Monday August 13 2018, Daily News Digest

Reasons for Personal Loan Inquiries July 2018

News Comments Today’s main news: OnDeck CEO says online lending is the future of SMB lending. SALT Lending now in 35 states. LendInvest debuts exclusive 5-year fix product through buy-to-let club. Weidai files $100M IPO in New York. Wonga says $3M African loans are unaffected by UK woes. Today’s main analysis: LendingTree Personal Loan Offers Report for July 2018. […]

Reasons for Personal Loan Inquiries July 2018

News Comments

United States

United Kingdom

China

International

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News Summary

United States

OnDeck Capital CEO says online lending is the future for small businesses, talks strong earnings (Proactive Investors) Rated: AAA

CEO Noah Breslow tells Proactive Investors the small business lending company has provided over US$9bln to small businesses, crossing the US$10bln mark this fall, saying online lending is the future for small businesses and consumers.

U.S. Cryptocurrency-Backed Lending Platform Now Available in 35 States After Passing Stringent Regulations (Crypto Disrupt) Rated: AAA

The cryptocurrency-backed lending firm, SALT, has released details that it is now operational across 35 states in lieu of passing crypto regulations and will be expanding its network to 20 new locations.

SALT is based in Colorado and is one of the few companies that allows borrowers to leverage their held crypto as collateral for loans. As more people than ever before hold crypto, it is important that cryptocurrency-backed lending firms pass regulatory checks to offer more competition to potential crypto borrowers in the safest possible manner.

SALT is planning to move into 20 new states, which will include North Carolina, Oklahoma, Florida, and Virginia. Crypto users in all but 15 states can now leverage their crypto to receive personal cryptocurrency-backed lending packages.

Tesla and Spotify say public markets have major flaws. Do they have a point? (Quartz) Rated: AAA

According to two prominent executives this week, the stock market isn’t all that it’s cracked up to be. Initial public offerings are broken, according to Spotify CFO Barry McCarthy (paywall). Tesla CEO Elon Musk says stock investors are too focused on the short-term, and his threat to take the company private sent tradersbankersfans, and government watchdogs into a tizzy.

McCarthy and Musk aren’t alone in their worries. The number of IPOs and listed companies in the US is shrinking: There were an average of 310 public offerings annually from 1980 to 2000, according to an analysis by Jay Ritter, a finance professor at the University of Florida. The average has slipped to 108 since then.

A common complaint is that public markets are too demanding. It’s expensive to comply with regulations, and these days there’s ample private money available for companies to tap without all the hassles of dealing with analysts, short sellers, quarterly reporting, and the rest of it.

Source Quartz

LendingTree Personal Loan Offers Report – July 2018 (Lending Tree) Rated: AAA

Offered loan amounts are down about 3.5% for all borrowers, while offered APRs inched up. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 64% of all loan inquiries.

Source Lending Tree

WV ranked 24th in US for student loan debt (Herald Dispatch) Rated: B

West Virginia schools rank 24th in the nation for the amount of debt its students graduate with, with Marshall University coming in sixth out of the schools tallied in a recent LendEDU report.

By licensing data collected from the annual Peterson’s voluntary financial aid survey, LendEDU, an online loan marketplace, completed its annual Student Loan Debt by School by State Report, a comprehensive analysis of student loan debt statistics for over 1,000 colleges and universities throughout the United States.

The total outstanding student loan debt now stands at $1.52 trillion, making it the second largest form of consumer debt behind only mortgages.

Average individual student loan debt up $ 313 in 2017 (UPI) Rated: AAA

The average amount of individual student loan debt owned by U.S. college students increased by more than $300 in 2017, according to a study by LendEDU.

The New Jersey-based online loan marketplace’s annual Student Loan Debt by School by State Report found the average debt per borrower for the class of 2017 was $28,288, up $313 from $27,975 in 2016.

“Student loan debt in the U.S. continues to be an issue of the utmost importance. The total outstanding student loan debt now stands at to $1.52 trillion, making it the second largest form of consumer debt behind only mortgages,” LendEDU said Wednesday.

The annual report uses data from the Peterson’s financial aid survey, which collects responses from 1,080 four-year public and private institutions to determine average individual student loan debt figures and rank states and colleges in terms of debt per borrower.

Who’s Departed, Who’s Left and Who’s Leading Among Robo-Advisors (Think Advisor) Rated: A

The second quarter of 2018 was a busy one for robo-advisors. Hedgeable announced its impending closure, WorthFM became history and LearnVest notified customers it was discontinuing its planning and online investment services.

