Friday July 6 2018, Daily News Digest

p2p loan korea

News Comments Today’s main news: PayPal, Synchrony close consumer credit portfolio deal. Personal loans hit record high. Funding Circle updates projected returns. Furongbao gets $121M investment. Creditshelf to IPO on Frankfurt Stock Exchange. Today’s main analysis: Swindlers in Korea tarnish P2P lending. Today’s thought-provoking articles: Why Kabbage isn’t ready to go public. Why a lack of local payment options hurts […]

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United States

PayPal closes sale of consumer credit portfolio (FinExtra) Rated: AAA

PayPal Holdings, Inc. (NASDAQ: PYPL) today announced the closing of its consumer credit receivables transaction with Synchrony (NYSE: SYF).

Under the terms of the transaction, and related transactions with unaffiliated third parties, Synchrony acquired $7.6 billion in receivables, including PayPal’s U.S. consumer credit receivables portfolio, which totaled $6.8 billion at the time of closing, and approximately $0.8 billion in participation interests in receivables held by unaffiliated third parties. PayPal received approximately $6.9 billion in total consideration at closing.

Why This Ambitious Startup Isn’t Going Public–Yet (INC) Rated: AAA

Petralia was discussing her Atlanta-based company’s ambitious expansion plans this year, which include buying other startups and rolling out new payments products. But she was also joking about what’s shiny and new in the world of financial technology startups: everything and anything involving cryptocurrency, relating to the blockchain, or connected to artificial intelligence. Such startups were heavy on the ground in mid-June, when I interviewed Petralia and her co-founder, Rob Frohwein, at the annual MoneyConf event in Dublin, a 5,000-person gathering of entrepreneurs and established companies in every corner of the fintech ecosystem.

Lending remains a large draw for fintech-focused venture capitalists, who put $900 million into the sector in the first quarter of 2018, according to an April CB Insights report. However, venture capitalists are “on pace for a new low” of money spent on lending startups, even while overall global fintech investment is “on pace for a new high,” the report found. Instead, investors are increasingly willing to bet on startups working in wealth management or robo-advising, insurance and blockchain or cryptocurrency.

Karrot Personal Loans Got Chopped: Here’s Where to Borrow Instead (Student Loan Hero) Rated: A

In 2014, Kabbage introduced Karrot, a program that provided unsecured personal loans up to $35,000.

But Kabbage recently stopped offering Karrot personal loans to grow its other offerings. Customers who already borrowed Karrot personal loans can continue making payments online. But those in need of a personal loan will have to look elsewhere.

Business Loan Company Receives Highest Award from TopConsumerReviews.com (Markets Insider) Rated: B

TopConsumerReviews.com recently awarded their best-in-class 5 star rating to OnDeck, a leader among online lenders who facilitate Business Loans.

SoFi Elects Peggy Alford & Magdalena Yeşil to Board of Directors (Crowdfund Insider) Rated: B

On Tuesday, SoFi announced the election of Peggy Alford and Magdalena Yeşil to its Board of Directors. According to the online lender, Alford is the Chief Financial Officer and Head of Operations for the Chan Zuckerberg Initiative. Previously she held positions at PayPal as CFO of Americas, Global Credit and Global Products and COO in the Asia Pacific region. Most recently, she served as the head of Human Resources-People Operations as well as the head of Cross-Border Trade for PayPal.

Personal Loans Surge to a Record High (Bloomberg) Rated: AAA

Personal loans surged to a record this year and are the fastest-growing U.S. consumer-lending category, according to data from credit bureau TransUnion. Outstanding balances rose about 18 percent in the first quarter to $120 billion. Fintech companies originated 36 percent of total personal loans in 2017 compared with less than 1 percent in 2010, Chicago-based TransUnion said.

Web-based firms like LendingClub, Prosper Marketplace Inc. and closely held Social Finance Inc. are driving the expansion of personal loans. LendingClub said in a filing that personal-loan originations in the first quarter soared 20 percent from a year earlier to $2.1 billion.

Why DC Developers Heart Crowdfunding (Commercial Observer) Rated: A

Small Change, was founded by Eve Picker, an architect and urban designer, with the idea of connecting investors with real estate professionals. The company’s first offering was for a tiny house in Pittsburgh, Penn in 2015. (Picker and Small Change could not provide comment due to federal law. Regulation Crowdfunding requires that all information about an offering reside on the Small Change portal and nowhere else.)

While Small Change is one of the newer platforms to the scene, other online real estate crowdfunding platforms, like Fundrise and Patch of Land, have been around for years.

19 State Attorneys General Unite Against “Madden Fix” Bills (OLPI) Rated: A

The Attorneys General of 19 states and the District of Columbia (the “AGs”) on June 27, 2018, publicly opposed to previously proposed pieces of legislation pending in Congress often referred to as the “Madden fix” bills.   Namely, the AGs made their views against HR 3299 (“Protecting Consumers’ Access to Credit Act of 2017”) and HR 4439 (“Modernizing Credit Opportunities Act”) in a letter (“AG Letter”) to Majority Leader McConnell, Minority Leader Schumer, Chairman Crapo, and Ranking Member Brown.  A copy of the letter can be found here: AG Letter.  HR 3299 passed the U.S. House of Representatives and is pending in the Senate and revises various laws to state that a loan valid when made does not become invalid when it is sold, transferred or assigned.  HR 4439 pending in a House committee would explicitly state that a bank’s being named lender is not affected by any arrangement is has with a service provider.

Nelnet Files Application for Industrial Bank Charter (Nelnet) Rated: A

Nelnet (NYSE: NNI) today announced it has filed an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Nelnet Bank, a Utah-chartered industrial bank. If the charter is granted, Nelnet Bank would operate as an internet bank franchise with a home office in Salt Lake City. Nelnet Bank would be a separate subsidiary of Nelnet, and the industrial bank charter would allow the company to maintain its other diversified business offerings.

Nelnet has hired Andrea Moss to lead the application process, and then Nelnet Bank if the charter is granted.

PayNet Sees Small Business Lending Reaching New Heights (Business Wire) Rated: A

The Thomson Reuters / PayNet Small Business Lending Index (SBLI) jumped 9.4 points to 152.7 in May and is up more than 10% on the year. The SBLI 3-month moving average also rose in May and is 11% above its year-ago level.

Of the ten largest states, growth was led by Texas (+12.9% Y/Y) and North Carolina (+12.3% Y/Y), which both climbed to record highs. The majority of industries also experienced growth in May, led by Transportation & Warehousing (+15.0% Y/Y), Mining (+9.4% Y/Y), and Construction (+7.5% Y/Y). Notably, all four of the industries that declined on a year-over-year basis are in the service sector, including Information (-9.3% Y/Y) and Accommodation & Food Services (-8.1% Y/Y). However, Health Care posted its third consecutive monthly gain (+4.1% Y/Y) after a steady two-year decline.

The PayNet Small Business Default Index (SBDFI) fell two basis points to 1.82% in May and is down seven basis points compared to a year ago, its sharpest annual decline since late 2014. On an annual basis, more than half of the major industries saw defaults fall in May, led by Mining (-183bp Y/Y), Transportation & Warehousing (-133bp Y/Y), and Professional Services (-32bp Y/Y). Regionally, defaults fell in eight of the ten largest states on a monthly basis, but were up in half of the largest states relative to year-ago levels. Notably, Texas (-36bp Y/Y) has seen defaults fall by double-digits in each of the last nine months.

United Kingdom

Funding Circle updates projected returns (Bridging & Commercial) Rated: AAA

Following the latest review, the P2P platform has updated the projected returns it displays for each lending option and will now show these returns as a range.

Projected returns are the annual returns that a diversified investor could earn after fees and bad debt, but before tax.

The projected returns for its balanced and conservative lending options are now:

• balanced: 6-7%
• conservative: 5-5.5%

P2P platform Lendy tops £400m funding (Mortgage Finance Gazette) Rated: A

Lendy’s latest milestone comes as some banks pare back their lending and more property developers seek out alternative finance options.

The firm reached £300 million in lending in April last year and has funded hundreds of bridging and commercial property development loans since its launch in 2012. These include residential developments, commercial property, and conversions.

The £400 million has been invested by over 21,500 investors who have earned more than £40 million in interest so far.

Money saving product recommendations “biggest incentive” to use Open Banking (Credit Strategy) Rated: A

Six months into Open Banking, two fifths of customers willing to share their bank transaction data with a new lender would do so if it provided product recommendations which save them money.

That’s according to research carried out by Equifax. Other motivations to share transaction data through Open Banking include the ability to easily compare products from different financial institutions (36 percent), being offered tailored incentives for switching to a new provider (34 percent), and a streamlined process when applying for mortgages (28 percent) and loans (25 percent).

Record first half for Scottish alternative lender (Business Insider) Rated: A

LendingCrowd , the Scottish alternative lending specialist, has reported record first half lending of almost £14m in 2018 and has upped its proportion of loans to Scotland-based businesses, helped by its £2.75m partnership deal with Scottish Enterprise’s investment arm.

After three consecutive months of record lending in April, May and June, the Edinburgh-based company loaned £13.9m in the first six months of the year, compared to £4.9m for the same period last year. Activity during the second quarter also reached an all-time high, with lending of £8.8m – a 225 per cent increase on the £2.7m delivered in the second quarter of 2017.

LendInvest notches another year of profit (AltFi News) Rated: A

Its loan originations came close to doubling, up 91 per cent to £536m. Revenues were also up, increasing to £53m for the year. Originations look set for further growth too, with lending capital growth of 94 per cent to £791m.

However, despite a surge in these key metrics, profits remain relatively modest at just £1.9m before tax for the period, up from £0.1m before tax the previous year, according to the firm’s gross management accounts. By IFRS standards, LendInvest recorded a similar £1.8m in profit last year, but made a loss of £1m in the preceding year (ending 31 March 2017).

Landbay co-founder looks to shake up property market (Peer2Peer Finance) Rated: A

GRAY Stern (pictured), the co-founder of buy-to-let peer-to-peer lender Landbay, is aiming to shake up the UK property market with his new company.

The investment portal, called Dot, enables amateur landlords to invest in UK and US properties that it has already sourced via estate agents and property portals. The properties come with a pre-approved mortgage, enabling anyone with a 30 per cent deposit to buy them instantly.

As part of its package, Dot provides all the services a landlord would need, including insurance, tax compliance, lettings and management, thereby taking some of the hassle out of the process.

