Review), Rated: A

China’s 1.2 trillion yuan ($189 billion) internet finance industry has reached a turning point as regulators tighten regulations after one too many cases of bankruptcy and fraud.

European Union

RaboDirect to quit Irish market in May (The Irish Times), Rated: AAA

RaboDirect Ireland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.

The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.

Bizarre Buybacks and Expensive Takeovers (The Washington Post), Rated: AAA

In November, Swiss fintech company Temenos Group AG spent 150 million Swiss francs ($160 million) buying back its shares at an average price of 122 francs each. Weeks later, with the stock at 115 francs, it’s preparing to sell shares to fund a $1.9 billion takeover of British rival Fidessa Group Plc.

The return on invested capital looks set to be just over 6 percent in 2020, based on the stated cost synergies plus Fidessa’s forecast operating performance. That’s well below the target’s 9 percent cost of capital.

Anyfin raises €4.8 million to refinance loans with a statement selfie (Finextra), Rated: A

Anyfin, a Swedish startup that offers to refinance consumer loans and credit card debt using a combination of artificial intelligence and a photo of the current statement and repayment terms, has bagged €4.8 million in Series A funding led by Accel and Northzone.

BNI Europa and Code for All partner to train new generation of IT developers (Finextra), Rated: A

BNI Europa, through Puzzle, its online credit brand, created a partnership with <Code for All_> to provide financial aid to anyone who wants to learn to become a IT developer.

This partnership provides an intensive code training program of 14 weeks supported by an online credit solution that offers special payment conditions to the program’s students.

International

What Is the Ripio Credit Network? (The Merkle), Rated: A

The Ripio Credit Network wants to offer a real global credit ecosystem which is more suitable than traditional solutions and even than similar peer-to-peer lending services. While that sounds like a tall order, the RCN protocol will connect lenders and borrowers all over the world via the native RCN token.

As is the case with any blockchain ecosystem, the Ripio Credit Network has its own native RCN token. It is the network’s payment channel first and foremost. Although credit transactions can be settled in any local currency, one does need RCN tokens to access the network and facilitate transactions.

Etherty launches blockchain-based, real estate trading platform (Construction Business News), Rated: A

A new investment portal, Etherty, has launched offering a real estate linked-crypto currency that enables investors to seize property investment opportunities all over the world, primarily in key markets such as Dubai, Mexico, and Australia.

500 Startups, Huobi Labs to Incubate Blockchain Projects (CoinDesk), Rated: B

500 Startups, the Silicon Valley startup accelerator, announced Tuesday it is partnering with cryptocurrency exchange Huobi’s incubator wing, Huobi Labs.

The two companies will support startups in various areas, including developing business plans, focusing on elements such as white papers, marketing strategies, community engagement and fundraising efforts, the accelerator said in a press release.

Australia/New Zealand

FMA opens applications for personalised digital advice (Scoop), Rated: AAA

The FMA is now open for applications from providers seeking to offer personalised financial advice to consumers through digital tools and platforms (so-called robo-advice).

India

P2P lending, payments platform JaldiCash to merge with parent firm Weizmann Forex (Financial Express), Rated: A

Weizmann Forex Limited (WFL), a foreign exchange and inward remittances platform, has approved the acquisition of its unit Weizmann Impex Enterprises Ltd (WISE). The proposed deal is supposed to take place on April 1st and will be done through a Scheme of Amalgamation, the company said in a press release. WISE is authorized by the Reserve bank of India to issue and operate semi-closed prepaid payment systems in India. The company owns ‘JaldiCash’, a payments platform that claims to have a network of more than 18,000 channel partners across 29 Indian states and more than 520 districts through their B2B model. JaldiCash works on a P2P model lending model, enabling loans for retailers, hotels and other services

APAC

ALAMI is on a journey to popularise sharia-based finance in Indonesia. (e27), Rated: A

Islamic banking assets is only 5.03 per cent of the total banking sector’s assets in the country, with a market share of IDR356.5 trillion (US$26.7 billion).

According to ALAMI CEO Bembi Juniar, this is due to the lack of infrastructure, support from key opinion leaders, and education on the benefits of sharia-based financial services.

So ALAMI offers a platform that serves as an aggregator for sharia-based financing for SMEs.

Canada

Wealthsimple raises $ 65 million in funding from Power Financial group of companies (Cision), Rated: AAA

Canada’s digital investor has raised a $65 million investment from the Power Financial group of companies, bringing their total investment in Wealthsimple to $165 million. Wealthsimple manages approximately $1.9 billion for over 65,000 clients in Canadathe United States, and the United KingdomMore than 80 per cent of people who use digital investing in Canada use Wealthsimple.

Authors:

George Popescu
Allen Tayl

Tuesday September 19 2017, Daily News Digest

Multifamily REITs

News Comments Today’s main news: Equifax cans two executives. Credit Karma to launch free ID monitoring tool. Funding Circle’s new lending options now in effect. Wealthsimple expands into the UK. HighRadius raises $50M. ID Finance launches Mexico operations. Today’s main analysis: Multifamily REITs reduce leverage, development pipelines. Today’s thought-provoking articles: The next crisis will start in Silicon Valley. RateSetter’s Rhydian Lewis […]

Multifamily REITs

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Africa

Latin America

News Summary

United States

Equifax hack claims two executives (American Banker), Rated: AAA

The Equifax data breach has claimed its first two executives. The company late Friday announced the immediate retirement of David Webb, its chief information officer, and Susan Mauldin, its head security officer. They will be replaced, respectively, by Mark Rohrwasser, who joined Equifax last year as head of the company’s International IT operations, and Russ Ayres, most recently vice president of IT.

Credit Karma to launch free ID monitoring following Equifax hack (Reuters), Rated: AAA

Credit Karma Inc is launching a new free service that will alert customers if their identity data has been compromised in hacks, the San Francisco-based fintech company said on Friday in the wake of massive breach at credit monitoring agency Equifax Inc(EFX.N).

The new ID monitoring service is being tested and will be available in October, the company said on Friday.

CreditKarma saw a 50 percent spike in sign-ups to its platform in the weekend after the hack, it said.

Multifamily REITs Reduce Leverage and Development Pipelines as Fundamentals Downshift and Supply Peaks (Morningstar), Rated: AAA

Key takeaways:

  • Stronger credit profiles and balance sheets provide the multifamily REITs rated by Morningstar Credit Ratings, with flexibility to withstand substantial market disruptions.
  • New apartment supply is pressuring multifamily fundamentals, and REITs on average are lowering their exposure to new construction.
  • Morningstar expects net operating income among multifamily REITs to moderate after years of solid gains.
  • Since 2016, Net Operating Income (NOI) growth has slowed amid additional supply.
  • Multifamily REITs rated by Morningstar reduced their leverage and their exposure to new construction, positioning themselves for the impending completions and an environment where borrowing rates are expected to rise.
  • Rental growth among multifamily properties should be subdued for the next two years. While fundamentals remain sound, surplus inventory of new units likely will keep rent increases in check.
Source; Morningstar
Source: Morningstar

Read the full report here.

The Next Crisis Will Start in Silicon Valley (Bloomberg), Rated: AAA

It has been 10 years since the last financial crisis, and some have already started to predict that the next one is near. But when it comes, it will likely have its roots in Silicon Valley, not Wall Street.

Since 2007, a tremendous wave of innovation has swept across the financial sector, affecting almost every aspect of finance. New robo-adviser startups like Betterment and Wealthfront have begun dispensing financial advice based on algorithmic calculations, with little to no human input. Crowdfunding firms like Kickstarter and Lending Club have created new ways for companies and individuals to raise money from dispersed networks of individuals. New virtual currencies such as Bitcoin and Ethereum have radically changed our understanding of how money can and should work.

But revolutions often end in destruction. And the fintech revolution has created an environment ripe for instability and disruption. It does so in three ways.

First, fintech companies are more vulnerable to rapid, adverse shocks than typical Wall Street banks.

Second, fintech companies are more difficult to monitor than conventional financial firms.

Third, fintech has not developed the set of unwritten norms and expectations that guide more traditional financial institutions.

Enova Announces $ 25 Million Share Repurchase Program (PR Newswire), Rated: A

Enova International (NYSE: ENVA), a financial technology company offering consumer and small business loans and financing, today announced that its Board of Directors has authorized a share repurchase plan for up to $25 million of its common stock through December 31, 2019.

Prime Meridian Ranks High on the Prestigious INC5000 List as one of Fastest Growing Companies in America (PRWeb), Rated: A

Inc. magazine ranked Prime Meridian Capital Management 554 on its 2017 annual Inc. 5000, which ranks the fastest growing private US companies in all industries. Amongst asset managers in the finance industry, Prime Meridian ranks near the very top of the list. The list represents a unique look at the most successful companies within the American economy’s most dynamic segment— its independent small and midsized businesses. Companies such as Microsoft, Dell, Domino’s Pizza, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names gained their first national exposure as honorees of the Inc. 5000.

The 2017 Inc. 5000, unveiled online at Inc.com is the most competitive crop in the list’s history. The average company on the list achieved a mind-boggling three-year average growth of 481%. The Inc. 5000’s aggregate revenue is $206 billion, and the companies on the list collectively generated 619,500 jobs over the past three years.

60-Second Market Review and Insights (Credit Chronometer), Rated: A

Regulatory uncertainty will continue to be a significant challenge going forward. Practices will be shaped by the standards imposed on fintech and other non-bank entities, which in turn, depends in part on the outcome of the tussle between the Office of the Comptroller of the Currency (OCC), which has begun offering a special purpose national charter, and state regulators who believe they are best suited to protect consumers.  The industry may soon also be impacted by legislation introduced recently in the Senate and the House that would overrule the 2nd Circuit’s Midland v. Madden decision denying purchasers of high-interest loans the benefit of preemption of state usury laws afforded their sellers under federal law.  Despite the ongoing debates, there appears to be momentum for more uniform and streamlined laws in the future that will provide greater certainty and, consequently, cost advantages for marketplace lenders.

dv01 Launches Cashflows for Securitizations (Business Insider), Rated: A

dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, today announced the launch of a cashflow engine for securitizations, with full waterfall and collateral model support. dv01’s cashflow engine is available for a library of 30 consumer unsecured, student, and small business deals, covering over $10 billion of securitizations from originators including Avant, Lending Club, Marlette, Prosper, SoFi, and Upstart.

dv01’s cashflow engine is powered by deal waterfall models that operate on loan level data sourced directly from originators. All projections are performed at the loan level and tied out to trustee reports, ensuring accuracy across the entire waterfall, down to the residual.

Within the cashflow engine, investors have access to full deal structure models to generate tranche and residual cashflow projections. This includes a wide array of functionality, including cohort-level control over assumptions; price, yield, and spread re-computation directly from the results screen; and price-yield matrix calculations. The output computations include a projected paydown chart and cumulative prepay/loss plots, all of which show both historic actuals and projected values.

The cashflow engine is integrated directly into dv01’s Securitizations solution, which offers investors 24/7 access to a reporting and analytics portal populated with loan level securitization data. When analyzing a securitization, users have access to deal-specific detail, collateral, and performance pages, as well as the ability to download updated loan tapes to track the evolution of a pool over time. Additionally, users can use dv01’s Pool Explorer to construct curves using historical platform data.

Fintechs get another alternative to IPOs (Business Insider), Rated: A

US-based VC firm Social Capital — whose portfolio includes fintechs Wealthfront, CommonBond, Jetty, and Cover — has 

Source: Business Insider

Small Business Crowdlending Fund Offers Startups Loan Opportunities (WYSO), Rated: A

Mom and pop business owners often struggle to find enough capital to get their ideas off the ground and succeed, research shows. Kiva Dayton’s recently launched crowdlending platform aims to help solve this problem.

Now, the Downtown Dayton Partnership is offering to commit the first 20 percent of each Kiva loan to help potential business owners build buzz and raise more funds through the platform.

According to a study by the U.S. Small Business Administration’s Office of Advocacy, inadequate capital is the major obstacle facing small businesses when it comes to growth, expansion and wealth creation.

All Kiva loans are zero percent interest and they’re small, with no loans over $10,000.

Younger Americans More Likely to Invest in Bitcoin (Coindesk), Rated: B

New survey data from online student loan marketplace LendEDU suggests that younger consumers in the United States are more interested in investing in bitcoin.

Of those between the ages of 18 and 24, 35.9% said they plan on investing in bitcoin, versus 43.5% who said no and 20.5% who weren’t sure. For the 25-34 age group, the “yes” figure grew to 40.4%, with 31.7% of respondents in that demographic saying no.

United Kingdom

Funding Circle New Lending Options Go Into Effect (Crowdfund Insider), Rated: AAA

Less than a month after Funding Circle announced the new versions of its existing Autobid and Autosell lending tools, the online lender revealed the new changes have officially gone into effect.

As previously reported, as part of these changes, Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.

Wealthsimple Brings Simple, Accessible Investment Advice to the UK (PR Newswire), Rated: AAA

Wealthsimple, a digital wealth manager, continues to make smart investing accessible and low-cost to more people with today’s announcement of the company’s expansion to the United Kingdom. UK residents can now open an account and have access to diversified investment portfolios in less than five minutes on wealthsimple.com or by downloading the iOS or Android app.

At launch, clients are able to open ISAs (Individual Savings Account), JISAs (for children) and personal accounts with a 0.7% management fee.

The London-based team is led by Fintech entrepreneur Toby Triebel, the former CEO and co-founder of the global online lending platform Spotcap. Triebel joined the Wealthsimple team in September 2016, leading the company through regulatory approval and initial beta testing, which saw over five thousand people sign up for early access to Wealthsimple through an online waitlist.

In May, Wealthsimple raised an additional C$50 million from Power Financial group of companies, a strategic partner, bringing Power’s total investment to C$100 million thus far in support of Wealthsimple’s global ambitions.

Rhydian Lewis on ‘dinosaur’ banks and making RateSetter the ‘crowdsourced Libor’ (SpearsWMS.com), Rated: AAA

Since he and co-founder Peter Behrens set up the online exchange from a flat in 2010, it has handled the loans of £2 billion.