During the same quarter, US Bank and Fifth Third Bank launched their robo-advisor platforms and SoFi, a fintech lender with a robo product, introduced checking accounts with debit cards, further blurring the lines between banking and digital advice. And U.K.-based Wealth Wizards, an independent digital advisor with AI capabilities, is exploring a talking robo-advisor.

What you need to know on Wall Street today (Business Insider) Rated: A

The crypto bear market has been a blessing for this bitcoin trading firm’s booming new business

Genesis Global Trading, a crypto trading shop based in New York,launched a crypto lending unit, Genesis Capital, earlier this year.That business originated $30 million in crypto loans on Tuesday, its largest amount ever, according to chief executive officer Michael Moro. The company typically lends out around $2 million per day on average.

In a sense, it could be a bearish indicator for the market. Many of the people who are borrowing crypto from the firm are doing so in order to take a short position on a given coin.

What happens when the government stops doing its job? (The Washington Post) Rated: A

It took almost two years for two dozen officials at the Consumer Financial Protection Bureau to pull together a case against Golden Valley Lending. The online lender was making small short-term loans at interest rates as high as 950 percent, violating laws in at least 17 states that cap interest rates.  Last October, the agency finalized a rule to stop “payday debt traps” by requiring lenders to determine whether people can afford to repay their loans.

Yet a few months later, it unceremoniously dropped the case, telling a federal judge in Kansas that it would “continue to investigate the transactions that were at issue.” Golden Valley is still doing business; its Web site says: “Get the money you need. It’s easy!”

Mulvaney has all but halted the enforcement of certain government regulations. He stripped the bureau’s fair-lending unit of enforcement power and redefined it as an advocacy office.

RealtyShares Launches New Brand Identity and Online Learning Center (SC Now) Rated: A

RealtyShares announced today the launch of its new corporate brand identity and online learning center. The brand changes come at a time when the company is continuing its focus on the commercial middle market, commercial transaction values under $50 million.

As part of the rebrand, RealtyShares is launching a new online learning center where investors can learn more about diversifying investments and the role that commercial real estate can play in an investment portfolio. This learning center includes guided learning paths and educational articles created and curated by RealtyShares’ expert professionals. The content is designed to help investors with a range of investing experience better understand the risks and rewards of investing in commercial real estate.

Kirill Bensonoff: 5 ways real estate can be transformed with a blockchain approach (Augusta Free Press) Rated: A

The real estate market has seen steady growth the past few years, and is showing no signs of slowing down. The commercial real estate industry alone is expected to reach $414 billion in commercial transactions next year.

This isn’t the biggest news in the real estate industry though.

According to real estate and cryptocurrency expert, Kirill Bensonoff, the most significant growth for real estate in the next few years will be how blockchain technology is applied to the market.

U.S. Fintech Even Opens New East Coast Headquarters In North Carolina After Securing More Than $ 40 Million in Series B Funding (Crowdfund Insider) Rated: B

Holistic financial health platform Even announced on Friday it has opened its new office in Raleigh, North Carolina. This news follows the company securing $40 million through its Series B funding round. Founded in 2014, Even describes itself as a mission-driven technology company working to help Americans escape the paycheck-to-paycheck cycle.

Even also reported that its mobile apps instantly budget so that users know how much is “okay to spend,” safely address cash flow issues with Instapay (on-demand access to wages), and help employees automatically save money out of their paycheck before it ever hits their bank balance.

Buy The Block: First Black-Owned Real Estate Investment Platform Allows Communities to Fight Gentrification (Digital Journal) Rated: A

Buy the Block founder Lynn P and her team have struck gold in the hills of Colorado for a second time in as many years with the release of their new app now available on Android and iOS platform. This app will expand the already extensive number of BlockVestor enthusiasts that populate the first Black-female owned FINRA and SEC regulated real estate crowd investing platform in the United States. The addition of the new app will rapidly expand a brand that is on the cutting-edge in alternative financing. This unique and innovative platform allows many inner-city residents a never-before available opportunity to invest with their peers and their communities.

Lowe’s Ventures backs Moved, a startup that makes moving less stressful (Tech Crunch) Rated: A

Moving can also be expensive, so the company has announced a partnership with Affirm, where Affirm’s financing will allow you to break up the moving costs into monthly payments.

To be clear, Moved isn’t doing the moving itself — instead, it’s basically connecting you to a marketplace of movers and other service providers. Pittenger said the company is “very strict about the suppliers and the vendors” and will remove them if customers aren’t happy with their experience.

Moved is managing all of this through a real, human assistant who can help you figure out what you need, handle the scheduling and serve as a “consumer advocate” who ensures that you’re not getting ripped off.

Take a Crash Course in Student Housing Investments (US News) Rated: A

As the back-to-school season gets under way, you may be shopping around for new investments for your portfolio. Real estate is a solid diversification tool and student housing is an under-the-radar sector to consider this fall.