Who is guiding the Big Three? (Peer2Peer Finance) Rated: A

The ‘big three’ P2P lenders – Zopa, Funding Circle and RateSetter – have often led the way in this process.

And as these firms have evolved, their board members – both executives and non-executive directors (NEDs) – have reflected these changes.

Here we look at the make-up of these boards and analyse the expertise and experience of the people who are guiding the big three.

Orca Cofounder Jordan Stodart Shares Update and Quiz Info (Crowdfund Insider) Rated: A

In preparation of its Lending Challenge, the P2P investment aggregation provider Orca partnered with UK P2P Lending Knowledge Leaderboard and posted a quiz targeting investors and industry players to see how much people know about the P2P knowledge. Neither questions nor answers will be posted here to keep the quiz fair.

Orca has teamed up with Peer2Peer Finance News; all winners will receive a print subscription to the magazine. The top 3 quiz placers will win:

  • 1st place: £100 John Lewis voucher, P2P Finance News magazine subscription & Trophy
  • 2nd place: Amazon Echo Dot and P2P Finance News magazine subscription & Silver medal
  • 3rd place: Regency Hamper and P2P Finance News magazine subscription & Bronze medal
China

Chinese P2P Lending Platform Furongbao Receives $ 121M Strategic Investment (China Money Network) Rated: AAA

Chinese peer-to-peer lending platform Furongbao announced that it has received a RMB800 million (US$120.6 million) series B round, strategic investment from a controlling shareholder of Wanjiale Gas Appliances, a Chinese household appliances manufacturer.

Chinese P2P platform fails to pay back $ 15m (Global Times) Rated: A

A Hangzhou-based peer-to-peer (P2P) lending platform  has failed to pay around 100 million yuan ($15 million) back to its investors, media reports said on Thursday.

An investor surnamed Zheng who is based in Hangzhou, East China’s Zhejiang Province, told the Global Times on Thursday that he had invested about 50,000 yuan on niubangold.com, but now he cannot withdraw money from the platform. “[Investors] have reported the case to local police,” Zheng said.

According to a statement posted on niubangold.com late Tuesday, projects worth 98.5 million yuan are overdue.

DLA Piper Adds Beijing Partner From Shearman (The American Lawyer) Rated: B

DLA Piper has recruited capital markets partner Yang Ge in Beijing from Shearman & Sterling, where she was counsel.

Ge’s practice focuses on equity and debt securities offerings. During her time at Shearman, which she joined in 2011, she was involved in several Chinese companies’ initial public offerings in the U.S., including advising the underwriters on online lender LexinFintech Holdings Ltd.’s $124.2 million Nasdaq IPO earlier this year and online micro-lender China Rapid Finance Ltd.’s $60 million listing on the New York Stock Exchange last year.

European Union

Creditshelf Plans Initial Public Offering on Frankfurt Stock Exchange in Q3 (Crowdfund Insider) Rated: AAA

Creditshelf Aktiengesellschaft, a Germany based online lender, has announced its intent to do an initial public offering (IPO) on the Frankfurt Stock Exchange. The IPO is currently scheduled to take place for the third quarter of 2018. The offering is expected to be newly issued shares with a capital increase in the amount of around € 15-20 million. Creditshelf says that Hevella Capital GmbH & Co. KGaA (backed by Rolf Elgeti) has placed a backstop order of up to € 15 million if and to the extent the shares are not subscribed for by investors in the course of the offering.

Creditshelf is an online lender that targets the German marketplace providing access to capital for SMEs. The platform targets a larger ticket size than many other SME lenders with an average loan size of around €500,000 and €600,000 – and moving higher.

International

‘Dollars On The Floor’ — Why A Lack Of Local Payment Options Hurts Retailers (PYMNTS) Rated: AAA

As digital technology keeps bringing new efficiencies to transactions, and more consumers around the world turn to eCommerce for retail and other purchases, an accompanying trend is making life interesting for merchants and payment providers. Local payments options are increasing, resulting in a sector that promises to undergo more fragmentation in the coming years.

Scandinavian consumers have embraced Klarna and other pay-by-invoice services — for reasons not entirely understood by Booth and other analysts, it seems.

If a Chinese consumer trying to make an online purchase cannot do so through Alipay or WeChat Pay, that consumer is more likely to search for another merchant that takes that form of payment rather than, say, using their own UnionPay-branded payment card, Booth said.

Key Learnings at the Cambridge Centre for Alternative Finance 2018 Conference (Lend Academy) Rated: A

Greg Medcraft is the former head securities regulator in Australia and is now the Director of the Directorate for Financial and Enterprise Affairs of the OECD. He talked about trust and how trust in business is low today, particularly in finance. The power of the crowd is impacting trust where companies misdeeds are amplified and public opinion can turn against a company quite quickly. One of the antidotes to this is distributed ledger technology that can create networks with more trust, transparency and traceability.

Probably the country with the biggest success story when it comes to financial inclusion is Kenya. While I have heard the story of M-Pesa before I have never heard it from the person that was in charge of overseeing the economy as it was transforming Kenya. Professor Njuguna Ndung’u was the Governor of the Central Bank of Kenya from 2007 to 2015 during which time M-Pesa went from a curiosity to having half of the country’s GDP flowing through its platform. The introduction of such a system was a major challenge for central bankers as they worried about KYC concerns and financial instability.

India

PolicyBazaar.com Becomes First Indian Unicorn Foraying into Blockchain (BW Disrupt) Rated: AAA

Blockchain has been the talk of town primarily because of bitcoin and other crypto tokens’ parabolic rise in price and then the recent downfall. However the underlying technology, blockchain, rarely gets its fair share of limelight. But when a billion-dollar fintech startup plans a foray in this tech, it deserves attention.

In a chat with their CTO and CPO, Ashish Gupta, he revealed their plans to implement blockchain technology at PolicyBazaar.com, his outlook on the technology as well as how it could affect the fintech space in general.

Artha Venture Fund makes first close at Rs 40 crore (The Economic Times) Rated: A

Early stage venture capital firm Artha Venture Fund (AVF) has achieved the first close of its maiden fund having raised Rs 40 crore. Artha Venture Fund I, which received the approval of the Securities and Exchange Board of India in March this year, will have a corpus of Rs 200 crore along with a greenshoe option of Rs 100 crore.

The fund, which is structured as a Category I alternative investment fund, will invest in startups across seed, pre-series A and series-A levels of growth.

Lending platform BigWin Infotech gets NBFC-P2P certification from RBI (Media Nama) Rated: B

Fintech start-up, BigWin Infotech (PaisaDukan.com) has received its Certificate of Registration (CoR) from the Reserve Bank of India (RBI), paving the way for the launch of its Financial Platform – PaisaDukan.com, a release from the company said today.  Though the company received an in-principle approval from RBI to set up an NBFC Peer-to-Peer lending platform in May, the operations could only commence after the firm received a CoR from the central bank. The RBI issued those guidelines last October, to register and accredit P2P lending firms that resell loans from individuals who have money to invest.

P2P platform Monexo Fintech to raise $ 5 million in equity (The Economic Times) Rated: B

Armed with a licence from the banking regulator to operate an NBFC-cum-P2P lending platform, Monexo plans to invest in IT and infrastructure, which require continuous capital injection in the initial stages of any online marketplace.

The Mumbai-headquartered firm received the RBI licence last Friday.

Asia

Swindlers tarnish P2P loans’ reputation (Korea Joongang Daily) Rated: AAA

Korea’s peer-to-peer (P2P) lending market is turning out to be a Wild West of hucksters and frauds, and government regulations are nowhere in sight.

According to Crowd Institute, a research center that specializes in P2P financial markets, to date, about 3.65 trillion won ($3.2 billion) of P2P loans have been taken out in Korea, about five times the amount from two years ago.

Indonesia’s OVO platform to start peer-to-peer lending in Q4 – head (Nasdaq) Rated: B

Indonesian conglomerate Lippo Group’s payment platform OVO plans to start peer-to-peer lending in the fourth quarter of 2018, its head said on Thursday.

Authors:

George Popescu
Allen Taylor

Monday June 12 2017, Daily News Digest

Philippine banking

News Comments Today’s main news: Zopa’s  6.1% return IFISA to launch June 15. CFPB’s Corday extends small biz lending RFI comment period. Zopa looking for 40 tech whizzes.  WeChat Pay available globally through Paymentwall. Today’s main analysis: Lending Club and the rise of securtization club deals. Today’s thought-provoking articles: China urges banks to devolve loan approval responsibility. How Thailand could […]

Philippine banking

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United States

Weekly Industry Update: Lending Club and The Rise of Club Deals (PeerIQ Email), Rated: AAA

A club deal program enables Lending Club to drive standardization – in offering docs, covenants, structure, servicing, collateral consistency, and offering cadence. As a sponsor, Lending Club is able control its brand in the public ABS markets and manage competing interests amongst issuers, placement agents, and investors. (See this week’s

Corday announces extension of comment period for small business lending RFI (Ballard Spahr), Rated: AAA

Last month, in conjunction with a field hearing, the CFPB issued the RFI, together with a white paper on small business lending.  In his remarks, Director Cordray revealed that, in response to requests for additional time to respond to the RFI (which currently has a July 14, 2017 comment deadline), the CFPB is extending the comment period by 60 days.

With regard to the CFPB’s debt collection rulemaking, Director Cordray discussed thedebt collection proposals under consideration by the CFPB which it released last July in anticipation of convening a SBREFA panel.

Elevate Launches Elevate Labs (News Channel 10), Rated: AAA

Elevate Credit, Inc., a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the launch of Elevate Labs at its new San Diego-based Advanced Analytics center. The center of excellence underscores the company’s commitment to innovation in the non-prime credit market.

Elevate’s industry-leading technology and proprietary risk analytics are optimized to help non-prime consumers meet their immediate financial needs while improving their financial futures. The company annually invests $40 million in its technology and analytics capabilities, including substantial investments in its proprietary IQ and DORA risk technology and analytics platforms, to support rapid scaling and innovation, robust regulatory compliance and ongoing improvements in underwriting.

DORA, Elevate’s proprietary risk analytics platform, utilizes a terabyte-scale Hadoop database composed of thousands of elements, 1.5 million customer records and other wide-ranging data inputs including credit bureau data, web behavioral and performance data, bank account data and other non-traditional data, to accurately assign risk to customers.

Elevate’s cutting edge technology and analytics team, worldwide, consists of the most advanced thinkers in risk analytics with more than 35 data scientists in our Risk Management department including over 25 staff members with advanced degrees and eight with PhDs. While the San Diego location is the company’s most concentrated and fastest growing analytics center, the team is spread across offices in Texas and the United Kingdom.