‘I’ve come to realise the importance of emotional intelligence to give other forms of intelligence the chance to come out right.’

It makes so much more sense for lending to be funded by investment as opposed to by an instrument called the deposit’ – not least because of the strictures imposed by regulators.

So far, 50,000 people have lent money through RateSetter, with £1.3 billion of loans repaid. Turnover this year should be £30 million; the headcount is 260. ‘Our ambition is that in due course the rates exchanged on RateSetter will be seen as benchmark rates,’ he says. And one day he would like peer-to-peer lending be ‘a crowd-sourced Libor’.

Clever Lending partners with LendInvest (Mortgage Strategy), Rated: A

Clever Lending has been made a strategic partner of bridging specialist LendInvest.

The firm will be able to distribute LendInvest’s specialist bridging and development finance products.

Brokers can now deal directly with Clever Lending to gain access to LendInvest’s range.

Pollen Street completes merger with MW Eaglewood (P2P Finance News), Rated: A

POLLEN Street Capital has completed its acquisition of a controlling stake in MW Eaglewood, creating one of Europe’s biggest alternative finance-focused investment managers.

The deal, first announced in May, sees Honeycomb Investment Trust manager Pollen Street become the majority shareholder of the combined group, which has assets of around £2bn.

Downing-backed report tackles ‘misconceptions’ over debt-based securities (P2P Finance News), Rated: A

A REPORT has been published that aims to tackle advisers’ confusion and misunderstanding of debt-based securities (DBS), following their acceptance into the Innovative Finance ISA (IFISA) in 2016.

The CPD-accredited report, published by Intelligent Partnership, identifies some of the opportunities in the market and the role DBS can play in a diversified portfolio.

The term is used to describe a variety of different models for deploying capital, usually involving a borrower, lender and interest rate over an agreed period. DBS are increasingly arranged through crowdfunding platforms.

The report explains the investment types available, how to evaluate risks in varying market conditions, tax wrapper options, fees and returns, the difference between DBS and peer-to-peer lending, and due diligence issues.

‘Vital advisers understand debt-based securities’ – report (Professional Adviser), Rated: B

Alternative debt-based securities (DBS) will become more popular thanks to regulatory pressure and greater demand for diversification, therefore it is vital advisers understand the products, research provider Intelligent Partnership has said.

Time is running out to save this iconic Welsh pub from closure (Wales Online), Rated: A

A Welsh community has just weeks to raise enough money to save an iconic pub after the current owners set a deadline for when they intend to pull their last pints.

Despite raising £130,400 of an initial target of £300,000 so far – including £50,000 in the first few weeks of the campaign – time is now running out after a deadline was set of Saturday, October 28.

In a fresh attempt to raise more money, a Peer to Peer (P2P) lending scheme is being proposed whereby people can loan £5,000 to the scheme which, the group say, would generate a 4% gross interest return per annum.

China

Too Little, Too Late? China Can’t Seem to Get a Grip on Fintech Regulation (WSJ), Rated: AAA

In recent weeks, Chinese central bank officials, banking and securities regulators have tightened oversight of a range of investing and technology platforms used by individuals to trade virtual currencies, invest in online loans and rapidly shift cash in and out of mutual funds.

A surge of Chinese investment—possibly more than $600 billion in the past two years—has gone into these so-called retail products, according to data from online platforms, financial information aggregators and cryptocurrency research houses.

In August, regulators placed limits on the growth of mutual funds made wildly popular via China’s mobile-payment platforms.

More than 700 online-loan platforms, known as peer-to-peer lenders, closed in the last year ahead of new caps on their operations that take effect this month that dimmed their prospects for profitability.

Source: The Wall Street Journal

HK needs crowdfunding-friendly regulatory regime (EJ Insight), Rated: A

However, despite the fact that Hong Kong is one of the major global financial hubs, so far we still don’t have clear guidelines or any specific regulatory regime for crowdfunding, thereby hindering the development of our tech industry.

As far as equity crowdfunding and P2P lending are concerned, since they involve financial returns and yields, they are usually subject to legal regulation. Yet, in order to ride the global crowdfunding wave, major financial markets such as the US, Britain, Japan, South Korea, Singapore and Australia have all eased restrictions on crowdfunding in recent years.

At present, Hong Kong doesn’t have a single and comprehensive piece of legislation that deals specifically with crowdfunding. Instead, it is regulated separately by different existing laws such as the Securities and Futures Ordinance, the Money Lenders Ordinance as well as the Companies Ordinance.

Nevertheless, according to the same study, Hong Kong is lagging far behind other major financial centers when it comes to crowdfunding volume. In 2015, we raised a mere US$9.3 million (HK$72 million) through crowdfunding compared to US$28.4 billion, US$4.33 billion, US$360 million and US$240 million in the US, Britain, Japan and Australia, respectively.

As such, I suggest that the new regulatory framework for crowdfunding be more flexible. For example, the administration can consider exempting crowdfunding initiatives that involve less than HK$20 million from certain requirements that currently apply to public companies such as the need to submit a prospectus to the Securities and Futures Commission for scrutiny before launching any investment offering for sale to the public.

China hit by financial scam ‘epidemic’ (BBC), Rated: A

Li Wenxing was starting a new life. In May, the young university graduate left his home in rural China on the offer of work with a software company in the city of Tianjin.

But the job was a scam and Mr Li was swept into the web of a gang running a pyramid scheme.

Two months later he was dead.

The tragedy, which is being investigated, sparked national outrage and has illuminated the growing problem of financial fraud and its devastating impact on communities in China.

Pyramid schemes

Pyramid schemes are flourishing in parts of the country where education levels are low.

Peer-to-peer lending and virtual currencies have fuelled the spread of other investing scams, luring victims with little financial knowledge.

Government crackdown

As part of the crackdown, more than 100 arrests were made in southern China last month, targeting individuals over their suspected links to a 360m yuan (£42.3m) pyramid scheme.

Authorities had at least one major bust last year – breaking up a 50bn yuan online finance scam which was suspected of defrauding 900,000 investors.

European Union

Peer-to-peer lending: Information externalities, social networks, and loan substitution (VOXEU.org), Rated: AAA

The evaporation of trust in the banking system following the financial crisis fostered the growth of digital platforms offering peer-to-peer investment opportunities in the US, Europe, and China. In Europe, as the debate about the capital market union progresses (European Commission 2017), policymakers see the possibilities for the digital investment and lending industry to help foster a unified capital market, which has been missing for so long.

Data show instead that over the years, default rates in the platforms have decreased steadily and are much lower than those in the traditional banking system. Lending rates have gone down (though still remaining attractive for investors), and trade volumes have steadily increased.

Brexit Raises Doubts Over Britain’s Fintech Future (Bloomberg), Rated: A

Britain’s impending exit from the European Union has put a “question mark” over the country’s attractiveness to financial technology firms, according to the head of France’s biggest peer-to-peer lender.

The French firm, Younited Credit, has just raised an additional 40 million euros ($48 million) to finance its expansion into another seven European countries, only to postpone its decision on entering the U.K. until the economic consequences of Brexit become clearer.

Maiden PE ICO Light on the Blockchain (Invezz), Rated: A

A new private equity ICO resembles a typical PE fund structure more than it does any blockchain innovation. Ethereum-based FundCoin (FND), which was developed by Dutch fund of hedge fund manager Finles Capital, is scheduled to make its debut as the industry’s maiden private equity token ICO on Sept. 30.

FundCoin, which is targeting EUR 100 million in its ICO, describes itself as bridging the gap between the blockchain and private equity, but there’s one problem. FundCoin doesn’t appear to have attached itself to any blockchain innovation.

Citing a lack of clarity on the designation of digital tokens as securities, U.S., Singaporean and EU investors are excluded from the FundCoin crowdsale, as per the white paper. Finles Capital says the ban will be revisited as regulation takes shape.

Monthly origination summary for August 2017 (Bondora), Rated: B

Loans issued in August 2017 came in at €2,926,457. The figure is well above the running average for the year. August was the third strongest month for originations in 2017 outpaced by only January and March.

As usual Estonia was the leader on loans issued amounts. However, the total share of the country was slightly lower than many previous months. The country represented less than 60% of the total share reaching 59.91%. Meanwhile, Spain came in at 17.57% and Finland represented nearly a quarter of the total with 22.51%.

Source: Bondora

 

International

Alpha Payments Cloud rebrands as Alpha Fintech (Finextra), Rated: B

Alpha Payments Cloud is unveiling its comprehensive rebranding and new corporate identity as Alpha Fintech.

The rebrand aims to crystalize Alpha’s positioning as fintech‘s first end-to-end middleware, connecting the merchant buyer and vendor supplier across the entire payments, risk and commerce spectrum through a single API and UI.

India

HighRadius Raises $ 50 mn (YourStory), Rated: AAA

Hyderabad-based HighRadius, a player in cloud-based integrated receivables software space, announced that it had raised $50 million in growth funding from Susquehanna Growth Equity. Founded in 2006, this is the first external funding round that HighRadius has raised in its journey and the company aims to leverage it to grow its global footprint and also expand the team.

Fastforward to 2017, HighRadius works with hundreds of Global 2000 companies, including brands like Adidas, Starbucks, Procter & Gamble, Johnson & Johnson and Warner Bros. Their integrated receivables platform optimizes cash flow through automation of receivables and payments processes across 6 categories- credit, collections, cash application, deductions, electronic billing and payment processing.

HighRadius currently employs over 500 people across US, India, and Europe. Narahari explained that USA is currently their largest market, with about 90 percent of their business concentrated there and a small percentage in Europe.

Asia

China’s JD.com announces $ 500M e-commerce and fintech joint ventures in Thailand (TechCrunch), Rated: AAA

Following on from Alibaba’s $1 billion deal with Lazada and a $1.1 billion round in Tokopedia led by Alibaba, rival Chinese e-commerce firm JD.com has announced a $500 million investment that will create e-commerce and fintech businesses in Thailand.

Southeast Asia, a region of 600 million consumers, is forecast to see its internet economy grow to $200 billion by 2025 thanks to rising internet access. That potential has attracted investment dollars from Chinese giants lie Tencent and Alibaba, and now JD.com is upping its own efforts.

Africa

Fintech defines new trends in financial services offerings for farmers (AFGRI), Rated: A

For agriculture, the rise of Fintech means easier access to funds, new competitors in financial services and a global reach. Selling cattle or produce? Fintech and digital markets can now connect farmers directly to buyers on a mobile platform, doing away with the middleman. Important to note is that Fintech not only minimises the dependency on traditional banks as the middlemen, but increases the use of peer-to-peer lending, growing and strengthening the sharing economy model. Good examples are M-Pesa and FarmDrive in Kenya, where FarmDrive connects smallholder farmers to loans and financial management tools through their mobile phones.

In Mozambique, the Institute of Cereals of Mozambique (ICM), which is responsible for regulating and promoting agricultural production and commercialisation under the remit of the Ministry of Industry and Trade, recently joined forces with FinComEco to link agriculture to the latest financial technology.

Latin America

ID Finance grows footprint in Latin America with launch of Mexico operations (ID Finance Email), Rated: AAA

19th September 2017 – 

Mexico readies bill to regulate fast-growing fintech industry (Reuters), Rated: A

Mexico would regulate its fast-growing financial technology sector, including firms that use crypto-currencies like bitcoin, to protect consumers and spur competition, under a proposed bill seen by Reuters.

The proposed legislation, which Mexican President Enrique Pena Nieto said this month would be unveiled in the Senate before Sept. 20, seeks to ensure financial stability and defend against money laundering and financing of extremists.

Financial services firms envisage massive potential growth in Latin America’s No. 2 economy by reaching the more than 50 percent of Mexico’s roughly 120 million citizens without bank accounts.

Authors:

George Popescu
Allen Taylor

Thursday June 29 2017, Daily News Digest

U.S. venture capital exits

News Comments Today’s main news: PayPal invests in LendUp. KBRA upgrades SoFi Consumer Loan Program 2016-1. Revolut spent 7M GBP on incredible sales growth. Today’s main analysis: VCs may face cash crunch as more tech startups stay private longer. Today’s thought-provoking articles: FSB issues report on fintech. Inside Ping An’s massive expansion. Chinese players pursue $3.4T international digital payments opportunity. Auto manufacturers leverage […]

U.S. venture capital exits

News Comments

United States

  • PayPal invests in LendUp. GP:”An outstanding partner to have for LendUp. With a little luck maybe Paypal and LendUp can also partner on customer acquisition.”AT: “I wonder why PayPal isn’t in the top 25 largest Internet companies. They’ve always had such great potential, but they never make the lists. Perhaps they aren’t diversified enough.”
  • KBRA upgrades SoFi Consumer Loan Program 2016-1. GP:”SoFi seems to go from high to even higher. “
  • Venture capitalists may face cash crunch, tech startups stay private longer. GP:”This could also be a hint that the companies private VC-driven valuations are not in line with the general public’s perception of their value”AT: “Not specific to online lending or fintech companies, but there is certainly an application to the alternative lending space. I can’t help but wonder if this is a long-term or shorter-term trend, but it seems to have started in the middle of last year some time.”
  • Global Debt Registry develops blockchain-based proof of concept for online lending. GP:”Slowly but surely we are starting to see the first blockchain applications that make sense.”AT: “There hasn’t been a single public ledger make a breakout, so these kinds of initiatives make me wonder if developments are based on demand or high hopes. I like this particular one, it’s interesting and innovative, but how many online lenders are asking for it?”
  • Home Point Financial grows third-party origination channel.
  • SEC’s robos handling is a big charade. GP:”The workings of a government are often obscure. I would call it politics. Perhaps one shoudl watch House of Cards TV series more often.”
  • Better Mortgage empowers consumers with a better price guarantee. GP:”I am not sure if this was necessary in order to convince people that a simpler and faster application is needed. In fact I usually advise companies not to price cheapest but to price as expensive as they can get away with as long as they provide real value to the users. Cheap has many issues: low margins, no profits, perceived lack of value, etc.”
  • Why Square is the ‘Tesla of payments’. GP:”I personally am not convinced that a Tesla car makes sense economically or practically over a gas or hybrid car at this time. There is a lot of hype and fashion into Tesla. I do have to recognize the Tesla cars look great though. I don’t think there is a hype behind Square, as it offers a really easy solution to accept credit card payments. Setting up credit card payments has always been a nightmare for all small businesses for no aparent reason. I am glad Square solved that.”
  • Which payment app is best? AT: “A pros/cons look at Venmo, Apple, and Zelle.”
  • Veem integrates with Intuit QuickBooks.