“The student housing real estate investment market is virtually untapped,” says Jay Morrison, CEO of the Tulsa Real Estate Fund. An aura of exclusivity surrounds student housing investments but it’s a sector that’s far from fully realized, “which means there’s plenty of room for opportunity for new investors in this market.”

As a smaller niche within the commercial real estate market, student housing has long been the domain of institutional investors and people with a high net worth.

United Kingdom

LendInvest Debuts Exclusive Five-Year Fix Product Through Buy to Let Club (Crowdfund Insider) Rated: AAA

Following the recent changes on its marketplace lending platform, UK-based LendInvest announced the launch of an exclusive five-year fix product through the lender’s Buy to Let Club. The lender reported that the product is Designed for landlords who wish to utilize a higher fee, lower interest rate loan, and allows the borrower to leverage their cash flow.

According to LendInvest, the five year fixed rate of 2.75% is available up to 75% LTV through the distributor, with a product fee of 4.99% which can be added to the loan. Affordability is then calculated at an Interest Cover Ratio (ICR) of 140% for higher rate taxpayers; 125% for limited companies and basic rate taxpayers, at an assessment rate of 4.19% against the total gross loan amount. The mortgage is available on loans up to £500,000 for purchase and remortgages, and suitable for standard property types and HMO’s.

Business funding options – what choices do you have? (Estate Agent Today) Rated: A

When you are starting up a new business, it is unlikely that you will already have enough capital to invest. Taking out a business loan is the best option as this will give you the chance to get set up.

But which loan type is best for your business idea?

Peer to Peer Lending

As banks are increasingly wary about giving out business loans, peer to peer lending has become a more popular method for matching people who wish to invest their money and those who need to borrow. Though this method can be quite expensive and may be risky, it is quite easy to raise substantial funds this way.

Crowdfunding

There are two types of crowdfunding: equity-based and reward-based. Equity-based crowdfunding is where people contribute money to receive equity in your business; reward-based crowdfunding is where people contribute money for a reward.

Competition from alternative lenders driving growth in business lending (London School of Business and Finance) Rated: A

Competition from alternative lenders is driving banks to boost lending amounts for businesses, according to Conrad Ford, Chief Executive of SME finance aggregator Funding Options.

Barclays and NatWest/Royal Bank of Scotland are among the banks that are boosting access to finance for SMEs.

Growing competition

Competition from alternative lenders is thought to have been the driving force behind Barclays’ decision to increase its lending amount to £100,000.

Commenting on the trend, Ford stated that there is growing competition in this sector, adding that Barclays is not the only bank that is taking action, with RBS/NatWest launching their Esme loans service, a digital lending platform that enables SMES to access unsecured loans of up to £150,000.

The pros and cons of alternative property investment and crowdfunding (Buy Association) Rated: A

With tax changes and stricter lending rules making it harder for some to finance a property purchase, investors are increasingly looking to navigate the challenges in the buy-to-let sector.

It’s why setting up a limited company through which to buy and operate rental properties is growing in popularity.

Peer to peer lending has exploded in popularity because it offers investors high interest rates paid over relatively short time periods.

There is obviously a level of risk involved – the property is used as security, and if house prices drop suddenly then you risk losing some capital. That’s why it’s important to consider the loan to value ratio (LTV) – for example, if this is 75%, the borrower can borrow three quarters of the value of their property. This means house prices would need to fall 25% before the investor made a loss.

China

How peer-to-peer lending turned middle-class Chinese dreamers into angry protesters (Quartz) Rated: AAA

In recent years, many in China’s middle classes poured their savings into peer-to-peer lending platforms, known as P2P for short, drawn in by promises of high returns. But amid a larger effort to curb financial risk to China’s economy, financial regulators tightened rules for these platforms, leading many of them to collapse without returning investor money. In Li’s case, the main stakeholders of Yonglibao, which he had put his money into, suddenly disappeared in mid-July (link in Chinese), he told the South China Morning Post. By the time its founders abandoned its offices, the platform had amassed a transaction volume of 7.6 billion yuan ($1.1 billion). The other protester told Quartz he had lost the equivalent of $50,000 on a platform called iqianjin.com—its name is Love Money, though it can also be understood as “Get Ahead” or “Money Coming.”

Both hoped a protest in Beijing would compel the government to help people recover their money from the dozens of P2P platforms that stopped allowing fund withdrawals last month. Instead, they were foiled by hundreds of uniformed police who locked down the area, patrolling corners near the offices of the central bank and securities regulators, and checking identity cards. More than 120 buses were brought to the area to take the stealth protesters away, according to a reporter with AFP.