Here Are All The Financial Reforms That Will Disappear With Dodd-Frank (Forbes), Rated: A

The U.S. House of Representatives on Thursday passed the Financial CHOICE Act.

The Act has seven principals:

1. Taxpayer bailouts of financial institutions must end and no company can remain too big to fail.

2. Both Wall St. & Washington must be accountable

3. Simplicity must replace complexity

4. Economic growth must be revitalized

5. Every American must be able to achieve financial independence

6. Consumers must be protected

7. Systemic risk must be managed via profit & loss

The Act proposes to restructure the Consumer Financial Protection Bureau, an agency that monitors financial products from loans to high-fee investment products.

Stress tests for America’s big banks, another Dodd Frank invention, are also contentious. The CHOICE Act proposes major changes.

In mortgages, the CHOICE Act will aim to allow smaller banks to increase lending by minimizing a rule about qualified mortgages. The rule increases costs of lending to higher risk borrowers and often precludes banks from holding mortgages on their books. Modifying the rules may allow local banks to increase lending.

The Death of Basis Points? (ETF Trends), Rated: A

The Financial Services industry is in the middle innings of a multi-phased and disruptive process that began in 1993 with the first ETF, and jump-started in 2008 with the first “robo advisor.” These two disruptive events continue to put enormous downward pressure on the fees charged by mutual fund companies and individual Advisors.

I do not believe financial services is racing toward a flat-fee model. However, the pace of fee compression will accelerate as clients have more low-priced options from which to choose. The end-result is enormous pressure on traditional Advisors to justify their higher prices and deliver an asset management solution more sophisticated than buy-hold-rebalance.

There are six key steps to becoming a Quant Advisor:

1. Develop a small but powerful set of investment models that are both unique and compelling. As an example, we only work with a small number of Advisors in an area to create and keep a competitive edge.

2. Have discretion on client accounts. The real value of using models is the ability to affect many client accounts at the same time to create efficiency and scalability. Building scale is the only sustainable way to overcome fee compression.

3. Communicate. Most clients simply don’t need or want to meet with their Advisor four times a year, but they want regular access to bite-sized information about what their Advisor thinks. Creating valuable, but short-and-sweet communications keep a client happy and informed. Generic newsletters do not count (because no one reads them).

4. Create multiple channels for a client to engage. Most traditional Advisors have a simple fee grid based on assets. A Quant Advisor will have a service menu that provides options from super low-cost investment-only relationships all the way to complex financial planning solutions. Due to scale and efficiency, any of these service levels can be highly profitable. Maybe one of the options is aflat fee only service level?

5. Sell more than advice. A Quant Advisor sells financial advice/planning and asset management services. Traditional Advisors only sell advice/planning and pay someone else to provide asset management (such as managed accounts, SMA’s, mutual funds, etc.). By having a unique and compelling asset management capability in-house, Quant Advisors do not have to pay someone to do it for them. That creates a new revenue source and the ability to capture a higher percentage of the total fees paid by the client. As fee compression continues to eat away at advice/planning prices, having multiple services to sell a client creates a more stable revenue stream.

6. Be hyper-transparent. Clients are more afraid of what they do not know than what they do. By proactively talking about and disclosing fees (including the hidden ones), risk and performance the relationship can blossom based on a new level of trust and understanding.

Industry Power Players Join RealtyShares (RealtyShares Email), Rated: A

We recently had the honor of welcoming

U.S. business schools embrace ‘fintech’ as students clamor for courses (Reuters), Rated: A

Stanford University and Georgetown University business schools are planning to offer “fintech” courses for business school students for the first time this fall. New York University is planning a new course for undergraduates after launching a fintech specialization in its business school last year.

They join the University of Pennsylvania’s Wharton School, Columbia University’s business school and the Massachusetts Institute of Technology’s (MIT) Sloan School of Management, which all launched similar programs in recent years.

A number of prominent startups have exploded onto the fintech scene in recent years, fostering interest in mobile payment apps like Venmo, digital loan platforms like SoFi and robotic wealth managers like Betterment.

Lending Club Shareholders Approve Election of Directors (Crowdfund Insider), Rated: A

Present at the Annual Meeting in person or by proxy were holders of 313,460,225 shares of common stock, representing 77.7% of the shares of common stock outstanding.

The vote tallies were as follows:

Nominees
 
For
 
Withheld
 
Broker Non-Votes
Scott Sanborn
231,733,112
2,464,510
79,262,603
Lawrence Summers
189,603,973
44,593,649
79,262,603
Simon Williams
192,466,148
41,731,474
79,262,603

Approach alternative investments with care (Business-Standard.com), Rated: A

Unlike the wealthy, retail (individual) investors have limited options to invest in high-risk, high-return alternative instruments. The ticket size of such products — private equity, exclusive wines and paintings — are too high for small investors. But, in recent times, more avenues have opened that allow retail investors to make risky bets in assets other than stocks. For example, bitcoins is one such asset that younger investors are looking at. The price of this virtual currency has gone up from $579.13 a year back to $2,825.03 — a return of 488 per cent.

Marketplace Lending News Roundup – June 10 (Lend Academy), Rated: A

Fintech’s ultimate value: Making sense of the data explosion from American Banker – Interesting piece what the true role of fintech should be: making sense of the masses of data.

U.S. business schools embrace ‘fintech’ as students clamor for courses from Reuters – Today fintech is one of the hottest courses at MBA schools, driven by student demand.

Peer-to-peer lender calls hung parliament “the worst of all outcomes” from AltFi – Commentary on yesterday’s UK election from an online lending perspective.

Marketplace Lending: The Next 10 Years from deBanked – Interesting thoughts on where marketplace lending may be heading.

LendingTree, Inc. to Present at RBC Financial Technology Investor Day (PR Newswire), Rated: B

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will participate in RBC Financial Technology Investor Day at The Westin New York Grand Central in New York, NY.

Doug Lebda, LendingTree Founder and CEO, is scheduled to present on Wednesday, June 14 at 8:55am ET. The presentation will be webcast live and archived at

Additionally, the company’s latest investor presentation will be available on its investor relations site at investors.lendingtree.com.

The week in real estate industry deals: June 5-9, 2017 (Inman), Rated: B

RealtyeVest lowered its required minimum investment amount to $5,000 for all offerings on their real estate crowdfunding platform for accredited investors. Previous minimum investment amounts ranged from $15,000 to $50,000, depending on the real estate project. The new $5,000 threshold is intended to draw first-time investors to experience RealtyeVest’s high-caliber performance with a nominal financial commitment. “We are seeing significant activity on our platform, however we feel there is a corner of the market we are not appealing to,” said Daniel Summers, RealtyeVest CEO, in a statement. “So we are offering investors a taste of our service with a new lowered investment amount for all projects. Once they see the quick return on their investments, they will no doubt want to increase their contribution amounts.”

United Kingdom

Zopa hunts for 40 tech whizzes as it narrows focus on bank launch (The Telegraph), Rated: AAA

Britain’s largest peer-to-peer lender has heightened its focus on building a bank, firing the starting gun on a recruitment push that will see it hire at least 40 developers for the project.

However its tune changed late last year, when it emerged that the technology firm wanted to challenge high-street lenders by offering deposit accounts and overdrafts.

Having raised £32m from investors eager to support the project earlier this month, the group is now looking to bulk out its workforce by at least 16pc – bringing in tech experts able to build a digital bank from scratch.

The hires will come from London and Barcelona, where Zopa opened a technology hub last week.

Zopa clarifies coverage ratios ahead of Core account launch (P2P Finance News), Rated: AAA

ZOPA has clarified the expected implications of phasing out of its provision fund as it prepares to launch Zopa Core on Thursday, a new account which will not be backed by the fund.

On 15 June, the peer-to-peer platform’s target date for unveiling its Innovative Finance ISA, the new account will formally take over from the firms’ existing Access and Classic products, whose safeguard fund will be phased out by December this year.

Existing safeguarded loans and new loans purchased before that deadline will continue to be covered by the fund until they reach maturity.

Zopa’s innovative finance Isa, paying projected 6.1%, to launch on 15 June (Which), Rated: AAA

Zopa’s long-awaited innovative finance Isa (Ifisa) will be made available to existing customers on Thursday 15 June, but it won’t be protected by the company’s Safeguard scheme.

The Isa, offering projected returns of up to 6.1%, will initially be made available to existing Zopa customers wanting to invest new money. It will then be possible to move existing Zopa loans into an Isa wrapper from 1 July, and transfer funds from third-party Isas from 17 August.

It is expected that new customers will have to wait two months or longer before being invited to open a Zopa Ifisa, due to expected high demand.

Zopa’s Safeguard scheme is a central compensation fund that aims to pay out to lenders whenever a borrower defaults on a loan. This fund is limited, so it could run out if lots of borrowers fail to repay, but it has covered 100% of eligible loans to date.

However, this scheme won’t be offered to Isa customers, nor will it be available to any new investors after December 2017.

It will offer two savings products in an Isa wrapper.

  • Zopa Core, in which your money will only be lent to lower-risk borrowers, offers expected returns of 3.9%.
  • Zopa Plus lends your money to a wider range of borrowers, offering expected returns of 6.1%.

LandlordInvest reports high demand for secondary market loans (P2P Finance News), Rated: AAA

ACTIVITY on LandlordInvest’s newly-launched secondary market has been better than expected, with investors shrugging off political uncertainty to snap up loan parts in record time.

The peer-to-peer lender, which specialises in buy-to-let finance, launched its secondary market in the middle of May.

Filip Karadaghi, the firm’s co-founder and chief executive, told Peer2Peer Finance News that uptake had been higher than expected, with no signs of a slowdown ahead of Thursday’s UK General Election.

Peer-to-peer comes of age as alternative asset class for investors (Financial Times), Rated: A

More than a decade after the first peer-to-peer sites launched in the UK, the sector that allows investors to lend directly to individuals and small businesses is coming of age. Two of the largest sites in the UK — Zopa and Funding Circle — were last month authorised by the City watchdog, marking a seal of approval for the lenders and providing a boost to the broader sector.

Institutional investors are already piling in. High-profile fund managers including Neil Woodford and Artemis invested more equity capital into RateSetter in recent weeks, valuing the company at more than £200m. Zopa completed a £32m funding round, led by Wadhawan Global Capital, an Indian financial services company.