United Kingdom

  • Revolut spent 7M GBP last year to fuel growth. GP:”What one needs to look at is not how much money was spent but what was gained and built through that. I am happy with a company spending 100mil GBP if they build 200mil GBP in revenue per year. A ration of spending 7mil for a revenue of 2.3mil is not impressive, however lets see the impact of this spent the following year.”AT: “Customer acquisition costs money. Remember, it took Amazon 10 years to make a profit. Now they’re the largest Internet company on the planet. While Revolut’s sales went up more than 500% in one year, they spent over half of their equity capital to do it. I see another funding round on its way.”
  • Financial Stability Board issues report on fintech.
  • Are alt lenders ready to publish APRs? GP:”Many of them already are publishing APRs on their websites. I am not sure why this is a question. While it is not a requirement I think it’s good practice and the serious ones are publishing it.”
  • Building a bank is not easy. GP:”Nobody ever said building a company , a startup , or a bank was easy. This is why often people with no experience and who don’t know what it takes are better position to take such a project. They are not afraid of what they don’t know and often they even find new solutions and innovate withotu being constrained of the existing established solutions to known problems. Many VCs, because of this reason, invest in inexperienced CEOs seeing it as a strenght. “
  • Hargreaves scraps P2P lending plans.
  • How to save cash, make more using P2P lending.

China

International

European Union

India

Asia

Canada

News Summary

United States

PayPal invests in online lender LendUp (Reuters), Rated: AAA

PayPal Holdings Inc has invested in LendUp, a San Francisco-based startup that offers loans online to consumers who have been traditionally overlooked by banks because they are considered too risky.

LendUp said it had secured a strategic investment from the payments company on Wednesday. It did not disclose terms of the deal. PayPal confirmed in a statement that it had made an investment.

PayPal has been expanding partnerships and acquiring new services to gain advantage over rivals in a highly competitive digital payments market.

KBRA Upgrades the Ratings on SoFi Consumer Loan Program 2016-1 (KBRA Email), Rated: AAA

Kroll Bond Rating Agency (KBRA) upgrades the rating on the Class A notes issued under the SoFi Consumer Loan Program (SCLP 2016-1), a consumer loan ABS transaction which closed on June 27, 2016. The credit enhancement has built for the Class A notes since closing. While cumulative net losses are slightly above KBRA’s initial loss expectations, the transaction has breakeven loss multiples which are sufficient for an upgrade of the Class A rating.

The collateral in the SCLP 2016-1 deal currently includes $382.3 million of loans, as of May 31, 2017. The collateral in the transaction has amortized from the initial pool balance of $506.4 million at closing. The current credit enhancement levels are 31.66% for the Class A notes. Credit enhancement consists of overcollateralization, cash reserves, and excess spread.

Please click on the link below to access the report:

Venture capitalists may face a cash crunch as more technology startups stay private longer (Quartz), Rated: AAA

Private equity research firm Pitchbook reports startup exits—sales or mergers of companies delivering returns to shareholders—has fallen in recent years. The number and value of startup exits were down about 70% last year from their 2014 peak. Despite big IPOs of companies such as Snap, 2017 has yet to yield a bumper crop of new exits as companies stay private longer.

It’s not a new problem, says Scott Jordon, managing director at Glynn Capital, but it’s now more acute. The time it takes for technology firms time to IPO has stretched (pdf) from around five to eight years in 2000 to about 11 years today. Pitchbook’s Nizar Tarhuni says they’re seeing venture firms extend funds or negotiate longer periods than the standard 10 years to return money to their limited partners such as pension funds.

A resurgence in IPOs is still possible. Public investors extended a (mostly) warm welcome to the 11 or so tech companies that have gone public so far this year, including Appian, Carvana, Cloudera, Elevate Credit, Netshoes, Okta, Veritone, and Yext.

Global Debt Registry Develops Blockchain-Based Proof Of Concept For Online Lending (Fin Alternatives), Rated: A

Loan data specialist Global Debt Registry has completed a proof-of-concept that utilizes the blockchain to provide investors with an immutable audit trail and a single source of core loan data.

The firm’s inaugural blockchain proof-of-concept (POC) lays the groundwork for providing investors and senior lenders in the online lending space with a safe and secure way to confirm loan ownership and collateral interests across companies within the ecosystem, GDR said.

In developing the blockchain POC, GDR worked with three leading blockchain platforms – Hyperledger, Ethereum and Chain.

Home Point Financial grows third-party origination channel (Housingwire), Rated: A

Shortly after wrapping up its acquisition of Stonegate Mortgage Corp.Home Point Financial Corp. already announced it’s expanding its third-party origination channel.

The lender plans to increase its wholesale client base by expanding the geographic reach and number of third-party originators the channel will serve.

Home Point finalized its $211 million acquisition of Stonegate Mortgage back at the beginning of the month.

‘Big Charade’ Seen in SEC’s Handling of Robos (Financial Advisor IQ), Rated: A

The rising popularity of robo-advisors is bringing increased scrutiny by regulators. At the same time, industry lawyers say they don’t foresee any substantive changes coming in the form of new rules.

This year for the first time, the SEC put online advice-giving on its list of examination priorities, raising concerns about “heightened risk to investors and/or the integrity of the U.S. capital markets.”

A key issue securities lawyers like Fein raises is that if the SEC insists its current rules adequately apply to robos – yet there seem to be shortcomings in how some robos execute their fiduciary duty – then any perceived enforcement gap will only widen.

But MacKillop, whose startup indie RIA manages about $50 million, scoffs at notions that computer-based investing can live up to the same sort of “best interest” standards for individual clients as brick-and-mortar advisors.

Better Mortgage Empowers Consumers with the Better Price Guarantee (BusinessWire), Rated: A

Better Mortgage officially rolled out the Better Price Guarantee — a promise to all of its borrowers that it will beat any competitor’s loan estimate by $1,000. If not, Better will actually give the borrower $1,000.

Better’s mission is to embolden consumers to confidently shop around while also de-risking one of the largest financial transactions they’ll ever make. According to a report published by Oliver Wyman, 71% of customers only get a loan estimate from one lender, which could mean that many home buyers aren’t actually getting the best price on their mortgage.

How the Better Price Guarantee works:

  • If the customer thinks another lender has a more competitive price, they can send Better the competitor’s Loan Estimate(LE) within three business days from the date on the loan estimate. If Better can’t beat the competitor’s LE by at least $1,000, Better will give the borrower $1,000 in cash when they fund with the other lender.
  • An LE is a standard form that all lenders are required to provide a consumer.
  • Better Mortgage may extend this guarantee to non-standard rate sheets.

Why This FinTech Firm Reminds One Analyst of Tesla (Barron’s Next), Rated: A

What do you call a financial-technology company whose stock is up 75% this year as investors bank on its ability to bring a disruptive product into the mainstream? The “ Tesla of Payments,” apparently.

That’s the way to describe Square, according to Mizuho analyst Thomas McCrohan, who began covering the company on Tuesday. The key question for Square is whether it can scale its business up to serve larger customers, and McCrohan is optimistic about the payment processor’s ability to do so while still making money.

Tesla happens to be up 74% this year. Tesla and Square are the top two performers in the Barron’s Next 50 index.

Which Payment App Is Best for You: Venmo, Apple or ‘Zelle’? (WSJ), Rated: A

Venmo

Pros: Works across several types of mobile devices and bank accounts. Funds can immediately be used to shop with Venmo.

Apple

Pros: Service works with Apple’s iMessage, so users don’t need to download a separate app.

Zelle

Pros: Will work within the apps of the biggest banks such as J.P. Morgan Chase, Bank of America and Wells Fargo. Funds are deposited directly into bank accounts within minutes.

Blockchain Payments Startup Veem Integrates with Intuit QuickBooks (Coindesk), Rated: B

Intuit QuickBooks customers can now send international payments via blockchain payment provider Veem as an alternative to traditional wire transfers.

United Kingdom

Hot foreign exchange app Revolut burned through £7 million fuelling its growth last year (Business Insider), Rated: AAA

London-based Revolut, which offers a pre-paid international currency card, made a pre-tax loss of £7.1 million in 2016, its first full year of operations. Revenue was £2.3 million in the year to December 31, accounts filed with Companies House show.

The loss was largely down to “card scheme costs, acquiring costs, and user acquisition costs,” the company’s directors write in the accounts. In plain English, that means the cost of processing payments done on its cards, and the cost of getting people to sign up for the cards in the first place. The cost of sales jumped from £1.5 million to £7.8 million.

Staff numbers jumped from 7 in 2015 to 32, with staffing costs climbing from just under £300,000 to £1.5 million.

The startup has raised £12.1 million in equity capital to date.

Financial Stability Board Issues Report on Fintech: “Regulators Need to Understand the Impact” (Crowdfund Insider), Rated: AAA

The Financial Stability Board (FSB) has weighed in on the burgeoning Fintech sector of finance. The FSB has been analyzing “financial stability implications” potentially created by Fintech innovation. The FSB says it is specifically seeking to identify “supervisory and regulatory issues that merit authorities’ attention”.

The FSB stated there are currently no compelling financial stability risks from emerging Fintech innovations.

According to the FSB, ten areas of interest have been identified of which the following three are seen as priorities for international collaboration. These three priorities are viewed as “essential” to supporting financial stability “while fostering more inclusive and sustainable finance.” The three priorities are:

  • The need to manage operational risk from third-party service providers;
  • Mitigating cyber risks; and
  • Monitoring macro financial risks that could emerge as Fintech activities increase.

The other areas that merit attention include:

  • Cross-border legal issues and regulatory arrangements.
  • Governance and disclosure frameworks for big data analytics.
  • Assessing the regulatory perimeter and updating it on a timely basis.
  • Shared learning with a diverse set of private sector parties.
  • Further developing open lines of communication across relevant authorities.
  • Building staff capacity in new areas of required expertise.
  • Studying alternative configurations of digital currencies.

Are the UK’s alternative lenders ready to publish APRs? (AltFi), Rated: A

In May of last year, the Competition & Markets Authority (CMA) published its rather hefty “Retail banking market investigation” report. Buried among its “proposed remedies” was a provisional decision to require lenders specialising in unsecured loans and overdrafts of up to £25k for SMEs to use annual percentage rates (APRs) to show the cost of these products. The proposed measure is set to become a reality in August, according to multiple sources. But are the UK’s alternative lenders ready?

The impending APR directive will not affect merchant cash advance firms, such as Liberis, because merchant cash advance is not technically considered lending. Nor will it affect asset-backed finance firms like MarketInvoice.

GrowthStreet is another business lending platform that would be affected by the directive, had it not taken the decision some time ago to publish APRs of its own accord.

One group that will presumably take a keen interest in the upcoming APR directive is the Association of Alternative Business Finance. The trade association, which launched in February, represents ten of the UK’s small business-focused direct lenders.

Building A Bank Is Not Easy (Forbes), Rated: A

UK Challenger banks, like AtomStarlingTandem and Monzo, are building from the ground up to do things differently.

But building a bank is not easy. Sophisticated and diverse product offerings, consumer trust, and security are three vital components. And in this regard, the incumbents often have a head start.

In our portfolio, we have seen AukaPay partnering with Sparebank1 in Norway to provide a white label payments app, MarketInvoice joining forces with BNI Europa to enable SMEs to access more working capital on its platform, Crosslend working with institutions to provide investment opportunities in consumer loans, and iZettle in successful partnership with Santander.

And when talking challenger banks, we can’t forget to mention BBVA’s acquisition of Holvi last year.

While P2P lending still represents a small proportion of total lending volumes, in the UK, origination grew 36% year on year in 2016.

Zopa is approaching bank building from a different base to the other challenger banks, and a case in point of collaboration with the incumbents.

Hargreaves scraps peer-to-peer lending plans (Money Marketing), Rated: A

Hargreaves Lansdown has dropped its plans to set up a peer-to-peer lending platform.

The company, which was expected to launch both a P2P lending platform and a cash management service to clients this year, has now decided it will solely focus on the cash management service.

Hargreaves Lansdown chief executive Chris Hill tells Money Marketing that despite P2P being “interesting”, the firm would rather focus on the new savings proposition because it is “a much bigger market”.

How to save your cash and make some more using P2P lending (Born2Invest), Rated: B

P2P lending seems to be a novel and definitely, profitable investment opportunity. It is becoming more and more popular and so there is a constant boost in the number of lenders who are getting profitable returns from this investment option. Here are a few essential steps for making money from the P2P investment.

Step No.1: P2P investment should be treated as an extra element in the overall financial portfolio

You must do ample research, deliberate and then come to a decision about what all should be included in your financial portfolio. You must possess a diversified and comprehensive financial portfolio. P2P lending seems to be a wonderful addition to this portfolio.

Step No. 2: Set a target and attain it

A profit of 2 percent over a 12-month deposit seems to be realistic. The two percent would be paying for the risk factors including investment in time.

Step No.3: Fortify your financial foundation

In order to make an impressive profit in your P2P investment, you must have a fantastic and truly solid financial foundation. This is certainly not a getting rich fast scheme but eventually, you could expect good returns.

Step No.4: Create a comprehensive system

Create a comprehensive system for investing in borrowers that is based on important information which is available, and is relating to the borrower.

China

Inside Ping An’s Massive Expansion (Institutional Investor), Rated: AAA

Almost 30 years after founding Ping An, Ma is ambitiously broadening his supermarket of financial products, much like U.S. financier Sandy Weill did as chief executive officer of Citigroup from 1998 to 2003.