Chinese Peer-to-Peer Lender Weidai Files to Raise Up to 0 Million in New York (Capital Watch) Rated: AAA

Hangzhou-based peer-to-peer lending platform Weidai, which translates as “micro-lending,” filed its preliminary prospectus Friday seeking to raise up to $100 million in an initial public offering in New York.

The proposed IPO size shrinked significantly since the company first announced its plans in April. According to Bloomberg citing sources, Weidai was previously planning to raise nearly $400 million.

Launched in 2011, the online micro-lending platform has attracted multiple high-profile investments, including a $159 million series C funding in 2016 led by Vision Knight Capital. Among other key investors were Chinese billionaire Chen Tianqiao’s Shanda Group and Shenzhen-listed software developer Hakim Unique Internet Co.

HK is running out of runway (The Edge Markets) Rated: AAA

BRACE, brace. Hong Kong’s initial public offering (IPO) take-off is going to come to a screeching halt.

Source: The Edge Markets

Ascletis Pharma Inc, a Hangzhou-based maker of HIV drugs, has slumped 20% since making its entrance at the end of July (1).

Even the online insurer that sparked a revival of Hong Kong’s IPO frenzy is in the red. ZhongAn Online P&C Insurance Co, a company backed by Internet behemoths Tencent Holdings Ltd and Alibaba Group Holding Ltd, surged on its debut in September, but now stands 42% below its price on listing.

Two-thirds of IPOs that raised more than US$1 billion in the two years ended July 2017 were below their offer prices after six months; three-quarters had dropped after a year, data compiled by Bloomberg show. Ironically, the cause of the pain can be traced partly to measures Hong Kong Exchanges & Clearing Ltd has taken to fight back against a US market that was luring away China’s new-economy stars.

Hexindai Further Strengthens Risk Control to Better Protect Investors (Crowdfund Insider) Rated: A

Hexindai (NASDAQ:HX), a China-based peer to peer lender, announced on Friday it has further strengthened its risk control system to better protect investors throughout the entire process of borrower acquisition, risk-based pricing, post-loan management, and default risk coverage through its new comprehensive, stable and efficient asset security system, HX-CORE. Hexindai reported it established the system based on advanced risk control technologies that leverage risk control models and enormous volumes of credit data from cooperating partners and business data accumulated by the online lending platform.

According to Hexindai, the risk-based pricing is conducted by the Company’s proprietary risk control system, called Hurricane, which was developed by the lender and operates in cooperation with a number of credit information organizations and third-party Big Data risk management companies.

Ning Tang, CEO of CreditEase, Shares Insight into P2P Lending in China (Crowdfun Insider) Rated: A

Ning Tang, founder and CEO of CreditEase – a huge Chinese Fintech that started as just a peer to peer lending platform, recently spoke to Bloomberg in Asia. CreditEase is also the majority shareholder of US listed online lender Yirendai (NYSE:YRD)

Tang provided an interesting update on the Chinese P2P sector as it has been going through a transformational process. In July alone, it has been reported that over 100 peer to peer lenders shut down in China as regulatory authorities tighten operational standards to curb rampant fraud. The actions are to ensure a robust and sustainable sector of online lending.

Tang shared that revenues have not been impacted much by the regulatory actions as CreditEase has become more diversified with inclusive finance, alternative asset management, and wealth management.

China reduces risks of peer-to-peer lending (CGTN) Rated: A

Chinese authorities are taking immediate actions to reduce risks in the peer-to-peer (P2P) lending business and better protect the interests of private investors.

The latest moves by Chinese financial regulators include urging leading internet platforms to undergo self-inspection and fix problems. They will also guide unqualified P2P lending platforms in exiting the market and dealing with their assets and debts in a market-oriented way based on legal principles.

European Union

Sweden’s Largest Loan Marketplace (Killer Startups) Rated: A

Thanks to rapid technological development around the world, it’s now possible for consumers to sidestep banks and other unnecessary intermediaries and secure private loans more efficiently.

One nation where this hasn’t been an issue is Sweden.  Look no further than Lendify – the country’s largest peer-to-peer lending platform – for proof.

“Lendify is a marketplace platform that connects borrowers with investors, without the involvement of banks or credit card companies,” said Erik Wikander, the company’s Founder.  “Some of Sweden’s foremost entrepreneurs are a big part of the platform – and we’ve been granted full approval from Finansinspektionen (the government’s financial regulation agency).”

Schwarmfinanzierung: Deloitte Study on “Crowdlending” in Germany says Banks Win (Crowdfund Insider) Rated: A

Deloitte Germany has published research on the crowdfunding sector and when it comes to comparing new forms of online capital formation and old banks – banks win. That is, at least in the eyes of the Deloitte research.