The rise of peer-to-peer sites means that lending, which as an asset class has been a monopoly for the banks, is opening up to ordinary investors.

Othera and Credit Crowd strike a blockchain partnership (AltFi), Rated: A

Credit Crowd gets on Othera’s blockchain, citing transparency as the key issue.

Blockchain provider Othera has linked up with Australian fintech lender Credit Crowd, allowing the Sydney fintech to digitise its loans on blockchain.

The partnership will allow Credit Crowd’s loans to be tokenised and traded on digital asset token exchanges—in effect, a kind of securitisation.

Credit Crowd is a P2P marketplace that specialises in short-term loans, secured by first mortgage properties. The company claims to have facilitated more than A$100 million worth of loans since its founding in 2012 and managed over A$50 million in their retail fund.

P2P lenders stay away from apps (P2P Finance News), Rated: A

APPS may be seen by some as a vital tool for any fintech business but peer-to-peer lenders have largely avoided this area so far.

Of the biggest UK P2P players, only Funding Circle has an app for investors, while Zopa has one in development.

Instead, others such as RateSetter, MarketInvoice and Landbay have focused on the overall web, desktop and mobile user experience.

Julian Cork, chief operating officer at buy-to-let lender Landbay, said the platform had considered making an app but decided against it.

Will robo-advice mean checkmate for human financial advisers? (Lexology), Rated: A

To date, robo-advice offerings have tended to focus more on the less complex end of the financial advice spectrum. The FCA’s enthusiasm for robo-advisers stemmed largely from concerns about an ‘advice gap’, situations where consumers (particularly those with limited assets) are unable to get advice and guidance on a need they have at a price they are willing to pay. The FCA has therefore seen robo-advisers as a way of providing quick and inexpensive advice primarily in relation to lower value or less complex scenarios. Robo-advice is still in its infancy and is generally not yet at the stage where it can provide sophisticated advice in relation to complex circumstances. Certain external factors are also slowing the spread of robo-advice. For example, recent research sponsored by ING suggests that the majority of the public remains uncomfortable with the idea of automated advice and this attitude will take time to change. In addition, PI Insurers may feel, by necessity, that they need to take a relatively cautious view in relation to new and untested technology. Firms implementing robo-advice solutions may therefore face increased insurance premiums, which is a further potential brake on innovation.

For the foreseeable future then, it appears that human advisers have no need to be concerned. Robo-advice is in the process of automating only one part of the wider industry and even then at a relatively restricted pace. But what about the longer term? If we make the reasonable assumption that advances in robo-adviser technology are inevitable does that mean that robo-advisers will one day become so sophisticated and accepted as to render human input redundant?

Meet the next generation of fintech startups set to revolutionise the world of finance (Wired), Rated: A

Winner of the startup stage Curve, started out in 2015 to cut out the noise and disconnection in the banking landscape. The digital wallet platform is designed to connect all of a person’s financial services into a single go-to place online, which is accessed with a Mastercard.

Finimize has grown an online community of 100,000 people. Each day, members receive a newsletter that digests the biggest finance stories of the day and why they should matter to them.

AgentCASH is an enterprise grade omnichannel platform that enables SMEs to sell and manage their products on multiple channels in real time.

Crowdsurfer brings big-data engineering expertise to crowd and peer finance to help the world understand where funds are flowing to.

Reposit was developed by its CEO Curran McKay as a faster, more affordable alternative to the £3.5 billion tenancy deposit system.

Lendr uses artificial intelligence to act as a reverse auction platform for mortgages.

Co-founder of Capitalise Paul Surtees has built technology that enables SMEs and their advisors to find, compare and select the best lenders available to them – allowing them to access the funding available. The platform matches SMEs with lenders, who are ranked based on their past successes.

London-based Paybase rolls an end-to-end solution for payments, compliance and risk into one unified API. The platform is designed for marketplaces such as the sharing economy or crowdfunding sites, as well as fintech apps and products that have complex payment processes.

China

China urges banks to devolve loan approval responsibility to boost lending (BusinessLine), Rated: AAA

China’s banking regulator has urged lenders to devolve responsibility for loan approvals to boost credit to small and micro businesses, but also emphasised that risks need to be kept under control.

Guo’s comments were made at a forum on Friday, according to a statement on the website of China Banking Regulatory Commission.

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

Internet Investment Fund has been Subscribed in Down Payment of ¥30bn

The Chinese Internet Investment Fund was founded jointly by the Cyberspace Administration of China and the Ministry of Finance. The total size of the fund is around $14.9billion. The initial subscription (almost $4.4 billion) has been finished with $300million was acquired by central government as guiding fund, and the rest was raised from strategic investors. Thus, the driven coefficient of the government funds reached to 1:14.

After a new round of share price increasing, Alibaba’s market value has reached to $360bn.

On 9th June, shares of Alibaba jumped by 13.29% and closed at $142.34 per share, the companies’ total market value reached to $362.3 billion. Exceeding Tencent for the second time and become Aisa’s most valuable company.

Previously, Alibaba issued its annual report of 2017 fiscal year, showing that Alibaba has surpassed Tencent on core metrics such as revenue, net earnings and cash flow.

According a report released by Deutsche Bank, Alibaba's estimated revenue for 2018 fiscal year will be far higher than expected, and the disclosed information will drive its stock price up further.

Ping An Launches Fintech Fund (Crowdfund Insider), Rated: A

Sepaking at the recent WSJ D.Live Asia event in Hong Kong, Ping An CIO Jonathan Larsen said Ping An is launching a new fund to invest in early stage Fintech ranging from $10 million to $30 million, according to a report from Dow Jones (here).

NYSE-listed P2P firm confident on its business model (ShanghaiDaily), Rated: A

CHINA Rapid Finance will follow the strategy of “low and grow” to realize a stable and sustainable growth after its debut on the New York Stock Exchange on April 28,  Wang Zhengyu, founder and CEO of the Shanghai-based peer-to-peer lender, said in Shanghai yesterday.

CreditEase’s CEO Tang Shares Insights on FinTech in China at The Asian Banker Summit (PR Newswire), Rated: A

CreditEase’s founder and CEO Ning Tang was invited to deliver a keynote speech today at The Asian Banker’s 18th flagship Summit “The Future of Finance” in Singapore. The Summit gathered leading industry, government and academic speakers such as Barney Frank, former US Congressman and a leading co-sponsor of the 2010 Dodd–Frank Act, David Shrier, Managing Director, MIT Connection Science and Engineering, and representatives from: ANZ, Bank of the Philippine Islands, DBS Bank, the Federal Reserve Bank of Chicago, Prosper Marketplace, Prudential, and Uber.

Future Life, Future Finance

The theme of this year’s Summit shares the same vision as CreditEase at its 11th anniversary – “Future Life, Future Finance”.

In his keynote speech, Tang shared his insights as a pioneer and thought leader in the FinTech industry, giving an overview of the current landscape, and anticipating where opportunities will be against the backdrop of potential or inevitable changes.

Going Global

After 10 years of successful domestic growth, at its 11th anniversary, CreditEase is ready to accelerate its global expansion. The opening of the new Singapore office and Tang’s delivery of the keynote speech at one of world’s renowned financial summits is just part of the global voyage.  In addition to Singapore, CreditEase Wealth Management operates overseas offices and affiliate offices in Hong Kong, New York, and Tel Aviv and its domestic mainland China network covers over 40 cities. Its resources are also spread across the US west coast, Germany, UK, and Australia.

China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A

On June 3, 2017 Tsinghua PBCSF Global Finance Forum, which was hosted by Tsinghua University, and organized jointly by the Tsinghua University PBC School of Finance (PBCSF) and Tsinghua University National Institute of Financial Research (NIFR), convened in Beijing.

The highlights of the forum include:

Digital Financial Inclusion: LI Dongrong, President of National Internet Finance Association of China, pointed out in his speech that China and the world had the potential to drive the growth of inclusive economies by promoting digital financial services. While tremendous gains in financial inclusion have already been achieved, digital financial services, together with effective supervision, are essential to close the remaining gaps in financial inclusion.

InsurTech Innovation: JIANG Bo, Director-General of the International Department of China Insurance Regulatory Commission and Member of the strategic Council of PBCSF, said that Insurance technology (InsurTech) is a burgeoning phenomenon that has the potential to help the insurance industry reconnect with its customers following a period of increasing alienation and disengagement.

Three Chinese Fintech Companies Join Slate of Overseas Listing in 2017

  • Zhong An Online Property and Casualty Insurance, China’s first online-only insurer, has resumed a plan to raise $1 billion or more in a Hong Kong initial public offering (IPO) in the second half of this year.
  • Rong360, an online platform for financial product search, comparison and recommendation, has announced to raise at least $400 million in an initial public offering in the U.S. as soon as 2017.
  • With its rapid expansion, Chinese online lending platform Neo Capital has revealed its IPO plan in the U.S. last year.

On June 5, Chinese company Xiaomi, perhaps best known for its smartphones, announced that its affiliate Xiaomi Loan would partner with CITIC Securities to list CNY600 million asset backed securities (ABS) under a shelf registration on Shanghai Stock Exchange.

The ABS product was split into three tranches: AAA, AA and the subprime:

Rating level

Volume

Interest rate

AAA

CNY426 million

5.7%

AA

CNY78 million

6.3%

The subprime

CNY96 million

8%

International

WeChat Pay is now available globally via Paymentwall (Payment Wall), Rated: AAA

Paymentwall has partnered with Tencent to bring WeChat Pay (Weixin Pay) to every online and retail store. The partnership allows every business owner around the world to get instant access to 600 million Chinese shoppers in China and abroad.

With over 600 million active users, WeChat Pay is now one of the most popular payment methods in the world. WeChat Pay processed over $1.5 trillion in Chinese digital payments, representing over 30% of all online transactions made in 2016.

Human-robo combo has greatest chance of success (International-Adviser.com), Rated: A

A combination of human and robo could be the answer for underserved Asian investors seeking low-cost technology-driven financial advice, a market that pure robo-advice providers have found hard to crack.

Inexpensive, automated robo-advisors could be a solution, but unlike in the large markets of US and Europe, in Asia they face difficulties stemming from regulatory fragmentation, lack of scale and investors’ preference for human contact.

The hybrid approach uses automated financial advice systems, but provides a layer of personal contact when dealing with the institution. Some call this approach “cyborg-advisor”, others “bionic advisor”.

Due to low profit margins of robo-advisory services and the necessity to achieve scale in order to be profitable, independent robo-advisors are not likely to succeed in the region under current regulations, according to Aldcroft.