Ma founded Ping An in 1988 in Shenzhen, the financial hub of southern China, which lies just north of Hong Kong’s border with the mainland. Over the past five years, the company has climbed onto the list of the world’s ten largest insurers, now ranking No. 4 behind France’s AXA, Germany’s Allianz, and U.S.-based MetLife in terms of assets, according to Relbanks.com. Though Ping An’s insurance assets rose 17 percent in 2016, to $802 billion, the company’s double-digit profit growth is benefiting in part from a diverse group of revenue streams, including banking, securities, asset management, wealth management, private equity, and, more recently, China’s booming arena of Internet finance.

Ping An saw 11.7 percent revenue growth, with gross earnings reaching a record high of 774 billion yuan ($112 billion), and a 15 percent growth in profits; net earnings rose to 62 billion yuan. About 56 percent of the group’s profits were derived from insurance, down from more than 80 percent a decade ago. The rest came from banking (20.6 percent), asset management (15.5 percent), and Internet finance (8.3 percent).

Among the company’s most touted technology successes is the 2011 founding of peer-to-peer lender Shanghai Lujiazui International Financial Asset Exchange Co. Lufax, as the company is known, has become an e-commerce giant for finance in China, the world’s second-largest economy. It’s the country’s biggest online marketplace for wealth management products: Last year more than 7.4 million individual and corporate investors used Lufax to purchase 6 trillion yuan worth of investment products from Ping An and thousands of other Chinese financial institutions.

Chinese Players Pursue $ 3.4 Trillion International Digital Payments Opportunity (PR Newswire), Rated: AAA

A new study from Juniper Research highlights the increasing dominance of Chinese companies in digital payments, with players such as Alibaba, Tencent and UnionPay seeking to bolster their revenues through international expansion.

According to the research, Strategies for Payment Providers: Opportunities, Risks & Competition 2017-2021, digital payment transaction values are expected to reach $5 trillion by 2021, up from $3.6 trillion this year, of which $3.4 trillion will come from sales outside mainland China.

The research includes the latest Juniper Leaderboards, highlighting best-in-class players in key payments arenas, including PayPal (for eWallets), Worldpay (for payment service providers) and Vodafone (for telco payments in emerging markets).

The complimentary whitepaper, Who will Own the Digital Payments Sector in 2021?, is available to download from the Juniper website together with further details of the full research and the attendant IFxl (Interactive Forecast Excel).

Hong Kong’s future is in learning new words: fintech, regtech, wealthtech (SCMP), Rated: A

Hong Kong’s role as a global financial hub may be under threat unless the city can embrace technology and adapt quickly to the tectonic changes that have taken place in the financial landscape in the two decade since its return to Chinese rule, experts say.

Hong Kong’s greatest moment of innovation was in 1997 with the Octopus card, a smart-card payment system that is now a ubiquitous part of daily life. Two decades since, the city has not made further progress and has lagged mainland China in exploring new forms of electronic payment such as Tencent Holdings’ WePay or Alibaba Group Holding’s Alipay.

Hong Kong’s existing banking model would change dramatically with the rise of fintech, similar to how Amazon.com revolutionised America’s retail industry, he said.

For Hong Kong to succeed as a fintech hub, regulators should license more companies to handle clients’ money to accelerate innovations in fintech and wealthtech, or the use of technology for wealth management and investing, he said.

“More than 70 of the world’s largest 100 banks are in Hong Kong, and this gives the city a big advantage because in fintech, the majority of the customers are going to be banks,” he said.

As many as 82 per cent of incumbent banks and financial institutions plan to increase partnerships with fintech companies in the next three to five years, according to a fintech survey in Hong Kong by PwC this year.

 

China’s Central Bank Vows to Push for Blockchain in Five-Year Plan (Coindesk), Rated: A

The People’s Bank of China (PBoC) is releasing new details about a forthcoming five-year development plan focused on its strategy for advancing technology use in the country’s domestic financial industry.

According to the announcement by the central bank, the PBoC intends to actively push forward the development of new technologies such as blockchain and AI. It also plans to strengthen its research on applications of fintech in regulation, cloud computing and big data.

Hong Kong Asserts Its FinTech Prowess (Financial Technologies Forum), Rated: B

In fact, the FinTech Association of Hong Kong (FTAHK) had its official launch on June 28, underscoring the point that financial IT innovation is no longer restricted to New York City and its concrete canyons or Silicon Valley in Northern California.

There will be committees taking on key sectors such as:

  • Blockchain/DLT;
  • Artificial intelligence;
  • Big data;
  • Payments;
  • Regulatory tech;
  • and financial literacy.
International

Automotive Manufacturers Leverage Fintech through Partners to Deliver a Differentiated In-vehicle Experience (Cision), Rated: AAA

The thinning margins in the automotive industry are making a strong case for vehicle original equipment manufacturers (OEMs) to explore revenue streams beyond sales and periodic maintenance. As customers become accustomed to digital transactions, OEMs will look to tap the hitherto underutilised fintechservices segment to generate additional revenues. Active partnerships with fintech companies will enable OEMs to offer multiple use cases that enrich in-vehicle experience, which will ultimately influence customers’ purchase decisions.

Fintech in the Global Automotive Industry, Forecast to 2025 is part of Frost & Sullivan’s Automotive & TransportationGrowth Partnership Subscription. The study examines key application areas of fintech in the automotive industry: leasing and finance, insurance, digital retailing, digital payments, and automotive services. Europe, followed by North America, is anticipated to lead in digitising finance, and North America, followed by Europe, in automotive service investments. The average investment in fintech is estimated to grow from $16 million in 2016 to $230 million by 2025with the emergence of digital car retailing and new business models in insurance.

The synergies between automakers and technology companies will power next-generation financial service infrastructure. Even though fintech partnerships with big banks slow down transactions, it is important to note that banks manage almost 32% all new vehicle financing in North America. Besides:

  • The competition for market share between banks and captives finance companies is expected to digitise new car sales and result in a $1 trillion auto financing market; and
  • Fintech will monetise services based on subscription models and on-demand vehicle features.
European Union

Fintonic Closes €25M Funding Round (Finsmes), Rated: A

Fintonic, a Madrid, Spain-based provider of a mobile app to optimize personal finances, closed a €25m round of funding.

Backers included ING Group and insurance group PSN, amongst other investors.

The company intends to use the funds to drive its growth in Spain and LatAm and increase its value proposition.

Luxembourg and Singapore fintech hubs connect (Finextra), Rated: A

The LHoFT, Luxembourg House of Financial Technology, and LATTICE80, the world’s largest Fintech Hub located in Singapore, are excited to have signed a Memorandum of Understanding (“MOU”) at Money 2020 Europe, setting a foundation for collaboration between the two centres.

This Memorandum of Understanding provides a framework to intensify the cooperation between two leading financial centres with a specific focus on Fintech and driving digital transformation in financial services.

Swiss Crowdlending Fintech Opts for Blockchain (Finews), Rated: A

Splendit is a Swiss fintech firm dedicated to broker loans to students paid for by financiers.

The company has decided to link up with Blockchain-fintech Lykke, Splendit said in a statement today.

Thanks to the deal with Lykke, Splendit henceforth will be able to finance foreign students by sending them their loans via the Lykke Wallet. Florian Kuebler, the co-founder of Splendit, says that this will save transaction costs and enable crowdlending across the globe.

Agreement between Willis Towers Watson and Workinvoice to support companies on the commercial credit market (Intermedia Channel), Rated: A

Willis Towers Watson (WTW) and Workinvoice have signed a collaboration agreement exclusively with the aim of bringing more and more Italian companies on the commercial credit market run by the Italian Fintech company.

The Workinvoice activities enable companies ‘ access to a particular market to obtain immediate liquidity, and to protect themselves from payment risks through the sale of its trade receivables to Italian and international institutional investors “ .

India

Rohan Tibrawalla Takes On Country Director-India Role for MPOWER Financing (PRWeb), Rated: B

MPOWER Financing (), an innovative fintech company and provider of educational loans to high-potential, international students, recently appointed Rohan Tibrawalla to the position of Country Director-India to oversee the company’s operations in the region from its soon-to-be-opened office in Bangalore.

In his new position, Tibrawalla is responsible for expanding and executing MPOWER Financing’s operations, marketing and business development strategies as well as for managing the loan portfolio and debt and equity capital sourcing.

MPOWER Financing is a public benefit corporation whose mission is to remove the financial barriers to higher education in the U.S. by providing loans and other resources necessary for students to complete their undergraduate or graduate studies.

Asia

Challenge is to navigate global fintech regulations and scale: Finastra’s Nadeem Syed (Deal Street Asia), Rated: AAA

Nadeem Syed, who heads mega fintech firm Finastra, believes regulators worldwide will need to evolve guidelines for the emerging sector  (fintech) but the challenge for many financial services firms would be to navigate the new environment and also scale services.

What are your plans in Asia Pacific in terms of expansion and growth after the merger and how has the journey been in Asia so far in terms of revenues and capturing markets?

We have long been committed to Asia Pacific and continue to see great opportunity across the region with double-digit growth rates. Developed and growth markets of Asia Pacific are successfully riding the digital wave especially with the tremendous opportunities that lie ahead of us in Indonesia, Myanmar, Thailand and China to name a few.

Misys has over 400 customers that cut across from Japan to Australia and we see tremendous opportunity to leverage our strength in the region to bring the D+H products to market, especially payments and cash.

Over the years, how have you seen Asia’s competitiveness in fintech being transformed? Has that been affected by the rivalry between region’s financial centres – Singapore and Hong Kong?

The financial services landscape, not just in Asia but globally, has seen a lot of regulators becoming more and more receptive to new technologies – distributed ledger technology, artificial intelligence, P2P lending and so on.

The challenge for all financial services companies is to navigate each jurisdiction’s new or upcoming regulations on fintech while translating their various innovations into services that can be scaled up and rolled out in a safe and reliable manner.

What kind of competition do you see from the internet giants like Baidu or Alibaba are fast emerging as fintech players worth noticing. What future do you see for Chinese fintech industry?

China’s internet giants are increasingly looking at fintech as it is a complementary sector that helps create a tighter online ecosystem for their customers. They are mostly focused on personal banking and payments solutions, which means traditional banks need to concentrate on evolving their own digital and online presence.

As the fastest growing region, do you see Asia emerging as a digital champion anytime soon. If yes, what will help to bring it and where are the major challenges?

Many countries in Asia are seeing exponential growth in the number of Internet and mobile device users – this has a direct correlation to the boom in digital or online banking, as well as other services being carried out online. Digital platforms mean that rural populations now have easy access to services previously unavailable to them, but the challenge is always how to ensure these platforms are safe and secure as cyber criminals get more sophisticated.

Fujitsu Starts Sales of Cloud-based Lending and Leasing Services from Cloud Lending Solutions (Fujitsu), Rated: A

Fujitsu today announced it is commencing sales in Japan of cloud-based solutions for lending and leasing businesses. Developed by US-based Cloud Lending Solutions and known as the CL Series, the solutions will be deployed and operated as Software as a Service (SaaS) with the support and operations services of Fujitsu technicians with expertise in financial systems. This is the first time services from Cloud Lending Solutions will be available in Japan.

ALT Corporation, a subsidiary of Yayoi Co., Ltd., Japan’s largest accounting software company, has decided to become the first Japanese customer for these solutions. ALT is using these solutions to set up a unique online lending business, with plans to begin trial lending in October 2017.

With the goal of offering solutions to transform business using Fintech to customers at financial institutions around the world, on July 12, 2016, Fujitsu signed a Memorandum of Understanding (MOU) with Cloud Lending Solutions for a strategic partnership.

The CL Series is a set of cutting-edge cloud services offered as SaaS, which digitize a suite of business processes for lending and leasing businesses, from applications to reviews, contracts and collections.

Canada

WEALTHSIMPLE, TRULIOO AMONG CANADIAN COMPANIES IN CB INSIGHTS FINTECH 250 (Betakit), Rated: A

Canadian FinTechs that made the list include Wealthsimple, which recently announced its UK expansion and raised a $50 million Series B; Montreal-based Blockstream, which raised a $55 millionSeries A in February 2016; and Toronto-based Wave, which raised $32 millionfinancing round from RBC, Portag3, and other investors in May.

The list also includes Vancouver-based Trulioo, which produces ID verification software for compliance and to fraud risk mitigation; Toronto-based Financeit, a cloud-based point-of-sale platform; and Toronto-based Street Contxt, which raised a fresh round of funding from 8VC, Point72 Ventures, Palm Drive Capital, and Portag3 Ventures in April.

Authors:

George Popescu
Allen Taylor

Thursday June 22 2017, Daily News Digest

German real estate crowdfunding

News Comments Today’s main news: PayPal, Venmo rolling out instant bank transfers. Sindeo goes out of business. SoFi’s new filing. Wealthsimple expands into UK. PayPal advances 400M GBP to UK businesses. Today’s main analysis: A look at Lending Club’s competition. Today’s thought-provoking articles: Many P2P lenders attract investors by raising interest rates. German RECF booms. International expansion of alternative lending. United […]

German real estate crowdfunding

News Comments

United States

United Kingdom

China

European Union

International

  • Alternative lenders spread their wings internationally. AT: “International expansion could become the big story of 2017 and 2018.”
  • Amazon and the future of fintech, part 2. AT: “Interesting theory. I suppose technology can facilitate more diverse business assets for true technology companies like Amazon, Apple, Klarna, et.al. But I don’t see how this is a lot different than traditional holding companies that expand businesses into multiple sectors other than the fact that the companies themselves are predicted to be the holding companies. Isn’t this what Google’s rebranding into Alphabet was all about? Perhaps Amazon could do the same. That would actually make sense.”
  • Global mobility.

Australia

Canada

News Summary

United States

Instant bank transfers are coming to PayPal and Venmo (TechCrunch), Rated: AAA

PayPal announced this morning a plan to speed up money transfers between its service, Venmo and users’ bank accounts for those with supported MasterCard and Visa debit cards. This new “instant transfers” service will be available at a rate of $0.25 per transaction, and will deliver funds in a matter of minutes, instead of the day or so it typically takes when using PayPal or Venmo.

The company says the feature will be available to the vast majority of cardholders, save for a handful of very small institutions.