Deloitte states that when it comes to providing finance to medium sized firms, the fabled Mittelstand, these companies have “little interest” in using this new form of finance. Simply put, their relationships with banks is too strong of a bond.

The research published by Deloitte was done in partnership with EFAM (Europäisches Forschungsfeld für Angewandte Mittelstandsforschung) at the University of Bamberg, the document said that the threat to traditional banks by crowdfunding or crowdlending has not panned out. This more recent study follows a similar one back in 2015 which stated that crowdlending was relatively unknown among company executives. Three years later, their survey of 250 medium size German firms appears to indicate little has change.

International

CreditRiskMonitor Announces Licensing Agreement with DBRS (Credit Risk Monitor) Rated: AAA

CreditRiskMonitor (OTCQX: CRMZ) today announced a new licensing agreement with DBRS, an independent, privately-held, globally recognized credit agency. DBRS is the fourth-largest ratings agency globally, with ratings on more than 2,400 issuer families and nearly 50,000 securities worldwide.

CreditRiskMonitor has also invested in cutting-edge technologies to improve the accuracy of its predictive scoring methods. The FRISK® score, a measure of bankruptcy risk in public companies, uses crowdsourced click patterns of risk professionals who subscribe to CreditRiskMonitor’s service. The PAYCE score, used for private company financial risk assessment, is formulated with deep neural network technology, a type of artificial intelligence.

Can Blockchain Revolutionize The Traditional Lending System? (Crypto Coin News) Rated: A

With the introduction of blockchain technology, there have been lots of projects built on blockchain that have attempted to improve the traditional banking system. This brings us back to the question; Can blockchain revolutionize the traditional lending system? The answer is unequivocally YES since there are projects already on the brink of achieving this. Also, the below features of blockchain technology is naturally what is needed to revolutionize the traditional lending system.

Ways blockchain technology edge the traditional lending system:

  • Accessibility
  • Time
  • Removal of intermediaries
  • Reduced risk

Assuring the future of financial services (Network World) Rated: A

The financial services industry is experiencing a period of dramatic change as a result of the growth in digitalization and its effect on customer behavior. In an emerging landscape made up of cryptocurrencies, frictionless trading, and consolidated marketplace lending, traditional banks have found themselves shaken by the introduction of new, disruptive, digitally-native and mobile-first brands.

With a reputation as being somewhat conservative and slow to innovate, many financial service providers are now modernizing and improving their systems, transforming their new business models and technologies in an effort to stay ahead of the more agile challengers snapping at their heels.

However, while this digital transformation brings significant opportunities, implementing these new technologies also presents challenges.

Australia

Blockchain P2P lender secures $ 1.35m to fund growth (Mortgage Business) Rated: A

BLOCKLOAN, a new blockchain-based marketplace lender headquartered in Sydney, has announced that venture capital fund Xplora Capital has purchased $1.35 million in tokens, as it continues its mission to provide “transparent, easy to understand, [and] real-time” access to personal finance on a global scale at more competitive rates than the banks.

The fintech said that by using cryptocurrency-backed loans on a global P2P lending marketplace, it aims to eliminate the “unnecessary” fees associated with traditional lending, while promising end-to-end loan origination, matching and management through the use of pooled smart contracts and an automated KYC and credit risk engine.

India

Are Digital Platforms Transforming Lending Decisions? (Entrepreneur) Rated: AAA

The effects of technology and the disruptions technology make, manifests itself in clearly perceivable ways. This is very evident in many sectors – in a short span (just eighteen months after its release) Google Maps had knocked out GPS navigation device makers and Amazon and Taobao (Alibaba) have disrupted how consumers shop for goods by moving them to online from offline (O2O). Enterprises are worried about being Uber-ed or Airbnb-ed as new age companies are challenging traditional ways of doing business.

Banking and Lending space have also gone through an amazing level of rapid innovation and disruption starting at the turn on the new millennium. Traditional banking monoliths can no longer feel impervious as they were protected by a myriad of government regulations which used to make it hard for fintech start-ups. Fintech start-ups don’t have to deal with the large legacy systems that drag down big banks and are nimbler and more suited to adapt to global trends and changing regulations. Internet only online banks with meagre to no brick and mortar branch presence have come up and have shaken up the large banks by offering better interest rates for deposits and borrowing than traditional banks. As an added benefit with the ubiquity of eKYC systems and adoption by fintech industry, accounts can now be opened in a matter of minutes and can be ready to transact than days and after an insane amount of paperwork that needed to be filled in earlier days.