Australia

NAB Ventures provides seed funding to Australian start-up Basiq (Banking Business Review), Rated: A

NAB Ventures, a venture capital arm of National Australia Bank, along with Reinventure have provided seed funding to Basiq, an Australian-based start-up that offers open banking API platform.

India

Lending startup Loanmeet raises seed funding (VC Circle), Rated: AAA

Online peer-to-peer lending platform LoanMeet, which is run by Strivers Solutions Pvt. Ltd, has raised an undisclosed amount of seed funding from a clutch of investors.

Chinese entrepreneur-turned-investors Cao Yibin and Huang Wei, along with KrazyBee.com co-founder and CEO Madhusudan E, participated in this round.

LoanMeet provides short-term working capital loans to retailers for inventory financing. The company claims to be growing at 50% month-on-month.

Flipkart to Add Online Loans to its Marketplace (Crowdfund Insider), Rated: A

Flipkart, one of the largest e-commerce platforms in India sales topping $2 billion each year, is getting into Fintech. Flipkart states that with the creation of a new focused team for financial services and products, Flipkart will be providing the public the option of obtaining loans from e-lending firms.

Flipkart is also expected to start offering other financial services such as access to funds.

Lendingkart gets Rs 50 crore loan from Yes Bank (Medianama), Rated: A

Lendingkart, an online platform for lending to small businesses and entrepreneurs, has raised debt funding worth Rs 50 crore from Yes Bank Ltd. The company said that this is the first step towards eventually shifting from non-banking financial companies (NBFCs), who provide loans at a higher rate, to banks.

In June last year, Lendingkart had raised Rs 205 crore ($32 million) in a series B round of funding led by Bertelsmann India Investments (BII) and Darrin Capital Management, with participation from existing investors Mayfield India, Saama Capital and India Quotient. Of this, $20 million was raised through equity sale and remaining $12 million  through debt financing.

How the rise of P2P lending presents several opportunities to banks (India Times), Rated: A

Peer to peer lending is hardly new. But it has risen to commercial prominence in the past few years, thanks to technology. The emergence of marketplace lending platforms connecting individual borrowers and lenders is disrupting the business of lending.

Peer to peer lending is hardly new. But it has risen to commercial prominence in the past few years, thanks to technology. The emergence of marketplace lending platforms connecting individual borrowers and lenders is disrupting the business of lending.

A 2015 survey shows that 25% of U.S. millennials have used a P2P lending platform. According to recent research, the cumulative amount of loans that originated via marketplace lending platforms in China was over $150 billion in 2015. In US and UK, it was close to $30 billion and $10 billion respectively.

While the Indian P2P market is much smaller, the scene is heating up. Last year alone, 20 lending firms cropped up to take the total to about 30. What does this imply for our banking industry?

Asia

How Thailand Could Become Southeast Asia’s Next Fintech Hub (Forbes), Rated: AAA

Omise, a payment management platform founded by Jun Hasegawa and Ezra Don Harinsut, is Thai fintech’s greatest success story to date. In 2016, it raised a $17.5 million Series B round and currently operates in Thailand, Japan, Indonesia and Singapore.

The Thai Fintech Association formed in 2016 as a networking club that would facilitate connections among fintech startups, big banks and investors, according to Disyadej. But the organization filed as an association with the Ministry of the Interior this year so it could take a more hands-on role in the industry’s development.

Although TechGrind operates in six countries in the region, it has relocated several of its startups to Bangkok so they can make use of TechGrind’s network and resources there. But TechGrind approaches opportunities in fintech — and in all startup sectors — from a cross-border perspective.

One such company is Pymlo, which creates accounting software for small businesses in Thailand and the broader region.

Hong Kong, Singapore rivalry hobbling Asia in $ 100 billion fintech race (Reuters), Rated: A

Governments across Asia – most notably Hong Kong and Singapore – have launched a raft of initiatives to grab a slice of the $100 billion invested in financial technology globally but the regulatory hotchpotch is making it tough for firms to scale up, the Asia Securities Industry and Financial Markets Association (ASIFMA) said in a report on Friday.

Investors poured $19 billion worldwide into fintech – including P2P lenders, distributed ledger technology and crowdfunding platforms – in 2016 alone and thousands of fintech start-ups continue to proliferate, according to a February report by global regulatory body the International Organization of Securities Commissions (IOSCO).

Hong Kong, Singapore, Australia, Japan, South Korea and Malaysia have launched a range of special programs to attract and foster fintech ventures, from incubators and grants, to temporary license waiver schemes, with competition fiercest between Hong Kong and Singapore.

Philippines

Consolidated credit database likely to improve lending in the Philippines in 2018 (ASEAN Today), Rated: A

The Philippines will launch a credit consumer database in 2018 in a bid to bolster retail lending.

Bulk of lending in the Philippines have been corporate loan, forming more than 80% of loan books. Consumer lending business have been secondary to corporate lending – analysts explained that the lack of consumer level data can explain this.

The gap between corporate and retail lending is the lack of a credible database.

The government’s Credit Information Corporate collects data from banks in the Philippines. This will be extended to rural financial institutions to build a credible database by 2018.

Authors:

George Popescu
Allen Taylor

Monday May 8 2017, Daily News Digest

Lending Club expenses revenues

News Comments Today’s main news: Experian legislative update. P2P platforms predicted to shift to hybrid models. Millennials spend over 1/3 of take home pay on rent. WeChat Pay enters U.S.market. Today’s main analysis: Lending Club’s lost year (and a half). Alternative return metrics (Cash on Cash Returns). Today’s thought-provoking articles: Record number of banks want to partner with LC. Q1 […]

Lending Club expenses revenues

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

MENA

News Summary

United States

Legislative Update 158 (Experian Email), Rated: AAA

Highlights this issue:

  • On April 14 the CFPB’s Office of Fair Lending and Equal Opportunity issued its annual report on fair lending. The report provides an overview of the work that the Bureau has done over the past year to provide oversight and enforcement of the fair lending laws under its jurisdiction.
  • In March, US Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) announced that they were seeking legislative proposals to promote economic growth. Proposals were due to the Committee on Friday, April 14. Experian worked closely with the CDIA and Chamber of Commerce to ensure that our policy priorities were included in their letters. CDIA’s comment letter recommended that the Committee take up and pass CROA reform, credit score competition and legislation to cap class action damages under the FCRA.
  • On April 19, GAO released a report on fintech and marketplace lending. The report was intended to provide an overview of fintech, as well as the potential benefits and challenges for consumers and small businesses.
  • Texas, H.B. 2333 would require a business that accepts a credit card or debit card for payment and retains any data related to the card, other than a confirmation number, for the transaction, to secure the retained information against a breach of system security. If a breach of system security occurs in which credit card or debit card information is compromised, the business shall notify the attorney general within 24 hours.

See the full report here.

Lending Club’s Lost Year (And A Half) (Seeking Alpha), Rated: AAA

One year later, the question hangs in the air: Has Lending Club recovered?

Source: Lending Club & Seeking Alpha

Meanwhile, G&A expenses ballooned as the company increased spending in compliance, retention, and recruiting. Despite only releasing one product, relative engineering costs also increased significantly during the same period. The company spent $35M in non-adjusted engineering costs, an increase of $11.5M from a year prior. Why have costs expanded, even though the company hasn’t grown?

Following the Jefferies incident (and even in the months leading up to it), one of the concerns that was brought up in 2016 was regarding Lending Club’s underwriting, both in its efficacy and in its efficiency. Many institutions temporarily halted their investments on the platform during the second quarter to do more due diligence, specifically on the concern that additional loans may have had their details changed.

This issue was recognized in the first quarter of 2016, when Lending Club stated that it had begun eliminating high-risk populations from its credit policy. The company announced several more cuts to its underwriting throughout 2016, most recently eliminating another 6% of borrowers from its credit policy. Cumulatively, approximately 17% of borrowers who formerly qualified for loans were cut from the credit policy.

Source: Lending Club

Why is credit deteriorating? Lending Club noted these deteriorating credit trends early in 2017:

“Throughout 2016 and into 2017 we have continued to observe the same trends on the Lending Club platform: indicators suggest a strong U.S. economy, but some borrowers are not offering appropriate levels of risk adjusted return.”

The delinquency rates for grades D-G do seem to be flat/trending down over the course of 2016, but delinquency rates for 36-month loans grades A-C are flat/trending up over the same period.

While not a perfect corollary, S&P/Experian consumer credit default indices also show an increase in bank card defaults over the past six months, which suggests that the increasing level of charge-offs is not limited to Lending Club.

Source: Lending Club

Lending Club also noted that it is spending a significant amount more on in-house collection efforts. Servicing and Origination expenses increased $2M from 4Q 2016 to 1Q 2017.

Lending Club noted that, although its servicing portfolio balance only increased 8% year over year, the revenue collected on its servicing portfolio has increased 34%.

Source: Lending Club

If we tally up our score card, we have:

  1. Revenue has not recovered (but the company has guided investors to growth in 3Q and 4Q).
  2. Relative spend has increased in 3 out of 4 expense categories.
  3. Bad debts will continue to impact note investor portfolios while the 2016 vintages progress through their hazard curves, although there are signs that the increase in loan charge-offs is slowing down and/or reversing for high-risk borrowers.

Alternative Return Metrics: Cash on Cash Return (PeerIQ), Rated: AAA

As evidenced from Prosper’s annualized return calculation methodology, the return calculation can be complicated, involving several moving parts. Marketplace institutional investors appreciate the complexity and diversity of return calculations.  At PeerIQ, we have had numerous conversations in the past with our clients and developed the “Cash-on-Cash Return” metric as one of several tools to monitor portfolio performance.

It varies from Prosper’s Estimated IRR by only considering realized cashflow information. Unlike Annualized Return, it eliminates complication springing from annualizing simple returns. In short, CoCR utilizes few readily available loan and pool level data points and summarizes the historical return of the investment on monthly basis.

Source: PeerIQ
Source: PeerIQ

The disadvantage of the CoCR metric is that returns are not forward-looking. Also, the declining cash-on-cash return performance (a typical characteristic of installment loan portfolios) can create confusion or frustration for retail investors. Retail investors experience strong net annualized returns in the early periods, only to experience returns consistently decline as loans season.

Record Number of Banks Want to Partner with Lending Club (Bank Innovation), Rated: AAA

Banks made up a “record” 40% of the lender’s almost $2 billion originations for the quarter, up from 31% last quarter, according to Lending Club CEO Scott Sanborn.