In most cases, the funds transferred between PayPal or Venmo and the end user’s bank account (via the supported debit card) will arrive in a matter of minutes. However, some banks may take up to 30 minutes, PayPal notes.

The instant transfer service is now launching into beta with select PayPal users, as a result of these deals, as well.

Lending Club: Take A Look At The Competition (Seeking Alpha), Rated: AAA

CreditKarma is a personal finance website. They provide a list of online personal loan options, given some basic information. I put in $10,000 as my desired loan amount and selected a credit score of 700-749. I got the following list of offers:

That’s eleven online, unsecured personal loan providers. The list does not include some others, like SoFi and Lightstream. Try it yourself here.

Lending Club vs. Marcus

Lending Club is an originate-to-distribute lender, while Marcus is a balance-sheet lender. Lending Club gives much of the profit of a loan to its investors, along with default risk and prepayment risk. Marcus keeps the risks and the profit. If we assume that Marcus’s loans look like Lending Club’s, with interest rates averaging 14% and defaults averaging 6%, then the income from each loan looks approximately like this:

LC: 5% origination fee + 1% servicing fee = 6% of loan principal

GS: 14% interest – 6% default – 1% cost of funds = 7% of loan principal

More importantly, it is a lot more painful for Lending Club to cut back on loan originations, for example in a downturn, and it doesn’t necessarily control the pace of lending. If Lending Club stops originating loans, the lion’s share of its income dries up immediately.

Sindeo closes shop (Sindeo), Rated: AAA

But, startups are hard and simplifying the highly regulated, complex business of mortgages is even harder. I believed we had overcome the biggest hurdles, but unfortunately, we didn’t. Today, we made the difficult decision to wind down Sindeo.

While Sindeo as a startup has failed, our people did not. As a matter of fact, we did what everyone said couldn’t be done.

  • We built a place where people could shop and apply for a mortgage from a robust marketplace of over 1000 loan programs, with one single application and one credit check.
  • We secured partnerships with some of the top real estate and consumer finance brands.
  • We helped our clients save millions of dollars on their home loans.
  • We built a people-centric brand, putting the needs of Sindeo’s clients first.

Sindeo’s Net Promoter Score (NPS) this year is 81, compared to an average of negative three from the top banks.

I am devastated for our employees, their families, our partners and our investors who believed in us, and worked so hard to build Sindeo. We have very talented people who need jobs today. Hire them.

Nick Stamos
CEO, Sindeo

SoFi Lending Corp. (Filer) (SEC), Rated: AAA

We (“us” or “PwC”) have performed the procedures enumerated below, which were agreed to by Social Finance, Inc., Deutsche Bank Securities, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co., J.P. Morgan Securities LLC, and SoFi Securities, LLC, who are collectively referred to herein as the “Specified Parties”, solely to assist you in performing certain procedures relating to the accuracy of certain attributes of the private consumer loans with respect to the SoFi 2017-4 securitization transaction (the “Transaction”). Social Finance, Inc. (“SoFi” or “Company”) is responsible for the accuracy of certain attributes of the private consumer loans with respect to the Transaction (the “Responsible Party”). The sufficiency of these procedures is solely the responsibility of the Specified Parties. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

Where Major US Banks Have Invested in Fintech (CB Insights), Rated: A

Key takeaways

  • Since 2012, the top ten US banks by assets under management have participated in 72 rounds totaling $3.6B to 56 fintech companies.
  • Ranked by the number of unique portfolio companies, the cohort’s three most active investors are Citi, Goldman Sachs, and JP Morgan Chase — in that order. Citi (including Citi Ventures) participated in 29 rounds to 24 companies, Goldman Sachs in 30 rounds to 22 companies, and JP Morgan Chase in 14 rounds to 13 companies.
  • Goldman Sachs is focusing on payments, investing in six companies in the space.
  • All ten banks have blockchain investments.
  • Although the second largest bank by assets, Bank of America takes the sixth spot on this list, with only six fintech companies in its portfolio.
  • Kensho saw lots of overlapping interest, with six of the cohort investing in its $50M Series B, which valued the company at $500M.

Robos get the press, but adviser tech is getting the money (Financial-Planning), Rated: A

Take the $140 million in funding that Silicon Valley-based Addepar recently raised from sources including SpaceX backer Valor Equity Partners.

Addepar CEO Eric Poirier says the eight-year old performance reporting platform has seen the number of assets its clients hold grow from $300 billion last year to $700 billion.

That’s not to say that there isn’t money for robo advice platforms — blending impact investing and robo advice garnered OpenInvest $3.25 million in seed funding from high-profile VC firm Andreessen Horowitz in May.

LendingPoint founders share recipe for success (Bankless Times), Rated: A

During the financial crisis both said they worked with large balance sheets which helped them understand how to position themselves in the marketplace. That experience also taught them that marketplace lenders cannot simply be technology companies, they also need to apply the lessons learned working in different environments, geographies and at different points in the cycle.

What they saw was a space where near prime consumers, those with credit scores between 600 and 700, were in need of better credit products, with many resorting to payday lenders and their ilk.

When lenders place too much emphasis on arbitrary measure such as FICO scores, they miss so much underneath. In one case the employee of a partner company saw her credit score quickly drop after she paid off a loan early. Even though she had fewer debt obligations, by traditional underwriting methods she was deemed a higher risk.

Alternative data sources can play a role in telling those unique stories while protecting everyone from fraud, Mr. Tavares said. Something as simple as how long a phone number has been active can help validate an applicant’s identity.

LendingPoint also believes it is crucial for marketplace lenders to originate and hold assets on their balance sheets, Mr. Burnside said.

LendingPoint offers personal loans up to $20,000 that can be paid back in twice-monthly installments over 24 to 48 months.

American Express invests in insurance startup Next Insurance (Reuters), Rated: A

American Express Co has invested in Next Insurance, a Palo Alto-based technology startup that sells customized insurance for small businesses online, as Silicon Valley companies look to shake up the insurance sector.

Next Insurance will use the new cash injection, which brings the investment round to $35 million, to expand the products it offers and target new business sectors, the company said.

Office of the Comptroller of the Currency Issues Third-Party Relationship Frequently Asked Questions (Lexology), Rated: A

Focusing on bank-fintech relationships, which likely were a key driver for the FAQs, the OCC notes that when “a fintech company performs services or delivers products on behalf of a bank or banks, the relationship meets the definition of a third-party relationship” that should be subject to the bank’s third-party risk management process. Akin to any other third-party service provider, a fintech company arrangement may or may not be considered a critical activity in this regard.  In an important acknowledgement of the diligence challenges banks face from time to time in conducting diligence of third parties, the FAQs also specifically address situations where a bank does not receive sufficient information from a third-party service provider that supports a critical activity. In that situation, the OCC expects a bank board and management to:

  • develop appropriate alternative ways to analyze these critical third-party service providers;
  • establish risk-mitigating controls;
  • prepare to address delivery interruptions;
  • make risk-based decisions that despite the lacking information, these critical third-party service providers remain the best service providers available;
  • retain appropriate documentation of all efforts to obtain information and related decisions; and
  • ensure that contracts meet bank needs.

The FAQs also specifically address marketplace lending arrangements with nonbank entities and relationships to facilitate mobile payments. In the marketplace lending context, the FAQs assert that a bank board and its management should understand the relationships among the entities involved and the risks specific to marketplace lending relationships, including reputational, credit, concentration, compliance, market, liquidity and operational risks. Management must also ensure it has proper personnel, processes and systems to monitor and control these risks, including, for example, adequate loan underwriting guidelines and appropriate board-adopted policies that include concentration limits. The FAQs direct banks to work with mobile payment providers “to establish processes for authenticating enrollment of customers’ account information that the customers provide to the mobile payment providers” as mobile payment environments become more ubiquitous and as customer expectations dictate that transaction accounts as well as credit, debit or prepaid cards issued by banks are able to be used in mobile wallets.

How The Blockchain Can Create A True Peer-To-Peer Sharing Economy (NASDAQ), Rated: A

One of the blockchain’s most prominent features is that it can bestow trust in a network without the need for a central authority.

The sharing economy refers to a new socio-economic phenomenon in which individuals share products or services with other individuals on a peer-to-peer basis for a fee. However, even though the sharing economy is built on a peer-to-peer model, there are intermediaries who charge a fee for facilitating the transactions.

Enter Blockchain Technology

In a true peer-to-peer sharing economy, there should never be an intermediary who dictates the terms and conditions of a transaction or takes a cut of the payment.

Say you want to rent a car for a short trip from one side of town to the other. To do so, you could use a mobile app to identify vehicles that are available in your vicinity. Then, after verifying the digital identities of both yourself and the vehicle owner, you agree to terms and conditions, such as the fee and duration of the rental, and buy a micro-insurance policy  covering the ride, via an immutable smart contract. Once the terms and conditions are agreed upon and the smart contract is created and verified, you can open the car using your smartphone and the payment is directly deducted from your digital wallet and transferred to the vehicle owner upon completing your trip.

While the above example is purely theoretical at this stage, there are two startups aiming to leverage blockchain technology to create a fairer peer-to-peer economy in the rideshare sector. Austin, Texas-based Arcade City and Israel-based La ‘Zooz both aim to take the “Uber out of Uber” by offering ride sharing without a company acting as a fee-charging intermediary. Instead, drivers and riders deal directly with one another and payments are automatically conducted in cryptocurrency once the ride is completed.

FT 300: full 2017 list of top US registered investment advisers (Financial Times), Rated: A

The FT invited qualifying RIA companies — more than 2,000 — to complete a lengthy application that gave us more information about them. We added this to our own research into their practices, including data from regulatory filings. Some 725 RIA companies applied and 300 made the final list.

The formula the FT uses to grade advisers is based on six broad factors and calculates a numeric score for each adviser. Areas of consideration include adviser AUM, asset growth, the company’s age, industry certifications of key employees, SEC compliance record and online accessibility. The reasons these were chosen are as follows:

• AUM signals experience managing money and client trust.

• AUM growth rate can be a proxy for performance, as well as for asset retention and the ability to generate new business. We assessed companies on one- and two-year growth rates.

• Companies’ years in existence indicates reliability and experience of managing assets through different market environments.

• Compliance record provides evidence of past client disputes; a string of complaints can signal potential problems.

• Industry certifications (CFA, CFP, etc) shows the company’s staff has technical and industry knowledge, and signals a professional commitment to investment skills.

• Online accessibility demonstrates a desire to provide easy access and transparent contact information.

 

An AboveLoans.com Review: A Simple Way to Borrow (Saving Advice), Rated: B

Compared to other online lender-matching agencies, AboveLoans doesn’t really stand out among other online lenders. The only part that may seem a bit different is the simplicity aspect. Because AboveLoans only gives out smaller amounts ($35K and less) getting a loan can be a pretty swift process but there is more to getting a loan than how quick it happens.

Loans can range from $500 to $35K and you’ll have anywhere from six to 72 months for repayment.

Applying from anywhere sounds great but how secure is AboveLoans.com? AboveLoans isn’t a lender. It is a lender matching site. The entire process is secure but if you’d prefer a group of lenders not have your information you may want to consider using another site. Once you’ve accepted the lender’s terms, etc. funds will be deposited directly into your bank account.

You can apply for each of the following loans through AboveLoans:

  • Debt Consolidation Loans
  • Emergency Loans
  • Auto Repair Loans
  • Auto Purchase Loans
  • Moving Loans
  • Home Improvement Loans
  • Medical Loans
  • Business  Loans
  • Vacation Loans
  • Tax Loans
  • Rent/Mortgage Loans
  • Wedding Loans
  • Major Purchase Loans
  • General Personal Loans
United Kingdom

WEALTHSIMPLE TAKES SERVICE TO ANOTHER FINTECH HUB WITH UK EXPANSION (Betakit.com), Rated: AAA

Wealthsimple is officially expanding its service to the UK with an invitation-only beta.

The UK expansion comes just four months after Wealthsimple announced its US expansion. The company had been working on its US expansion over the past year.

“Ultimately, our ambition is to be a global financial services company. The UK has a lot of similarities to Canada — similar language and culture, the financial services industry is in a similar place — so it felt like the next logical step,” says Mike Katchen, CEO of Wealthsimple.

Toby Triebel, who previously co-founded online lending platform Spotcap, will lead Wealthsimple’s UK business.

PayPal hits £400m mark in advances to UK businesses (AltFi), Rated: AAA

PayPal Working Capital, PayPal’s small business lending arm in the UK, has hit £400m in cumulative cash advances made to British businesses. Over 22,000 business owners have now taken out an advance from PayPal Working Capital since it launched in 2014. The £400m milestone comes after a 116 per cent increase in total cash advances made by the firm over the past year.

PayPal’s small business lending activities are considerably further advanced in the US, where it topped $2bn in cash advances in the summer of 2016.

The high-yielding trusts more popular than ever (interactive investor), Rated: A

Trust purchases by advisers and wealth managers hit an all-time high over the 12 months to the end of March at £777 million. That’s up 11% on calendar year 2015, when £698 million was piled into closed-ended vehicles.

In addition, Q1 2017 was the second-highest quarterly period for purchases of trusts at £246 million. That’s a year-on-year increase of 85% and 25% more than the previous quarter.

Specialist debt was the most popular sector with advisers and wealth managers in first-quarter 2017. It’s the first time it’s topped the list, accounting for 14% of all investment trust purchases during the period.

He continues that, with the likes of peer-to-peer lending relatively new innovations, another potential risk is that trusts investing in it, which tend to be even newer concepts, are unproven over different economic and investment environments.

The sector average payout is above 6%, with some of the highest-yielding, including Carador Income (CIFU), Ranger Direct Lending (RDL) and Fair Oaks Income, paying over 10%.

SafeCharge reveals research urging fintech innovation for marketplace payments (SafeCharge), Rated: A

According to a study from the Ecommerce Foundation, almost 40% of the world’s online retail market will be controlled by marketplaces by 2020.