Africa

Wonga faced collapse in the UK, but says its 3 million loans in South Africa are unaffected (Business Insider) Rated: AAA

An emergency cash injection of R178 million has saved microlender Wonga from collapse – for now.

The UK firm, which has operations in South Africa, is currently facing immense pressure after the British authorities forced it to write off loans worth R4 billion because Wonga failed to properly check whether customers could afford them.

Wonga’s shareholders, two venture capital funds, have pledged the money to prop up Wonga.

Mobile banking inevitable but ATM card will remain useful (The New Times) Rated: A

During a wide-ranging interview with The New Times at a recent GSMA M360 Africa Series in Kigali, Mr Akinwale Goodluck, Head of the Global Mobile Operators’ organisation in sub-Saharan, sought to dispel the myth that mobile money would cannibalise banks.

He pointed to the fintech synergy between telcos and banks, noting how the significant numbers of people across the region are using “phones to do proper mobile banking.”

This is true, and perhaps more pronounced in East Africa. The sub-region has the largest mobile money market on the continent, accounting for 56.4 per cent of total users in sub-Saharan Africa, according to GSMA.

East Africa is, however, only leading the way, but not for long.

Asia

Indonesian startups Akseleran, Pomona confirm recent funding (Deal Street Asia) Rated: AAA

Two Indonesian startups have confirmed raising a funding round earlier this year.

P2P lending startup Akseleran said it raised a pre-Series A funding round of $1.85 million, while adtech startup Pomona said it secured an undisclosed Series A funding round.

P2P lending startup Akseleran raises $1.85 pre-Series A funding Peer-to-peer lending startup Akseleran has confirmed raising a $1.85-million pre-Series A funding round backed by a New York-based family office, the parent company of PT Bintraco Dharma Tbk and several angel investors.

According to a press release, the startup plans to use the fresh funding for expansion by recruiting representatives in a number of cities in Java such as Yogyakarta, Solo, Surabaya and Semarang. It also plans to step up its marketing campaigns through various advertisements.

Authors:

George Popescu
Allen Taylor

Friday April 6, 2018 Daily News Digest

Friday April 6, 2018 Daily News Digest

News Comments Today’s main news: SoFi to roll out deposit accounts, debit cards next month. PeerStreet raises $29.5M. Welendus loanbook hits 100K GBP in 3 months. Weidai plans $400M IPO. Instamojo to expand into SME lending. Today’s main analysis: Banks slow fintech investment, revert to their own digital infrastructure plans. Today’s thought-provoking articles: Credit bureaus aren’t going anywhere yet. Blockchain […]

Friday April 6, 2018 Daily News Digest

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

SoFi Plans to Start Rolling Out Deposit Accounts Next Month (Bloomberg), Rated: AAA

Social Finance Inc. said it will start offering deposit accounts and debit cards to some customers next month, the first major new product under Chief Executive Officer Anthony Noto.

The San Francisco-based company is looking to branch into various financial services as Goldman Sachs Group Inc. ratchets up pressure on SoFi’s profitable center of personal loans. The startup unveiled a banking-like product, called SoFi Money, in January and began accepting applications to a waiting list.

Majority of Millennial Women Have Money to Invest, But Fear Holds Them Back (Markets Insider), Rated: A

The biggest driver of the investment gap between men and women isn’t knowledge or other financial obligations, but fear, according to a new study by SoFi and professional networking site Levo League (Levo).

However, while millennial women are extremely active in managing their financial status, and over 50%+ have the means to invest each month, the study found the majority of millennial women do not to invest due to fear (56%). Furthermore, the study results indicated the top two reasons why millennial women do not invest is because they don’t know where to start (25%+) and because they are paying down their debt (25%+).

Credit bureaus aren’t going anywhere. For now (American Banker), Rated: AAA

The breach of personal data on more than 143 million customers Equifax revealed in September was followed in mid-March by the news that an executive insider-traded stock before the public was notified about the breach. This week, Equifax acknowledged it had sent erroneous breach notification letters to an undisclosed number of people.

 

 

LendingTree Personal Loan Offers Report – March 2018 (Lending Tree), Rated: AAA

Lenders offered personal loan borrowers less money than they did last month, while offered APRs were mixed. Rate and loan amount offers varied widely among consumers, depending on factors including, but not limited to, credit score, income, and current debt obligations.

Excellent credit (760+ score): Offered APRs to consumers with a credit score of 760+ averaged 7.42% in March.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.42%, a decrease of 2 basis points from the prior month, and down 22 basis points from the same period one year ago.
  • At $22,644, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above was down 4.61% ($1,045) from February, but up over 17.60% ($3,986) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had offered APRs of 4.87% on average, and loan amounts of $35,669. A borrower with this APR and loan amount would save $3,021 by consolidating debt with a 10% APR over a three-year term.