Bank participation hit its lowest (for the past 12 months) in the third quarter of 2016 — 13% of the total $1.9 billion originations — and has been on a steady increase ever since.

Source: Lending Club

Online lenders feel the pinch (Crain’s Chicago Business), Rated: A

Data glitches are bad for any company. But they are especially terrible for online lenders that trumpet having high-quality data as a main selling point.

And now comes Prosper Marketplace, which said on Thursday that it told investors their returns were inflated because of a systems error. Annual returns for some investors were cut in half, while others declined by 2 percentage points or less.

For example, take a look at a recent securitization by Avant, the Chicago-based online lender that cut its staff by about 30 percent last year and whose loan default rates had been higher than expected. To attract investors to the nearly $220 million deal, Avant had to materially improve the underlying creditworthiness of loans by reducing their length and the amount financed and increasing their risk-adjusted yield, according to PeerIQ.

Data provider Orchard Platform said the average return on online consumer loans was 3.95 percent last year, which doesn’t seem sufficient unless the default rate was extremely low, especially compared with average returns of 6.93 percent in 2015.

The U.S. economy will slow at some point, leading to a reduction in loans and higher defaults. And eventually, all lending will be done online.

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q1 2017 (PR Newswire), Rated: A

LendingTree®, a leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the first quarter of 2017. The list features the top lenders in multiple loan product categories, including Mortgages, Personal Loans, Business Loans and Auto Loans, all of which are included in LendingTree’s online loan marketplace.

Lender rankings are based on a weighted average of overall rating and the total volume of customer reviews for mortgage, personal, business and auto loans. Lenders were rated on offered rates, fees and closing costs, responsiveness, customer service and overall customer experience.

Mortgage Category

1)

Insight Loans

2)

J.G. Wentworth Home Lending, LLC

3)

CBC National Bank

4)

Arcadia Financial Group LLC

5)

Veterans United Home Loans

6)

First Midwest Bank

7)

AmeriSave Mortgage Corp

8)

Wyndham Capital Mortgage

9)

First Direct Lending, LLC

10)

HomePlus

Personal Loans Category

1)

First Midwest Bank

2)

Lending Club

3)

Avant

Business Loans Category

1)

Seek Capital

2)

RapidAdvance

3)

Currency Capital

Student Loans Category

1)

RefiJet

2)

up2drive – a division of BMW Bank of North America

3)

rateGenius

How Will a Real Estate Lending Slowdown Affect Marketplace Lenders? (National Real Estate Investor), Rated: A

According to new statistics from the Mortgage Bankers Association, real estate lending is slowing down. Lenders closed $491 billion in mortgage loans in 2016, down 3 percent from the previous year. The decline in the last quarter of 2016 was even more significant, falling 7 percent in comparison with the fourth quarter of 2015.

In commercial real estate, reports show that the decline is even sharper. According to Real Capital Analytics, U.S. commercial property purchases were down 10 percent in 2016 from the previous year, and the trend seems to be continuing into 2017. U.S. investors purchased $50.3 billion in commercial property in January and February of 2017, compared to $80.1 billion during the same timeframe in 2016.

With $300 billion in loans coming due in the next 18 months, it is unlikely that the slowdown is a sign that the industry is poised for a more significant decline.

Strong outlook for marketplace lending

While banks will likely continue to have a small pullback in commercial real estate lending, the outlook for marketplace lending is strong. In 2015, alternative lenders originated 68 percent more loans than the year prior, according to the Mortgage Bankers Association. With American Banker reporting a 700 percent growth in the marketplace lending industry in just four years, this growth is poised to continue.

While commercial real estate lending as a whole may have been down slightly in 2016, the outlook for marketplace and other non-bank lenders is strong for 2017.

A Simple Macroeconomic Case For Avoiding Lending Club (Seeking Alpha), Rated: A

We believe the most commonsense case for avoiding Lending Club (NYSE:LC) as an investment is pretty simple and doesn’t involve a deep dive into the numbers. We think the reasons for avoiding peer to peer lenders can be explained simply and are relatively easy to understand. Lending Club, along with other peer to peer lenders and smaller aggressive regional banks, will likely be a poor investments in coming quarters as a shorter-term debt cycle turns over and the lowest creditworthy types of loans begin to see a spike in delinquencies and faults.

While Lending Club loves to point out to its investors and those who participate in its online marketplace that a lot of its borrowers have great credit scores, the reality of the situation is that the lowest creditworthy people who are denied loans elsewhere will drift to platforms like Lending Club in order to secure a loan they otherwise would not be able to obtain. This is just simply a function of lending markets: the least creditworthy people will find the lowest spot on the totem pole to borrow money.

Enter Lending Club, a pool of investors chasing high yield and borrowers who were likely unable to obtain credit elsewhere. We think the obvious outcome for the broader economy will be significant and continued pressure on all peer to peer lenders, not just Lending Club, going forward over the next couple of years.

Small banks warm up to marketplace lending for SBA expansion (American Banker), Rated: A

Marketplace lenders are slowly gaining traction with community banks eager to do more Small Business Administration lending.

Five Star Bancorp in Rocklin, Calif., is the latest small institution to follow the trend, agreeing earlier this year to try out SmartBiz Loans.

Is PayPal Co-Founder Max Levchin Making The Next Credit Card Killer? (Forbes), Rated: A

Now, Max Levchin’s latest venture, the financial technology company Affirm, is seeking to bring more accountability and transparency to the banking industry through what he calls “fair and honest financing.”

According to CreditCards.com, the average amount of credit card debt is about $9,600. If you make the minimum monthly payment, you could pay more than $11,615 in additional interest during the life of the loan — which is more than you originally borrowed.

Affirm lets shoppers pay for purchases — such as a Casper mattress or Peloton bike — over time with simple-interest loans that are free of any penalty or late fees.

Last month, the San Francisco-based company completed its 1 millionth consumer installment loan.

Max Levchin: We started Affirm 5 years ago with the thesis that we could build smarter underwriting and anti-fraud technology to improve on the tired traditional systems, and therefore create financial products that are simple, transparent, fairly-priced and free of incentive misalignment that so often defines consumer banking.

Since 2014, our loan volume has grown 40+ times over, we’ve added 900 merchant partners including Expedia, Wayfair, Peloton, Casper and Eventbrite, issued more than 1 million loans, all while maintaining an industry-first Net Promoter Score (NPS) of over 70.

Max Levchin: Since 2001, the [CFPB] found that more than 29 million consumers had been harmed by illegal practices perpetrated by bad actors in the finance industry.

There are also several legal, yet equally harmful, practices being used by the industry today that are disproportionately affecting the most financially vulnerable populations.

I would also like to see the CFPB affirm a consumer’s right to access and permission their financial data. Doing so expands access to credit for the 58 million Americans considered credit invisible – those with no credit files or insufficient information in their files to generate a credit score.

Max Levchin: Over the next few years, we [plan] to offer many more services expected from a modern financial institution, while bringing transparency to the industry where too often the customer has to lose for the service provider to win.

A new era for big asset managers? Glass Steagall and fintech (The Financial Revolutionist Email), Rated: A

The current clamor for breaking up America’s big banks should serve to remind those institutions to carefully manage the newfound freedom they will enjoy if Dodd-Frank gets defanged. It should also spur them to continue to seek out new risk-detection and monitoring technologies to avoid the kinds of systematic problems that sparked neo Glass-Steagallism in the first place. Does voice trading have a future?

It’s easy to believe that with the growing role of IM/chat messages, computer on computer communications, sophisticated algos and machine learning, the telephone is destined for oblivion when it comes to trading. But in a new survey conducted by Greenwich Associates, “voice” was reaffirmed as an important element to building trust and detecting nuance between trading counterparties. That’s good news for start-ups like Apple should buy Canada or PayPal.

So instead of creating a money transfer service from scratch, Apple should consider scooping up Venmo and the rest of PayPal with it (and/or A two pizza, Agile future for banks.

ANZ, for example, is the latest bank to announce that it would shift to Agile teams of about ten as a way to

JPMorgan formally quits R3 (Finextra), Rated: A

JPMorgan Chase has formally exited blockchain consortium R3, following in the footsteps of fellow titans Goldman Sachs and Banco Santander who split last November.

The departure comes as R3 continues to pursue fundraising efforts, looking to raise to raise $150 million from its members and strategic investors in return for a 60% stake in the business – a downgrade from its original funding target of $200 million.

Ping-pong capitalism: RE tech firms look to China for cash (The Real Deal), Rated: A

Real estate tech startups like LendingHome, Fundrise, Cadre, RealtyShares and Roofstock also raised money from Chinese firms.

Between 2011 and 2015, annual Chinese investment in U.S. technology companies rose from $300 million to $9.9 billion, according to research firm CB Insights, before falling in 2016 amid a general slowdown in venture investment. The data doesn’t break down how much money went into real estate technology, but sources said it holds a special appeal to Chinese investors.

Hone is backing the real estate investment platforms Roofstock, RealtyShares and Clara Lending, the Airbnb competitor Overnight and the drone-based property inspection service BetterView, among others, making it one of the most active Chinese investors in the space. The social media company Renren invested in mortgage platform LendingHome and crowdfunding company Fundrise, among others. Alibaba founder Jack Ma is an investor in Cadre, the Jared Kushner-backed real estate investment startup.

The fintech revolution is nigh. Our next move is critical. (The Hill), Rated: A

The technology of the future that is thought capable of revolutionizing financial institutions and its regulators is already here. But with no national plan to harness it for economic betterment or regulatory transparency, it may well represent another missed opportunity to restructure the financial system.

One need only look to the evolution of the internet, with its revolutionary concepts of distributed communication that fundamentally changed how the world and its financial institutions communicate. A similar revolutionary technology, distributed ledger technology (DLT), is promising to fundamentally change how financial institutions store and report information, but only if it can become a common good like the internet.

With the CAT rollout and data collection not yet begun, a more robust and comprehensive DLT solution could be proposed, one which combines important CFTC products with those of the SEC in a shared data collection undertaking.

The U.S. needs a comprehensive fintech and regtech (regulatory technology) plan to efficiently deploy DLT.

With standardization, fintech and regtech innovation can enable virtual global views of financial data that is disbursed throughout local computer nodes (data collection points) across the globe. But this is only possible if these nodes conform to both common data standards and common networking protocols.