This difference creates complex challenges:

  • Regulation – The impending Payment Services Directive 2 regulation requires certain marketplaces which retain funds between a seller and a buyer to hold a payment institution license.
  • Seller Onboarding – Manual processes and Know Your Customer regulatory requirements create friction, which discourages sellers from registering with marketplaces.
  • Payment Checkout – A critical component for any business. Localisation, buyer experience, payment method offering, all must be optimised for conversion.
  • Split Payments – Marketplaces need to split transactions between multiple parties, both for marketplace commission and where a single checkout experience involves multiple sellers.
  • Seller Settlement – Marketplaces are in competition for sellers. Sellers demand frequent settlement of funds, often daily, in their local currency, and using a local payment method.
  • Unique Fraud – Marketplaces face new forms of fraud unique to the sector such as ‘collusion fraud’ where fake buyers and sellers facilitate the sale of non-existent goods with stolen payment cards.

The pros and cons of P2P lending (Bridging & Commercial), Rated: B

Peer-to-peer platforms have revolutionised lending, allowing retail investors to benefit from what was once the preserve of financial institutions and high-net-worth investors.

Pros

1.    Potential returns are excellent, and much higher than can be achieved with dividend yields.
2.    Returns are fixed, and don’t fluctuate like returns from equity investments or the stock market.
3.    Lenders are not charged fees, so the amount stated is the net amount investors receive.
4.    Platforms no longer have to deduct tax at source, so investors will be paid gross and account for their own tax.
5.    Investment terms are typically under 12 months.
6.    Legal charge holders will be paid out as a priority before any owners/equity shareholders.
7.    It is FCA regulated, so platforms must be transparent and are legally obliged to be upfront about risks. Platforms must have contingency plans in place, such as a significant financial buffer.
8.    The launch of the Innovative Finance Isa means peer-to-peer loans can be held within an Isa, so returns are tax free.

Cons

1.    While regulated by the FCA, peer-to-peer lending is not covered by the Financial Services Compensation Scheme, so losses are not underwritten by the government.
2.    Peer-to-peer loans are likely to be tied-in until the borrower has repaid, unless the platform can find a buyer.
3.    Loan periods are short, but investors may have to wait for the loan to complete before they start earning interest. One alternative is for investors to lend money to the finance company and get a fixed return for a fixed period. The rate will be less, but interest will be continuous, so investors can end up with approximately the same return, without having to select individual loans to invest in.
4.    If the borrower does not repay on time, investors need to wait until they have repaid – although they should continue to earn interest in the meantime.
5.    If the borrower defaults, the property will have to be repossessed. If that’s the case, there could be delays of at least several months. The property may not achieve a sale price that allows lenders to be repaid all their capital and/or the interest owed.
6.    While investors will receive a fixed rate of interest that may be higher than average dividends, they will not benefit from capital growth.

China

Many P2P Lending platforms attract investors by increasing interest rate  (Xing Ping She Email), Rated: AAA

Recently, in the background of surging market capital interest rates, the yield of money fund and bank financial products both rose markedly. P2P lending institutions no longer have the advantages in interest rates. In order to attract investors, there comes a new wave of raising interest rates in P2P lending industry.

On June 21st, Tuandai launched a notice of welfare activity, raising the interest rate of product “Futoubao 36”by 0.5%-1.4%.

Recently, Yirendai issued several promotion activities of raising rates, such as rebating 4% for inviting a new user.

On June 17th, JiMu Box announced from that day to June 23rd, if a customer successfully invited new user to invest in the platform, the inviter would receive a coupon of 6% growth in interest rates, in addition to the regular cash coupon and interest rate hikes.

Besides, Ma Tianshuai, the founder & CEO of JieYue United, said they also operated a welfare feedback activity of raising interest rates during the company’s 4th anniversary on June 18th.

Cash and carry (Breaking Views), Rated: A

A Hong Kong Monetary Authority study shows the former British colony is oddly cash-intense. The average person held nearly $6,000 in 2014 – second only to Switzerland.

The first licenses for mobile-wallet apps were granted to Apple, Android Pay, Tencent and others in 2016. Alibaba’s Alipay launched its localised app in May, more than a decade after starting on the mainland. Twenty years after Hong Kong’s reunification with the mainland, in consumer-facing fintech at least, the city looks a decade behind.

European Union

German Real Estate Crowdfunding Market Booms (Crowdfund Insider), Rated: AAA

The road ahead for the German real estate crowdfunding market has been cleared. The threat of being excluded from the scope of application of the crowdfunding regulation, the Kleinanlegerschutzgesetzt (KASG), was taken off the table last month. The crowdfunding market can move ahead on its exponential growth path.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

Exporo was incorporated in 2013 by Simon Brunke, CEO, Björn Maronde, Julian Oertzen and Tim Bütecke.

Zinsland was founded in 2014 by Carl-Friedrich von Stechow, CEO, Dr. Stefan Wiskemann and Moritz Eversmann.

Bergfürst was started much earlier than its competitors, in 2011, as an equity crowdfunding platform launched by Dr. Guido Sandler, CEO, and Dennis Bemmann.

Next to the three leaders, around ten new entrants try to carve a market for themselves:

  • Zinsbaustein, launched in 2016, is the number 4 with 8 projects financed to the tune of €9 million.

Others have only financed a few projects so far:

  • iFunded started in 2015 and open for business in 2016, iFunded intends to attract German and international investors who want to invest in Berlin. Its average size of projects is €800K.
  • Home Rocket, started in 2015, Home Rocket operates from Austria but addresses both the German and Austrian investors and developers.
  • immofunding started in 2015, also operates from Austria.
  • Renditefokus started in 2015.
  • ReaCapital started in 2017.

LendIt Partners with Startupbootcamp FinTech For Its PitchIt Europe 2017 Competition (PR Newswire), Rated: A

LendIt, Europe’s largest global show in lending and fintech, today announced its Pitchit @ LendIt contest partnership with Startupbootcamp FinTech for PitchIt @ LendIt Europe 2017, a leading platform for fintech startups who can earn mentorship, endorsement and exposure to leading institutions, investors & press. Online applications also officially opened to qualifying fintech startups.

This year’s competition is slated to see hundreds of applicants all vying for a prestigious spot in the finals, and a chance to present on the keynote stage in front of over 1,000 members and high ranking executives from the global fintech industry at LendIt Europe (9-10 October, Intercontinental O2 Hotel, London.)

This year’s exclusive PitchIt Contest Partner will be Startupbootcamp FinTech, the leading global FinTech accelerator focused on innovation for the financial services industry. The finalists will present to a panel of influential VC judges and mentors, including those from Balderton Capital, Commerz Ventures, Thiel Capital, Index Ventures and Target Global VCs,and other high profile investors in the fintech capital of the world, London.

To apply to PitchIt @ LendIt Europe competition, firms must meet the following criteria:

  • Must be a fintech company
  • Two or more full-time co-founders/employees
  • 2-10 full-time employees
  • Less than 3 years in business (companies founded before 2014 not eligible)
  • Raised less than 4 million GBP since launch date
  • Must have a professional business website
  • Everyone registering on behalf of a specific company must have an email with that company’s domain
  • Past PitchIt Europe finalists are ineligible
International

Alternative Lenders Spread Their Wings Internationally (deBanked), Rated: AAA

As alternative lending gains global traction, a growing number of U.S-based alternative lenders are exploring international growth, with large companies like OnDeck, Kabbage and SoFi leading the way.

To be sure, international expansion requires extensive time, money and regulatory know-how, and some U.S. alternative lenders may never reach the critical scale to be able to compete effectively. Nonetheless, as globalization proliferates, industry observers expect that additional forward-thinking companies will push beyond the limits of their current geographical borders.

Affirm—which works with more than 900 retailers and recently announced that it had processed its 1 millionth consumer installment loan—has focused on domestic growth so far, but the company is now considering a number of options for international expansion, Metcalf says.

Europe, for instance, has seen substantial growth over the past few years, with the U.K. leading the way in alternative finance. It has four times higher volumes in aggregate than the rest of Continental Europe, according to a 2016 report from KPMG and TWINO, one of the largest marketplace lending platforms in Europe. (P2P consumer lending is the largest component of alternative online lending in Europe, capturing 72 percent of the total in the first through third quarters of 2016, according to the report.)

After the U.K., France, Germany and the Netherlands are the top three countries for online alternative finance by market volume in Europe, according to a September 2016 report by the Cambridge Centre for Alternative Finance.

Asian markets, meanwhile, show significant promise for alternative finance players to make their mark due to the sizeable population of digitally savvy consumers who are still largely underbanked. China is by far the largest market for alternative lending in Asia. It’s also the world’s largest online alternative finance market by transaction volume, registering $101.7 billion in 2015, according to the March 2016 Cambridge Centre for Alternative Finance report.

Although there are many possible international markets to explore, U.S. lenders have to tread carefully before planting roots elsewhere, observers say. Some smaller U.S. lenders may find domestic expansion easier and more cost-effective because of the time, regulatory and financial commitment that goes along with exploring international markets.

What’s more, foreign banks looking for alternative lending partners typically prefer to work with larger, more established players.

Within the past several years, OnDeck has begun offering small business loans to customers in Canada and Australia. Frequently Canada is a first step for U.S. companies that want to expand internationally because of the shared language and similarities between the economies, Young explains.

After the Canadian operation was successfully underway, the opportunity arose for the online lender to expand to Australia—which shares several similarities with the Canadian market.

U.S.-based alternative lenders also need to be careful to create products that fit the culture and needs of a particular market.

Take Kabbage, for example. The small business lender expanded into the U.K. in 2013, two years after its U.S. debut. But the company found that having its own small business lending business in the U.K. was too challenging for regulatory and capital reasons. It no longer offers new loans from this platform.

Instead, the funding company decided that a better global strategy was to license its technology to financial institutions in international markets a less capital-intensive, yet economically sound way of doing business.

Kabbage—which recently announced the establishment of its European headquarters in Ireland—has licensing arrangements with Santander in the U.K., Kikka Capital in Australia, Scotiabank in Canada and Mexico and ING in Spain.

For its part, SoFi has announced plans to expand to Australia and Canada this year. The company’s chief executive has also talked about European and Asian expansion in the future.

LendingClub, meanwhile, last November announced a significant partnership with National Bank of Canada and its U.S. subsidiary Credigy.

Amazon And The Future Of FinTech: Part II (Seeking Alpha), Rated: A

The model of the new information age is connectivity and this connectivity comes from building platforms that transcend industries.

But, let’s get back to the FinTech issue. In my previous post, I argued that Amazon, as well as Apple (NASDAQ:AAPL) and PayPal (NASDAQ:PYPL), has entered into the “payments” space and that this is their inroad into the banking field. And the payments space is definitely a “platform market.”

Now, we learn that a major European player in the payments space has actually received its banking license. Klarna is one of Europe’s largest financial technology groups, valued in 2015 at $2.25 billion.

And, now they have a banking license. But don’t expect mortgages from them right away. Expect “payment cards and accounts.”

In other words, they are building a platform that will transform banking, one that works through many different companies and industries. Is that what Mr. Bezos and Amazon are working on?

Global mobility: supporting your business (Relocate Magazine), Rated: A

Transferwise has become one of the world’s biggest fintech companies, valued at $1 billion with 700 employees.

Nilan offered a number of benchmarks for his company’s success since it was established in 2011 – its expansion from two to 200 markets, its ever-growing list of international HQs, its boom from 60 employees to 700 – but the one that’s made headlines most recently is the announcement that customers are now sending $1 billion per month using the service.

The threat of Brexit looms, however, and Transferwise is concerned about the impact it will have on the company’s ability to access talent.

Australia

Need a loan? Then ask a peer (Yahoo! Finance), Rated: A

Interestingly, a finder.com.au survey revealed that the majority of Australians think that a good credit score should come with perks. That is, 67% of people believe that a good financial history should mean better interest rates on products like loans.

Here are four things you need to know about P2P loans: 

When reviewing your options, keep a close eye on the fees involved to ensure that you’re not paying more than you can afford.

As P2P lending isn’t backed by a large corporation, do your due diligence by researching the reputation of the platform you’re thinking of signing up with. A quick way to do this is to check for a credit license.

P2P platforms typically offer lower loan amounts, so you may only be able to borrow up to $50,000 for a personal loan. This could be restrictive, depending on your loan purpose and the amount you need to borrow.

Once you’ve wrapped your head around the ins and outs of P2P lending, decide whether this is the right type of finance for you.

Canada

Alternative investing requires more transparency: survey (Benefits Canada), Rated: B

The survey, which polled 200 institutional investors and asset managers, found respondents cited transparency as the leading investment consideration, for both alternative investments (62 per cent) and traditional investments (62 per cent).

According to the survey, risk management is the most important driver for transparency in both traditional and alternative investments. Nearly three-quarters (73 per cent) of respondents said portfolio risk management was the most important element, while about half said regulatory requirements (53 per cent) and competitive considerations (43 per cent) were the most important elements.

Authors:

George Popescu
Allen Taylor

Tuesday May 16 2017, Daily News Digest

corporate bond credit spreads

News Comments Today’s main news: KBRA rates Prosper’s Series 2017-1. SoFi’s bid to become bank pulls FDIC into fintech fray. LendInvest joins Home Builders Federation. Monzo puts API dev on back burner. PBOC sets up new China fintech committee. N26 launches savings accounts with Raisin. Today’s main analysis: Asset volatility diminishing and approaching new lows. Today’s thought-provoking articles: The future […]

corporate bond credit spreads

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

Canada

South America

News Summary

United States

KBRA Rates Prosper Marketplace Issuance Trust, Series 2017-1 (KBRA Email), Rated: AAA

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Prosper Marketplace Lending Issuance Trust 2017-1 (“PMIT 2017-1”). This is a $450.5 million consumer loan ABS transaction that is expected to close on May 24, 2017.

This transaction represents the sixth securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Prosper Funding LLC (“Prosper” or the “Company”).

Get the full report.

Volatility in the asset markets has been steadily declining and is nearing new lows. One factor helping to suppress volatility is the lack of many surprises in the first-quarter earnings season, which passed with results generally within the range of expectations. From an economic point of view, while GDP was weak in the first quarter, it is expected to rebound in the second quarter.