Good credit (680 – 719 score): Offered APRs to consumers with a credit score between 680 and 719 averaged 15.89% in March.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.89%, up 20 basis points from last month and 139 basis points from a year earlier.
  • At $15,993, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs decrease by 175 basis points ($279) in the last month, but increased by 242 basis points ($386) from March 2017.
  • The top 10% of offers, presented to borrowers with the best profiles within the 680 – 719 credit score range, had an average best APR of 7.00%, offered with an average loan amount of $23,822. A borrower with this APR and loan amount would save $3,250 by consolidating debt from a 15% APR over a three-year term.

The most common reasons for seeking a personal loan are credit card refinancing and debt consolidation. These two categories comprise 63% of all loan inquiries.

Source: Lending Tree
Source: Lending Tree

LendingTree Mortgage Offers Report – March 2018 (LendingTree), Rated: AAA

  • March’s best offers for borrowers with the best profiles had an average APR of 4.25% for conforming 30-year fixed purchase loans, up from 4.22% in February. Refinance loan offers were up 11 bps to 4.24%. Mortgage rates vary dependent upon parameters including credit score, loan-to-value, income and property type.
  • For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 5 bps to 4.85%. The loan note rate hit the highest since March 2016 at 4.75% and was also up 5 bps from February. We prefer to emphasize the APR as lenders often make changes to other fees in response to changing interest rates.
  • Consumers with the highest credit scores (760+) saw offered APRs of 4.72% in March, vs 4.99% for consumers with scores of 680-719. The APR spread of 27 bps between these score ranges was unchanged from February and still near the widest since this data series began in April 2016. The spread represents over $14,000 in additional costs for borrowers with lower credit scores over 30 years for the average purchase loan amount of $238,593. The additional costs are due to higher interest rates, larger fees or a combination of the two.
  • Refinance APRs for conforming 30-yr fixed loans were up 6 bps to 4.83%. The credit score bracket spread remained at 24 bps, amounting to nearly $13,000 in extra costs over the life of the loan for lower credit score borrowers given an average refinance loan of $239,668.
  • Average proposed purchase down payments were little changed at $62,758.
Source: Lending Tree

PeerStreet Raises $ 29.5 Million to Further Transform Real Estate Investing (Business Wire), Rated: AAA

PeerStreet today announced the close of a Series B funding round of $29.5 million to continue driving the company’s mission of democratizing access to real estate debt.

The Series B round was led by World Innovation Lab. Existing investors Andreessen Horowitz, Thomvest, Colchis Capital, Felicis Ventures, and others participated along with new investors Solon Mack and Navitas Capital. The raise will accelerate PeerStreet’s growth. Specifically, PeerStreet will be broadening the type of real estate loans it cultivates from its network of lenders and hiring more world-class talent.

RealtyMogul Closes $ 2.75 Million Equity Investment in Plano Multifamily Portfolio (Business Wire), Rated: A

RealtyMogul announced that it has completed an investment in a $11.9 million multifamily apartment portfolio in Plano, Texas, consisting of 156 units.

The property was acquired through a partnership with Comunidad Realty Partners, a dynamic real estate investment firm specializing in multifamily apartment communities in densely-populated Hispanic neighborhoods. Comunidad reports to have owned and managed over $600 million in multifamily assets overall, comprised of approximately 8,200 units. RealtyMogul has invested with Comunidad Realty Partners on five previous transactions.

Stripe launches a new billing tool to tap demand from online businesses (Tech Crunch), Rated: A

Stripe  has made its name by providing developers with a simpler way to start charging customers and handling transactions, but today they hope to take another step by launching a billing product for online businesses. That’ll allow them to handle subscription recurring revenue, as well as invoicing, within the Stripe platform and get everything all in the same place. The goal was to replace a previously hand-built setup, whether using analog methods for invoicing or painstakingly putting together a set of subscription tools, and make that experience as seamless as charging for products on Stripe.

While this is a tool that’s a natural fit for something like Stripe, it’s certainly one that’s created a substantial business opportunity. Last month, Zuora — an enterprise subscription services company — filed to go public amid a fresh wave of enterprise IPOs that included Dropbox and Zscaler (and also, to a certain extent, Salesforce’s big acquisition of Mulesoft). Zuora’s subscription services revenue continues to grow, showing that Stripe will certainly have competition here, but also that there’s a large market opportunity.

Enhancing the Business Value of Loan Pricing Systems (Loan Pricing Pro), Rated: AAA

Today, FinTech companies, marketplace lenders, traditional banking institutions and many other types of innovative new lending platforms are using loan pricing systems to sharpen their focus on balancing shareholder returns with customer pricing sensitivities and market demands.