On Deck Capital subsidiary amended and restated its existing asset-backed revolving debt facility (Reuters), Rated: B

* On May 4, 2017 subsidiary amended and restated its existing asset-backed revolving debt facility – SEC filing

* Fourth A&R credit agreement provides for increase in lender’s revolving commitments from an aggregate amount of $75 million to $100 million

Shark Tank Star Kevin O’Leary Loves Fintech. (Crowdfund Insider), Rated: B

Shark Tank star Kevin O’Leary, also known as “Mr. Wonderful” to some, is a fan of Fintech. O’Leary is sharing the love by delivering the Keynote address at the upcoming Benzinga Fintech Awards scheduled to take place this coming Thursday in New York City (May 11, 2016).  O’Leary is said to be a regular suspect at the Benzinga offices too.

O’Leary will be presenting the keynote at the pinnacle of the award celebration.

Alongside O’Leary the following executives will be presenting or participating;

  • Kathleen Murphy, President, Personal Investing at Fidelity Investments
  • Tim Hockey, President and CEO of TD Ameritrade
  • Ron Suber, President of Prosper Marketplace
  • Matt Burton, CEO of Orchard
  • Adam Dell, founder and CEO of Clarity Money
  • Bill Emerson, Vice Chairman at Rock Holdings
United Kingdom

P2P platforms predicted to shift to hybrid models (P2P Finance News), Rated: AAA

UK PEER-TO-PEER lending platforms are poised to shift towards hybrid models to stay afloat, a financial services think tank claimed on Monday.

The P2P industry has re-shaped the country’s small corporate funding and investment market, putting pressure on traditional lenders to step up their game, said the Centre for the Study of Financial Innovation. But it is now facing a plateau that may require it to expand into direct lending and balance-sheet operations, as well as cutting interest rates, to become profitable.

He pointed out that SME lending growth has become relatively stagnant and that less than half of UK small businesses are aware of new online sources of finance. This casts a shadow over the volume growth that P2P lenders need to achieve to become a mass market.

And in response to the digital innovation brought about by P2P players, traditional banks have begun to change the way they address the SME market, upgrading their online services and shortening their decision-making timeframes.

Attracting borrowers and scaling up investment volumes is going to be one of the key challenges for platforms going forward, the report said, alongside proving the soundness of their underwriting during a credit downturn and investing in continued innovation in customer service.

Millennials spend over a third of take home pay on rent despite price growth beginning to slow (LendIt), Rated: AAA

Cash-strapped millennials renting in the UK are spending upwards of a third of their take home pay of £17,359 on rental payments, according to the latest Landbay Rental Index, powered by MIAC.

For tenants aged between 18-39 and living alone, 69% of a monthly post-tax income of £1,447 is spent on £1,012 of rent. In a shared house of two people, overall rent of £1,152 adds up to 39% of each tenant’s income, while those co-habiting in a three-bed property would each spend 30% of their monthly take home pay on a rent of £1,322.

Rents have continued to rise over the last five years, increasing by 9% across the UK since April 2012 and by 8% in London – with monthly payments remaining a huge burden on those struggling to save, despite the pace of rental growth beginning to slow since August 2015, from 2.66% to 0.82%. While rents have begun to fall in prime Central London, outer boroughs popular with millennials, such as Barking and Dagenham, Havering and Bexley have seen rents grow by 26%, 18.9% and 18.2%.

Current accounts: How fintech is revolutionising personal banking (Independent), Rated: A

The gig economy continues to grow, with about 5 million people in the UK working as independents. It makes sense that a bank account provider would want to cash in on that and that is why Coconut has sprung up – to provide tailored banking for freelance and self-employed workers.

Customers can manage and track their income and outgoings via an app, and it even gives reminders of tax deadlines and the end of the financial year.

Increasing numbers of customers are relying on their phones for their daily banking, with data from the British Banking Association revealing that customers used their phones to check their bank balances 895 million times in 2015 alone, a number that is no doubt rocketing upwards.

A number of fintech start-ups are trying to capitalise on this trend and Monzo is one.

The app gives customers a real-time insight into what they are spending and how they are spending it, helping to budget and stay in the black. Users can access their account via an app that gives data on their daily and monthly spending, as well as the overall health of their account.

The first bank to gain a licence while being centred entirely around an app, Atom is racing ahead in the fintech current account stakes. It offers some far-sighted technological developments, including the opportunity to do away with passwords and even debit cards, instead relying on voice and face recognition.

And DiPocket is a new financial app that isn’t a bank but offers customers mobile banking facilities via a prepaid Mastercard.

Funding Circle’s Desai: use P2P for monetary stimulus (P2P Finance News), Rated: A

UK POLICYMAKERS should start using peer-to-peer platforms to stimulate the economy, Funding Circle’s chief executive and co-founder Samir Desai said on Wednesday.

The head of the country’s third-largest business lender called on the government and the Bank of England to bypass the banking system and inject monetary stimulus via P2P platforms, capitalising on the direct access they provide to the real economy.

New direct Lending fund targeting 6.5% yield seeks fresh capital raise (AltFi), Rated: A

The Edinburgh-based RM Secured Direct Lending trust is seeking to raise fresh capital just five months after its launch as it nears full deployment of its capital.

Launched back in December 2016, the closed-ended fund targets the SME lending space investing in loans it originates of between £2-10m. It specialises in secured debt investments and the portfolio has had a good run since its initial public offering (IPO) with most of its capital invested or moving towards deployment.

Total Net Assets are today £48.9m. Nearly £40m has been invested in a total of 11 loans, with borrowers ranging from a healthcare group, a UK high street retailer and a large UK/European forecourt provider.

What role can robots really play in the financial advice market? (The Herald), Rated: A

So, when Royal Bank of Scotland announced in March that it would be rolling out robo-advice for mortgage applications by the end of the third quarter it was clear that that particular innovation is no longer quite so innovative.

Put simply, websites such as Nutmeg, which is by far the best-known name in the fledgling UK market, present would-be investors with a range of questions designed to ascertain their attitude to risk before directing them to a model portfolio that should suit their needs.

However, the issue, according to Stephen Martin, head of Brewin Dolphin’s Glasgow office, is that even where needs are uncomplicated, robo-advisers can only go so far because they will never be able to tease out information peculiar to individual situations.

Hollands agreed, noting that while robo-advisers are a positive addition because they are helping open the investment marketplace to a wider range of people, they cannot be seen as a like-for-like replacement for full financial advice.

While the robo-advice market in the UK remains small, covering in the region of £1.5-2 billion of assets, research from Deloitte suggests that with more and more people having to take responsibility for investing their own pensions the potential for growth is high.

The accountancy giant found that 43 per cent of 35 to 44 year olds with a pension would use robo-advice on where to invest it, with those with the smallest pension pots, who may not be able to afford traditional financial advice, most likely to go to a robo-adviser.

5 ways to finance your start-up business (Business Zone), Rated: B

Business grants: In an unsettled economy, start-ups are seen to be important as a way of encouraging economic growth- this is why so many banks and publicly funded organisations are happy to support your ambitions.

Short term loans: One way in which you can look to finance your business is through a quick loan from a reputable company. Quick loans can help to offer you the perfect cash injection necessary to get your business up and running with the ability for the debt to be paid back over a series of repayments. The key with funding your business through a short term loan is in finding a loan with a low interest rate.

Crowdfunding: Peer to peer lending and crowdfunding have become an increasingly popular way for entrepreneurs to start up their own businesses.

Friends and family: Something to always consider when looking towards funding your own business is to pitch for funding from your family members and friends.

Angel investors: Angel investors can be a great source of investment and can be found in most cities.

China

WeiyangX Fintech Review (Crowdfund Insider), Rated: AAA

WeChat Pay, one of the biggest mobile payment platforms in mainland China, has boosted its cross-border business by entering the U.S. market.

One in four of those aged between 18 and 27 use pay-by-credit services Ant Check Later, a personal loan and installment service under e-payment provider Ant Financial Services Group, as these freer spenders form the very core of the country’s burgeoning consumer-credit landscape.

People born in the 1990s constitute 47.3 percent of the platform’s registered users. Among them, nearly 40 percent prioritized the service as a payment option over its sister service Alipay, China’s largest mobile wallet by market share. This is 11.9 percentage points higher than those born before 1985.

Baidu Financial has announced to launch new consumer mortgage products with the aim of encroaching on consumer credit market.

On May 2, the National Committee of Experts on Internet Finance Security Technology, which was sponsored by the National Internet Emergency Center and the Internet Society of China, released a piece of evaluation criterion for P2P online lending platforms.

The rating standards mainly include five aspects: corporate strength, enterprise qualification, operation indices, cyber security and social reflection.

In another attempt to secure a firm grasp on China’s Fintech market, Chinese tech conglomerate LeEco has turned its next venture towards insurance and fund consignment. Since 2015, LeEco has got several financial licenses on various fields: micro credit, private placement, insurance and fund. Specially, LeEco is trying to build a fintech ecosystem, which covers micro finance, equity management, fund and insurance sales.

CreditEase CEO Ning Tang on China’s Marketplace Lending Industry, Robo-Advisors, Credit Scoring, & More (CB Insights), Rated: A

In recent weeks, Ant Financial‘s Yu’e Bao surpassed JPMorgan’s US government money market fund to became the largest in the world, China Rapid Finance became the second Chinese P2P lender to go public on a major US exchange, and Ant Financial upped its bid to acquire MoneyGram, the second largest global money transfer provider.

On the state of marketplace lending in China

Two fintech sectors — payments and marketplace lending — are more mature than others in China, as they have been around for over 10 years, have massive scale, and operate within robust regulatory frameworks and ecosystems.

We think that, over the next decade, sectors like crowdfunding, robo-advisors, insurance tech, blockchain and blockchain-driven applications will emerge. Some are behind marketplace lending by 3 years, some by 5 years, and some are behind by even 10 years, but I think all will go through a similar process in China.

It took 10 years for marketplace lending to grow from an idea to an industry in China. Recently, there has been tightening in the market, but I believe a tighter market will help the industry become more stable and healthy.

On credit scoring in China

Regulators have adopted a strong view that credit scoring is key for China to develop its credit bureau system. It will be a very strict process.

Currently, we use eCommerce data, telecommunications data, bank and credit card data, insurance data, and social security data. Big data is very helpful, but alternative data needs to cooperate with traditional finance and credit data to make the risk evaluation model really work.

I think China will develop a multi-layer system. The core will be the credit bureau — consisting of core credit data — and around it will be different applications for different industries utilizing some industry-specific data. Around that will be additional ancillary data services utilizing big data for anti-fraud, marketing, and so forth.