Following the French presidential election and the general lessening of international tensions, corporate credit spreads have tightened and asset volatility has declined toward its lowest levels.

Source: Morningstar

The average corporate credit spread of the Morningstar Corporate Bond Index (our proxy for the investment-grade bond market) tightened 3 basis points last week to +117, a new low for the year. The last time the index was at this level was September 2014. From a longer-term perspective, the average spread of the Morningstar Corporate Bond Index has been lower less than one fourth of the time since the end of 1999. In the high-yield market, the Bank of America Merrill Lynch High Yield Master Index tightened 5 basis points to +377. The tightening was led by the energy sector, which declined 10 basis points as oil prices continued to rise. Since the end of 1999, the average spread of the high-yield index has been tighter only 17% of the time.

Source: Morningstar

The Future of Lending is Now with Latest TransUnion Prama Offerings (NASDAQ), Rated: AAA

As TransUnion (NYSE:TRU) data from the end of March 2017 suggest, the consumer credit market is as complex as ever. Mortgage delinquency rates: continuing to drop. Auto loan delinquency rates: rising. Personal loan market: growing, but slowing. Access to credit cards: highest since 2005.

Maneuvering through this ever-changing credit landscape is difficult for lenders of all sizes, ranging from credit unions to regional banks to the largest financial institutions. To help navigate through this complex maze, TransUnion today introduced the newest modules in its PramaSMenvironmentBenchmarking and Data Extract.

Prama Benchmarking provides advanced data analytics and visualization capabilities specific to the auto loan, credit card, mortgage and personal loan markets—to deliver relevant insights for each line of business. Lenders will now be able to measure their performance across numerous metrics and filters, and compare it to the industry and their peers.  This information can be used to improve how financial services companies segment, target, acquire, cross-sell and retain customers. The Data Extract module provides self-service access to query against 100 percent of TransUnion depersonalized archive credit data, allowing customers to receive faster delivery of data to support their own analytics—in their own environment with their preferred tools.

Measuring Business Performance Against Peers

Benchmarking provides performance data on metrics such as delinquencies, charge-offs, bankruptcy, average balance and utilization. It offers views of market share in terms of number of accounts, total limit or total balance. The module also lets lenders analyze depersonalized data using dimensions such as APR, origination vintage, credit tier, state or MSA region, account status and consumer credit age.

For instance, a regional bank in Western Pennsylvania interested in growing its credit card portfolio is now able to observe five years of its own data versus other similar banks in their region.

Extracting Data Faster – From a Month or More to Hours

A traditional archive request process – from customer order to product delivery – typically takes 30 days or more. This includes time spent defining and iterating on the customer’s data requirements. “With Data Extract, the process will take less than 24 hours – an enormous time savings,” said Gomez.

With Data Extract, customers gain the following advantages:

  • Self-service – On-demand, point-and-click access to query TU depersonalized archive credit data.
  • Speed – Secure overnight delivery of the dataset.
  • Confidence – Quick access to depersonalized data to support a customer’s own analytics, so they can make faster decisions with more confidence.
  • Control – Create queries according to their data requirements, avoiding the back and forth that is often typical of an archive request process.
  • Flexibility – Quickly obtain depersonalized data for use within their own analytics environment and processes.

SoFi’s bid to become an industrial bank pulls FDIC into fintech fray (American Banker), Rated: AAA

The Federal Deposit Insurance Corp. has so far managed to stay out of the growing battle over how the U.S. fintech sector should be regulated, but that appears likely to end as one of the nation’s largest online lenders announced plans to apply for a specialty banking charter soon.

Social Finance Inc., the San Francisco-based consumer lender known as SoFi, hopes to secure an industrial bank charter. That state-issued charter used to be a popular way to organize a bank, and was commonly used by companies that are not primarily in the financial services industry.

SoFi COO: We have measures in place, extra authentication for our consumers (MSN), Rated: AAA

Joanne Bradford, SoFi COO, weighs in on how companies are protecting themselves on the heels of a worldwide cyberattack, mortgages, student loans and refinancing.

Watch the video segment here.

SoFi: We Will be the First Unbank – Bank (Crowdfund Insider), Rated: AAA

SoFi Chief Operating Officer Joanne Bradford was back visiting with CNBC today. Bradford addressed several topics including the recent cyber attack that has public and private entities running for cover around the world. SoFi has not been impacted by the digital attack and Bradford was quite confident that SoFi is better prepared for any malicious attempts to infiltrate SoFi due to their single point of access (unlike traditional banks).

Asked if the Fintech industry is more, or less, vulnerable than traditional types, Bradford explained;

“We are less vulnerable. You only come to SoFi at SoFi.com. We don’t have branches which helps make it more efficient. Less points of vulnerability…but for the consumer it is more about speed and ease of use. Getting things done quickly on your mobile device.”

How to Predict If a Borrower Will Pay You Back (NY Mag), Rated: AAA

Recently, three economists—Oded Netzer and Alain Lemaire, both of Columbia, and Michal Herzenstein of the University of Delaware—looked for ways to predict the likelihood of whether a borrower would pay back a loan. The scholars used data from Prosper, a peer-to-peer lending site. Potential borrowers write a brief description of why they need a loan and why they are likely to make good on it, and potential lenders decide whether to provide them the money. Overall, about 13 percent of borrowers defaulted on their loan.

It turns out the language that potential borrowers use is a strong predictor of their probability of paying back. And it is an important indicator even if you control for other relevant information lenders were able to obtain about those potential borrowers, including credit ratings and income.

Listed below are ten phrases the researchers found that are commonly used when applying for a loan. Five of them positively correlate with paying back the loan. Five of them negatively correlate with paying back the loan. In other words, five tend to be used by people you can trust, five by people you cannot.

Here are the phrases used in loan applications by people most likely to pay them back: debt-free, lower interest rate, after-tax, minimum payment, graduate.

And here are the phrases used by those least likely to pay back their loans: God, promise, will pay, thank you, hospital.

Now, let’s consider language that suggests someone is unlikely to pay their loans. Generally, if someone tells you he will pay you back, he will not pay you back. The more assertive the promise, the more likely he will break it. If someone writes “I promise I will pay back, so help me God,” he is among the least likely to pay you back. Appealing to your mercy—explaining that he needs the money because he has a relative in the “hospital”—also means he is unlikely to pay you back. In fact, mentioning any family member—a husband, wife, son, daughter, mother or father—is a sign someone will not be paying back. Another word that indicates default is “explain,” meaning if people are trying to explain why they are going to be able to pay back a loan, they likely won’t.

Misys rolls AI strategy into trade monitoring software (Misys), Rated: A

Misys has stepped up to the artificial intelligence (AI) plate, today unveiling Misys FusionCapital Detect. The component helps financial institutions spot booking errors, anomalies and unusual activity, accelerating trade validations and reducing exceptions with machine learning.

FusionCapital Detect behaves as a smart personal assistant for validation teams, red flagging probable mistakes that are otherwise time consuming to identify. Users can catch errors that existing tools on the market let through, reducing operational risk and preventing manual mistakes that lead to decisions being made on the wrong profit and loss information and incorrect end-of-day reports.

Being able to validate transactions at T+0 has become crucial in today’s pressurised regulatory environment, including under:

  • The European Market Infrastructure Regulation (EMIR): which makes it necessary to identify errors as soon as possible in order to confirm trades within 24 to 48 hours.
  • The Fundamental Review of the Trading Book (FRTB): which requires daily risk reports – unidentified trade errors will invalidate these reports, breaching compliance.

OpenInvest Secures $ 3.25 Million in Seed Funding Led by Andreessen Horowitz (PR Newswire), Rated: A

OpenInvest (www.openinvest.co), a social impact investing platform for retail investors, announced today that it raised $3.25 million in seed funding. The round was led by Andreessen Horowitz with participation from Abstract Ventures, Wireframe Ventures and SV2. OpenInvest is an accessible online financial advisor that empowers investors to fully align their investments with their values, and then take action to more meaningfully engage companies and drive social change.

According to a recent Morgan Stanley survey, 84 percent of millennials want the companies they invest in to align with their values. OpenInvest meets this opportunity with an innovative platform that allows consumers to invest with their hearts, without having to compromise financial returns. The company’s investment screens include climate change, fossil fuels, weapons manufacturers, gender equality, LGBTQ workplace treatment, deforestation, tobacco, companies funding the Dakota Access Pipeline, and companies supporting President Trump, which can be freely mixed and matched to construct a personalized portfolio. Investors can further customize by including or excluding individual companies, while their portfolio auto-rebalances to maintain diversification and broad tracking of the market.

Lemonade sweetens U.S. insurance rollout plans with California license (Reuters), Rated: A

Lemonade Inc, a tech-driven insurance startup that promises renters and homeowners insurance in as little as 90 seconds and payment of claims in 3 minutes, has won approval from California regulators to sell policies in the state, the company said.

The insurer’s foray into California, the most populous U.S. state, comes amid the company’s push to become licensed nationwide, less than a year after launching in New York. Last month, Lemonade, which sells policies directly to consumers through its website and smartphone app, expanded into Illinois.

Green Dot Hits, OnDeck Misses, And First Data Looks Ahead (PYMNTS), Rated: A

First Data’s New Friends

First Data CEO, Frank Bisignano, noted in the wake of First Data’s earnings release this week that the company remains on track to meet its guidance for 2017 and that he is “confident that the current weakness is transitory.”

First Data will be instrumental in helping drive Alipay expansion into the U.S. market, focusing on firms that use First Data’s Clover platform.

By the numbers, First Data reported adjusted earnings per share of $0.28 and revenue of $1.7 billion.

Credit and retail processing in North America were up 1 percent, and the business, globally, gained 2 percent. Accounts on file, again for North America, grew by 7 percent.

The deal will give Alipay scale roughly equivalent to Apple Pay’s in terms of presence, at around 4.5 million U.S. sites.

OnDeck’s Falling Figures

Reflecting the changes, the company lowered its full-year net revenue outlook to a range of $342 million to $352 million. It previously had forecast $377 million to $387 million.

Annual costs are also slated for a big cut — by around $25 million. Those cuts will be achieved by lowering headcount. About 27 percent of the staff will be cut back from levels at the end of 2016.

By the numbers, losses clocked in at $0.11 per share, slightly more than the $0.10 loss analysts were looking for. Gross revenue rose 48.4 percent to $92.89 million on higher net interest income, beating analysts’ estimates of $90.38 million.

Green Dot Beats the Streets (In a Big Way)

The company posted adjusted earnings per share of $1, which was $0.16 better than analysts were forecasting. Revenue clocked in at $253 million, was up 11 percent year over year and was higher than the roughly $234 million that had been forecasted.

Guidance for the full year was also ticking up — just about in line with the magnitude of the beat, with revenue to range from $830 million to $845 million (both ends of the range were taken up by $15 million). Earnings per share are slated to come in between $1.89 and $1.94, which compares with the consensus of $1.92 as of Wednesday morning.

Green Dot is making pre-paid cards look easy, OnDeck is demonstrating how marketplace lending (or marketplace anything) is really, really hard — and First Data is greatly looking forward to next quarter, when it can report smoother sailing.

US Government Awards $ 2.25 Million to Blockchain Research Projects (Coindesk), Rated: A

The US government has awarded research contracts to three startups working with blockchain worth a total of about $2.25m.

The Department of Homeland Security (DHS) quietly revealed the grants last week as part of its Small Business Innovation Research initiative.

Who got funded: DHS said that it parceled out a total of $9.7m between 12 companies, three of which are working with the tech. According to a release, each firm got about $750,000 to fund their research.

Here are the companies that got funds for their blockchain-related initiatives:

  • BlockCypher: The startup has been awarded a grant for its “blockchain platform for multiple blockchains, applications and analytics. BlockCypher was the recipient of a $600,000 DHS grant last summer.
  • Digital Bazaar: According to DHS, the company is working on a “verifiable claims project” that utilizes “fit-for-purpose distributed ledgers”. Like BlockCypher, Digital Bazaar was given a DHS grant in 2016.
  • Evernym: This Utah-based business will use the funds to support its research into “decentralized key management using blockchain”, according to DHS.

Lendio is Now Offering Small Business Loans Within Minutes (Military-Technologies), Rated: A

The team at Lendio is pleased to announce that they are now offering small business loans within minutes.

In addition to providing small business owners loans as quickly as possible, Lendio also features a business loan marketplace that lets people find the financing tools they need to help run their business.

Oportun, Inc. (SEC), Rated: A

Opportun has filed for ABS with the SEC.

My Experience Refinancing Student Loans from Pharmacy School (Pharmacy Times), Rated: A

In 2015, I graduated with over $150,000 in student loans from pharmacy school. At the time, it felt like an insurmountable amount of money to pay back, especially considering I took a substantial pay cut to complete a 1-year residency after graduating. The monthly payments were extremely high and to make matters more confusing, I had multiple loan providers between my private and federal loans, with some in my name and some in my parent’s name. The interest rates on these loans varied from 6.5% to 8%.

After finishing my residency, I knew I had to take a close look at my financial situation and make a plan to aggressively start paying off these loans. After extensive research, I decided to refinance my student loans through Social Finance, Inc (SoFI), an institution that offers a number of different loan types through a “nontraditional” approach.

Refinancing through SoFI will save me over $15,000 in cumulative payments over a 10-year term by lowering my interest rate to 5%.

If you’re refinancing with a longer repayment period (10 to 20 years) and prefer stability, a fixed rate may be the better option. Personally, I chose a variable rate loan because the interest rate was significantly lower than the fixed rate loan, and I plan to pay off my student loans long before the end of my 10-year term.

RealtyShares Names Industry Vet to BOD (Commercial Property Executive), Rated: A

Edward Forst, the former president & CEO of Cushman & Wakefield, has become the newest member of RealtyShares’ board of directors.

With Cushman & Wakefield, Forst oversaw 16,000 real estate professionals in 60 countries.

How Can I Pay for Fertility Treatment? (LendingClub), Rated: B

To begin, you’ll want to determine how you’re going to pay for fertility treatment and related care such as medications, genetic testing and egg freezing services.