Still, the core layer will look quite similar to what the US credit system looks like.

On insurance tech in China

The biggest pain point for the insurance industry in China is that it’s never sold in the right way.

We don’t need more insurance products, we need more education and intelligent matching.

Where CreditEase is investing

Chinese investors are in the process of building globally diversified portfolios. From our point of view, we help clients who already have foreign currency outside of China to invest in the US and other parts of the world.

We are still quite interested in opportunities in lending. For example, we invested in (former Lending Club CEO) Renaud Laplanche’s new venture, Upgrade. I believe there are still a lot of opportunities left over from marketplace lending 1.0. We are similarly interested in crowdfunding, insurance tech, and — not only robo-advisors — but also B2B fintech models helping the wealth management and asset management industry.

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

Over 60% Chinese P2P Lenders achieved profit

According to the latest statistics from Online Lending House, 28 P2P Lending platforms disclosed their financial results, accounting for 1.3% of all the platforms. In 2016, 17 (61%) platforms have achieved profit, while 11 P2P Lenders had a loss.

The data shows that the most profitable platform is Yirendai, with $1.12 billion net profit. However, another US listed platform, China Rapid Finance, has lost $0.23 billion. Excluding lost platforms and those with incomplete data, the average net interest rate of 17 platforms are 25.92%, performing well in profitability.

 

Lenders Revenue

(Million RMB)

Net Profit

(Million RMB)

NetProfit Rate Founding Time Public Company shareholding ratio
Yirendai

3,238

1,116.4

34.48%

Jul. 2012 YRD

direct listing

WeiDai Network

1,776.3

325.50

18.32%

Jul. 2011 HAKIM UNIQUE

12.38%

Niwodai

666.9

64.88

9.73%

Jun. 2011 Jiayin Fin-tech

100%

PPmoney

327.74

43.09

13.15%

Dec. 2012

Wan Hui Technology

100%

AVATAR China

35.03

20.90

59.65%

May. 2015

Neo Telemedia Limited

70%

UF-Club

189.82

19.61

10.33%

Nov. 2013 Hemei Group

51%

Yinhu Network

50.91

2.41

4.72%

Jul. 2014

Panda Financial Holding Corp., Ltd.

100%

PP100

37.85

-12.12

Aug. 2015 Nuode Share

40%

Lcfarm

58.84

-45.10

Mar. 2015 NoPoison

33.64

China Rapid Finance

385.43

-230.25

May. 2015 XRF

direct listing

The huge market of Auto Finance may reach to 1.85 Trillion RMB in 2018 

After the Internet Finance mania in China, more attentions now are paid to bank depository of the auto loan market. In China, with the rapid development of economy, cars gradually become ordinary people’s necessary life consumption, especially in developed areas, and almost every family owning a car.

Meanwhile, the large holding numbers and high liquidity of cars make it one of the most promising vertical field in P2P industry. It was reported that the number of car users in China are rapidly increasing, which contributed to the rapid development of the auto loan market.

According to the latest data, the total volume of Internet auto finance in China is expected to reach at 1.85 trillion RMB, driving the penetration ratio of consumer finance to about 30%.

European Union

Temenos hires FinTech heavyhitter for Marketplace (IBS Intelligence), Rated: A

Temenos has announced Duena Blomstrom as Chief Growth Officer for Marketplace, its online store of 100+ FinTech solutions that have been certified and pre-integrated with the Temenos Suites.

Blomstrom is well known in the FinTech sector as an analyst, entrepreneur and Angel Investor, a mentor for Startupbootcamp and Techstars, and the inventor of the Emotional Banking, EX and Bank Branding concepts. For the past 18 years, she has operated on the strategy and consulting side, be it for sales or marketing.

But banks are not easily displaced. Peer-to-peer lending, for instance, has grown rapidly, but still amounted to just $19bn on America’s biggest platforms and £3.8bn in Britain last year, according to AltFi Data, an analytics company. And some marketplaces now involve banks. Lex Sokolin, director of fintech strategy at Autonomous, a research firm, argues that music—one of the first industries to be attacked by digital revolutionaries—was fairly easily disrupted. Retailing was a little harder, but customers got used to not handling books, cameras and clothes before buying. Finance and health care, he says, are much more difficult. People are rarely inspired by financial products, says Mr Sokolin, which makes it costly to build a brand. It is easier to team up with those who already have the customers.

In the West, regulation is opening up more of the field to fintechs, both large and small. A revised European Union directive on payment services, known as PSD2, allows third parties to offer more convenient ways of paying online or to consolidate information from different accounts (with the holder’s permission) so that people can keep track of their finances. America has no equivalent, but the Office of the Comptroller of the Currency, which oversees national banks, has proposed giving special licences to fintechs.

China’s digital behemoths worry less about such things. Companies like Ant Financial, the financial arm of Alibaba, an e-commerce giant, and JD.com, another online marketplace, have masses of data about those who buy and sell on their platforms. They know their spending habits and how much cash they can spare, so an easy next step is to offer them small loans. Big Chinese banks in any case neglect consumers and small businesses, so customers feel no loyalty towards incumbent lenders. Regulators have also been willing to let online companies shift into finance.

International

Q1 CYBERCRIME REPORT (ThreatMetrix), Rated: AAA

In the ever-evolving world of cybercrime, authentication continues to be a mainstay of global digital businesses; accurately recognizing trusted returning users and promoting a frictionless online environment builds a loyal customer base and reduces attrition.

However, cybercrime is becoming an increasingly global phenomenon, operating across borders in well organized criminal gangs, with knowledge sharing and centralized intelligence. Attacks continue to evolve quicker than the tools and techniques used to detect them.

Some key attack trends analyzed this quarter include:

  • The multifarious attack methods used in a 2017 cybercrime attack
  • The evolution of attacks from single to multi-vector approaches
  • Identity theft is a key issue for all industry sectors as they continue to see attacks involving stolen and synthetic credentials, harvested from omnipresent data breaches
  • The proliferation of RATs in the financial services sector
  • The sophistication of bot attacks
  • The only effective armor is to genuinely understand who your real customers are and how they transact, by collecting and processing all the information you know about them and using this to make informed risk decisions.
Source: ThreatMetrix

See the full report here.

Financial technology is proving less of a battleground than feared (The Economist), Rated: A

To be sure, a gang of newcomers have muscled their way into their domains. Peer-to-peer or marketplace lenders, such as Lending Club and SoFi in America, or Funding Circle and RateSetter in Britain, connect people and companies that want to borrow with those that have money to lend, promising both sides keener rates. Britain’s MarketInvoice allows small companies to borrow against receivables immediately, rather than turn to a bank or wait for bills to be paid. Digital banks such as N26 in Germany, Tinkoff Bank in Russia and an array of British hopefuls are challenging incumbents.

Islamic Fintech Alliance Publishes Fintech Industry Snapshop Report (Crowdfund Insider), Rated: A

The Islamic Fintech Alliance (IFT Alliance) has published its inaugural report on the emerging Fintech sector for the Muslim community.

Munshi is the founder and CEO of Ethis Ventures, a company that operates several platforms including crowdfunding. Mushis states that Muslims must unite to take advantage of this “unprecedented opportunity” to invigorate Islamic financial services with new forms of finance.

See the full report here.

Australia

Financial advisers should consider bitcoin as an asset class: Dunworth (Financial Standard), Rated: A

This week the cryptocurrency broke record-highs when it started trading above USD$1680 against the US dollar. As at May this year, the total market cap of the bitcoin market has more than doubled to US$23 billion since it hit the US$10 billion mark just three years ago.

“A lot of people say that bitcoin is very volatile. It is in the short term but if I were doing fund management for my client, I see it as a very good long term investment,” he said.

Cambridge University counts as many as 5.8 million unique users of the so-called crypto currency wallet, most of whom use bitcoin. More than 100,000 merchants and vendors now accept bitcoin as a form of payment albeit regulators warn that bitcoin users are not covered by refund rights.

Australia going cashless is great for fintech (AltFi), Rated: B

Australia is set to be an almost cashless society by 2020, promising benefits for fintech.

Since 2010, cash payments have declined a staggering 46 percent, and now make up less than 10 percent of all payments, according to new research by East & Partners Australia.

The hope for fintechs is that as payments go digital and the data supply increases, so too will demand for new technologies. It will also improve Australia’s attractiveness to foreign investors.

Writing in The Guardian, the economist Philip Soos denounced a cashless economy as empowering the security state and the banks.

India

Instamojo Wants To Help India’s Five Crore Small Businesses Transact Online (Bloomberg Quint), Rated: AAA

Digital modes of payment are becoming ubiquitous, riding on the government’s less-cash drive after demonetisation. Yet, Instamojo, a Bengaluru-based fintech company, feels not enough is being done for small businesses.

The company wants to help India’s micro, small, and medium enterprises receive payments online in a simple, hassle-free manner, said Sampad Swain, one of its founders and also the chief executive officer. The government last year projected that the number of such businesses has grown to over 5 crore.

The only two requirements for the company’s service to work is that both parties must have a mobile number and a bank account.

“If the mango seller wants to use our platform, he has to first do an e-KYC, which takes a few minutes,” said Swain. This can be done either through a mobile application that can be downloaded from the Play Store, or on Instamojo’s website.

The seller then generates a link by providing information on the ‘purpose’ of the transaction, and the amount that the buyer has to pay. In this case, the purpose would be a crate of alphonso mangoes, and the price would be Rs 1,700, Swain explained.

Once the link is generated, the seller can forward it to the buyer by any messaging mode, like WhatsApp, Facebook, email, or even an SMS. When the buyer clicks on the link, he or she is directed to Instamojo’s website, where a number of online payment options are available.

MENA

Middle East, North Africa (MENA) FinTech Update: Slow to Adopt or Miles Ahead? (EdgyLabs), Rated: AAA

Headquartered in Dubai, Wamda (which means “sparkle” in Arabic) is an organization that supports the entrepreneurial spirit and business initiatives in the MENA region. Along with PAYFORT, an online payment platform, Wamda Research Lab released a report that provides in-depth data about FinTech in MENA.

According to the ‘State of FinTech,’ over $100 million USD were invested in Fintech in the MENA region over the last decade, with $50 million expected for 2017 alone. In 2013, the number of Fintech startups was 46. Then, in 2015, that number increased to 105–with the United Arab Emirates leading the pack with 30 independent FinTech startups–and the overall MENA number is expected to reach 250 by 2020.

Authors:

George Popescu
Allen Taylor