The good news is that fertility financing is available so that cost does not have to be a barrier to treatment and your dream of becoming a parent.

The flexible payment plans include:

  • One loan for comprehensive fertility care for up to three services: IVF treatment, medication, genetic testing or egg freezing
  • No upfront payments
  • Fixed rates starting as low as 3.99% APR*
  • Manageable monthly payments for a range of budgets
  • Payment sent directly to your providers in one to three business days, so you can start treatment without delay or pressure to distribute funds correctly

How to Invest in Debt (Michael Pellegrino Email), Rated: B

Get a free sample chapter. Password: debt-investor.

United Kingdom

LendInvest joins the Home Builders Federation (Property Reporter), Rated: AAA

Specialist mortgage lender, LendInvest, has announced that it has joined the Home Builders Federation, in a move aimed at supporting property developers to build more homes of every type.

The Home Builders Federation is the representative body of the private sector home building industry in England and Wales and its members are responsible for 80% of housing output each year. The organisation currently supports the LendInvest Property Development Academy, a non-profit, two-day course delivered in five key cities across the UK and intended to create a new generation of property entrepreneurs.

Monzo puts API development on the back burner (Finextra), Rated: AAA

Digital bank Monzo is putting its API developer plans on ice as it faces up to the challenge of launching current accounts for its 190,000 customers.

The news will be a blow to the 2000 people on the bank’s developer Slack channel who have invested time in building integration to the Monzo API.
In the two years since it launched its first hackathon encouraging developers to build products using the API, the bank now counts some 100 personal projects integrating with the toolkit. Despite these efforts, Monzo will not allow developers to publish their current applications.

Peer-to-peer lending rises as Moneywise users seek higher returns (Moneywise), Rated: A

Nearly half (48%) of Moneywise.co.uk readers use peer-to-peer (P2P) lending in a bid to earn higher returns on savings, our latest poll results reveal.

This is an increase from 39% of Moneywise users who said they used P2P lending in August 2016, and 33% who said the same when we asked in February 2016.

The number of Moneywise users aware of P2P has also risen. Just 4% said they’d never heard of P2P lending in our most recent poll, compared to 6% who hadn’t heard of it last August, and 9% who hadn’t heard of it last February.

Seedrs: Andy Murray Invests in Three UK Entrepreneurs, Den, Morpher & Landbay (Crowdfund Insider), Rated: A

Tennis star and Seedrs advisor Andy Murray has invested in three early-stage UK businesses. The Seedrs listed companies include Den, Morpher and Landbay. Murray’s Seedrs originated portfolio now stands at over 20 companies, according to the platform.

Landbay is back on Seedrs once again. The property rental crowdfunding platform has crowdfunded successfully multiple times on Seedrs.  Landbay was one of the very first peer-to-peer platforms to be granted full authorisation by the FCA at the end of 2016. Landbay has raised £2.3 million overfunding to 157% in the round.

Robo Advice – 5 Key Factors to Success (EValue), Rated: A

1 – Engaging the consumer

Currently, a real need exists to increase consumers’ engagement with their financial life and enable easy access to robust financial advice for all. However, for many consumers, the breadth of choice available, when it comes to making financial planning decisions, only serves to create confusion and adds to the complexity often resulting in no decisions being made at all.

2 – Realistic expectation of range and level of returns

This means that not only should the overall forecasts be realistic but each individual scenario, which makes up the forecast, should also be sensible and capable of occurring. Suggesting a potential outcome which, in reality, is impossible is obviously not particularly helpful to consumers when it comes to making investment decisions.

3 – Risk Suitability Assessment

In the UK, it is clear that robo advice needs to meet the same suitability standard as traditional advice. Therefore, any risk suitability tool must be rigorous and robust in order to ensure an accurate measurement of a consumer’s tolerance to risk and capacity for loss.

4 – Personal Advice Given

As everybody’s situation is different, in order for a robo advice proposition to be successful it must be able to provide appropriate personal advice which not only reflects a consumer’s individuality and specific objectives but is also not detrimental to their other financial needs.

5 – Fully automated with appropriate compliance reviews

By automating the advice process so that it can be delivered remotely and driven by the consumer, costs will be cut sharply as a result. At the same time, consistent quality and thorough documentation generated by the process will provide a full and reliable digital paper trail to ensure regulatory compliance.

Robo Advice market eyes pensions, insurance and mortgages (AltFi), Rated: B

The automated financial advice market is set for a decade of strong growth, according to a new report by consultancy Deloitte, which suggests the underlying disruptive technology will spread into more niches than its current wealth management segment.

To date, automated advice has been most prevalent in wealth management – called robo advice – but this is just the tip of the iceberg. In its latest research into the space, entitled The next frontier: The future of automated financial advice in the UK, Deloitte says the UK offers a rich opportunity for automated advice with up to 15 million consumers willing to pay for it.

China

PBOC sets up new committee to oversee China’s burgeoning fintech industry (SCMP), Rated: AAA

China’s central bank said on Monday it has set up a committee to oversee financial technology, reflecting an attempt to bring regulation up to speed with a fast-growing industry that could bring cross-sector financial risks.

The People’s Bank of China said on its website it will gauge the impact of fintech on monetary policy, financial markets, financial stability, payment and clearing.

It will also beef up the use of new technology, such as big data, artificial intelligence, and cloud computing to enhance its capabilities in protecting against and resolving cross-market financial risks, it said in the statement.

P2P Industry News (Xing Ping She Email), Rated: A

People’s Bank of China is going to set up FinTech Committee
Recently, People’s Bank of China (PBC) announced to set up FinTech Committee, aiming at reinforcing the planning and coordination of fintech. PBC is going to do deep research on the influence of fintech on monetary policies, financial market, finance stability, payment and settlement etc. And it also encourages finance sector to use high-tech, such as big data, AI and cloud computing, as regulatory method to improve the ability for identifying, preventing and solving financial risks.

BNP Paribas Group Investigates for Financial Innovation in Asia
On May 5th, executives from security services department of BNP Paribas visited JadeValue, China’s first fintech incubator, to investigate for financial innovation in Asian market. Xeenho Wallet, as one of the incubated enterprise of JadeValue, and a typical example of Chinese modern fintech company, communicated with the European professional financial survey team, and achieved initial intent of cooperation on exchange of P2P industry news.
Xeenho is one of the first P2P funds platforms in China. Based on big data and robo-advice, Xeenho’s risk-control management keeps the Zero Bad Debt in the industry.

European Union

N26 launches savings accounts with Raisin (TechCrunch), Rated: AAA

N26 is launching yet another feature to build a modern retail bank for European customers. This time, the company is partnering with Raisin, a German startup also known as WeltSparen. In just a few taps, you’ll be able to open a savings account for money you don’t need.

All your deposits are guaranteed up to €100,000 per bank by the National Deposit Guarantee Scheme as part of the European Union.

N26 is only launching this feature in Germany for now, but Raisin accepts customers from other countries. So you can expect to see this feature in other countries later this year. Similarly, if you don’t want to have your money stuck on a savings account, N26 will launch overnight savings later this year.

Raisin has built an API in order to facilitate the N26 integration.

Rabobank enters digital identity market (Finextra), Rated: A

Rabobank has partnered with Norway’s Signicat to provide a digital identity hub for businesses looking to onboard new customers and sign legally-binding contracts online.

The joint Digital Identity Service Provider (DISP) offers a range of online login, identity, signature and data archiving services under the banner of Rabo eBusiness. Rabobank says it will initially market the programme to energy, telecom and insurance companies, healthcare institutions and financial services providers.
International

Top 10 FinTech Companies Disrupting Banking (Disruptor Daily), Rated: A

Banking and payment financial technology have grown exponentially in just the past few years thanks to tech like blockchain, artificial intelligence, and big data. These crossovers are making for faster, safer processes and lower prices for individuals and businesses alike.

Wyre boasts transfer speeds under 6 hours internationally, significantly faster than the traditional SWIFT or bank wire transfer networks.

Xendit is a payment processing infrastructure provider that covers the southeastern Asia region. Among the services offered through Xendit are bank transfers, card processing, and escrow services.

Xero offers accounting professionals and small-to-medium businesses (SMBs) with more than 600,000 customers a cloud-based accounting software.

N26 allows UK customers to open accounts in minutes, perform withdrawals at any ATM, and pay with the N26 MasterCard.

Beyond making in-person and mobile payments more secure, Circle is also working to reduce the cost of in-person and international payments as well as the time intensity of global payments.

Simple unifies accounts under one card and splits the net interest margin from lending across all of the partner banks in its network to help simplify the customer experience.

Earnest is using data science, design, and software automation to allow their clients to manage their existing finances and debts while opening up new opportunities for well-behaved clients to see better interest rates and more options.

Featurespace has developed and deployed artificial intelligence and machine learning solutions for financial service providers in more than 180 countries.

InstaMed has changed the healthcare payments industry through the use of their easily-integrated, private cloud computing network.

India

i2iFunding plans to increase loans disbursal to Rs 200 Cr in 2 yrs (India Times), Rated: AAA

Peer to Peer (P2P) lending platform i2iFunding said today that it planned to increase the loans disbursed on its platform to Rs 200 crore over the next two years. It currently disburses loans worth Rs 60-70 lakhs a month.

Having strengthened its risk processes, the company is now keen to expand operations, he said. The company also expects business to pick up the RBI issues regulatory guidelines for the sector.

Five Points to Keep in Mind When Investing in P2P Lending (BW Disrupt), Rated: A

But while there has been a major change in the appetite for risk among Indians, P2P lending requires an investor to be thoroughly aware and educated on how to make informed choices when opting for P2P lending. P2P lending is globally growing at a CAGR of 48%. In India, the industry is expected to touch $5 billion by 2020-2021. It’s here to stay and the faster a smart investor understands, learns, and makes the most of it, higher the returns.

  1. Build a Diversified Portfolio
  2. Small Ticket-size, More Loans – One of the biggest advantage of P2P lending is that the average ticket size can be as low as Rs. 1000/-. So invest small amounts in large numbers. And by that we don’t mean putting Rs. 2,50,000/- across 10 loans of Rs. 25,000/- each but to aim for 50 loans of Rs. 5,000/- each.
  3. Compounding Benefit – P2P lending is the only, unique asset class in which investors begin to receive returns – principal as well as interest – through EMI from the very next month of making the investment.
  4. Realistic Expectations, Long-term horizon – Before investing in P2P lending, it is advisable to choose a lending platform after considering the track record of the leadership and their risk management team.
  5. Informed Choices – Before investing in P2P lending, it is advisable to choose a lending platform after considering the track record of the leadership and their risk management team.
Asia

Fintech start-up 4xLabs raises US$ 1.5m in new funding (Straits Times), Rated: AAA

Singapore fintech start-up 4xLabs has raised US$1.5 million (S$2.1 million) in its latest funding round.

The round saw follow-up investment from Dymon Asia Ventures, as well as participation from new investors such as Malaysia-based OSK Ventures International.

4xLabs aims to increase transparency in the market for travellers and money changers with its cloud-based services.

The firm, set up in 2011, offers two platforms: Get4x, a currency exchange-rate aggregator platform for travellers, and Biz4x, a platform that helps money changers better manage their businesses.

Canada

Toronto Financial Services Alliance Says Strengthening Fintech Ecosystem Must Be a Priority (Crowdfund Insider), Rated: AAA

The Toronto Financial Services Alliance (TFSA) says Canada’s financial service relevance is at risk unless the Fintech ecosystem is improved.

TFSA has published a report specifically on this subject. Entitled, “Seizing the Opportunity: Building the Toronto Region into a Global Fintech Leader,” the report states that the Toronto/Kitchener-Waterloo corridor today benefits from a strong core of financial institutions, top-tier research facilities, a strong talent base and relatively low business operating costs compared with other global Fintech ecosystems.

The report sets out six key areas to target:

  • Collaboration: Closer and more frequent engagement among Fintech startups, well-established financial institutions and the venture capital community.
  • Capital: Improved access to sophisticated seed-level and local later-stage capital for Canadian Fintechs.
  • Regulation: Reduced regulatory burden on emerging Fintech companies, and modernized regulatory frameworks to attract foreign investment and further reflect changing business models, technologies and priorities.
  • Research: Encouraged commercialization of research for financial services to further establish the region as a global leader.
  • Talent: Creation of opportunities and conditions that will attract top talent with experience growing and scaling fintech companies.
  • Awareness: Raising of the region’s profile on the global stage as a Fintech hub.

Power Financial invests C$ 50 million in ‘robo-adviser’ Wealthsimple (Reuters), Rated: A

Power Financial Corp has invested C$50 million ($37 million) in “robo-adviser” Wealthsimple, bringing its total investment in the 2-year-old financial technology company to C$100 million, they said on Thursday.

Toronto-based Wealthsimple provides automated investment advice to consumers and helps manage personalized portfolios based on responses to an online questionnaire about investment goals. It entered the U.S. market at the end of January.

The company said it now has more than 30,000 clients in Canada and the United States, up from 20,000 in late January, investing more than C$1 billion in exchange-traded funds.

South America

Goldman Sachs Sees Big Potential for Fintech in Brazil (NYT), Rated: AAA

Brazil is experiencing a wave of growth in financial technology that will most likely eat into the market share of the country’s huge and long untouchable banks, a new report from Goldman Sachs says.

Entitled “Fintech Brazil’s Moment,” the 45-page research report estimates that the more than 200 financial technology companies in Brazil should generate a potential revenue pool of about $24 billion over the next 10 years. Payments, lending and personal finance are three promising segments, as is insurance, the report found.

The Goldman Sachs economists cited what they called “an oligopolistic market structure” in Brazil where the top five banks, excluding development banks, hold 84 percent of total loans. In retail branch banking, the top five banks have 90 percent of branches. That is up from 71 percent in 2007, the report said, observing that “the market has become more concentrated since the financial crisis” of 2008.

By contrast, in the United States, the top five banks hold just about 20 percent of all branches. In India, that figure is slightly over 30 percent, and in Turkey it is just under 30 percent.

Authors:

George Popescu
Allen Taylor