The lending landscape is changing, but the need to achieve an adequate rate of return while delivering fair and accurate pricing, remains a constant.

Source: LoanPricingPro

Read the white paper in full here.

Five Ways for FinTech Lenders to Achieve ROI on a Loan Pricing System Investment (ProBank), Rated: A

There are a variety of strategies to consider ensuring attaining a reasonable return on your investment in a loan pricing system. We’ll cover each of these in the form of short case studies that we’ve taken from one or more of our existing clients’ actual experiences.

  1. Enhanced Loan Yield Quantitative analysis can be easily used to measure the effectiveness of the loan pricing system implementation on a pre-test / post-test basis. The technique used relies on the same Funds Transfer Pricing (FTP) methodology which a robust loan pricing system uses to calculate loan profitability. To illustrate this, we’ll use a recent client implementation of LoanPricingPRO at a $1 billion lender.
    Source: Probank Report
  2. Increased Collection of Loan Fees In today’s highly competitive environment with historically low rates and generally weak loan demand, loan fees are often sacrificed, or at least underutilized as a tool for increasing profitability. As a general rule, the shorter the loan term, the more powerful the impact of loan fees on loan profitability and ROE.
  3. Decline in Lost Opportunities-Lenders using LoanPricingPRO® usually have a higher batting average when measuring the number of new loan clients against the total number of requests received or applications taken.
  4. Active Portfolio Management-When implementing a loan pricing system with an interface to the organization’s core data systems, significant new reporting capabilities are attained. Lenders are able to receive reports on and track trends in loan officers’ portfolios.
  5. Improved Discipline, Accuracy & Pricing Consistency-As has been shown, it is possible for senior management teams and lenders working
    together and aided by an accurate and appropriately calibrated loan pricing system, to significantly improve the return performance and growth rate of the lending client base.

Read the full report here.

 

A Third of Americans Would Forfeit Their Voting Rights For a 10% Pay Raise, Says Study (Time), Rated: A

More than a third of Americans would give up their right to vote for a 10% annual pay raise, according to a new survey.

The peculiar findings come from a survey conducted by LendEDU, an online student loan marketplace, that polled 1,238 working Americans. In exchange for the hypothetical pay bump, about 35% of these employees said they would sacrifice their voting rights for life. In addition, just over 9% of respondents said they would give up their children’s (or future children’s) right to vote for life for the make-believe raise.

But those aren’t the only big sacrifices the respondents would make for a 10% annual salary increase. More than 12% said they would break up with their partners, and nearly 19% said they would give up their health insurance for the next five years. Forty percent would forfeit their dental care for five years for a raise, and nearly 18% would say goodbye to their Social Security benefits.

Source: Lend EDU

DepositAccounts.com Releases 2018 Top 200 Healthiest Banks and Credit Unions in America (Benzinga), Rated: A

DepositAccounts.com, a subsidiary of LendingTree, today released its list of the 2018 Top 200 Healthiest Banks and Credit Unions in America.

Source: Deposit accounts

If You Can’t Beat Them, Join Them — How Banks, Fintech And Tech Players Can Win Together (Forbes) Rated: A

As tech giants like Amazon, Facebook and WeChat set out on their quest to be all things to all people, eroding the boundaries between industries, banks that want to maintain and grow their market share need to rethink the rules of competition.

While a growing number of banks have acquired fintechs to avoid fading into the background (

12 Best Bank of America Personal Loan Alternatives (Student Loan Hero), Rated: A

Bank of America offers various loans — but not personal loans

Bank of America’s loans, however, are limited to two specific types:

Some online lenders with competitive interest rates on personal loans include:

LendingClub and Prosper, for example, are both in the peer-to-peer lending space. LendingClub has fixed personal loan rates ranging from 5.99% – 35.89%. You’ll need to check your rate with Prosper directly since it varies depending on your credit and borrower profile.

Marlette Funding Welcomes a New Advisor with a Focus on Innovation (LendEDU), Rated: B

Marlette Funding, LLC, recently appointed Marshall Lux as an advisor to its board of directors and company. Marlette Funding is the parent company of Best Egg, which is a lending platform that offers unsecured personal loans.

Jeffrey Meiler, chief executive officer of Marlette Funding, said Lux’s considerable experience in financial services and his expertise in the consumer market make him a good fit for the company.

FinTech Veteran Ethan Schwarzbach Joins inFactor To Head inFactorIQ Platform (PR Newswire), Rated: B

inFactor Corp, an integrated financial technology company providing liquidity solutions across the spectrum of non-bank lending, has announced today that Ethan Schwarzbach has joined the company to head up the company’s new inFactorIQ platform.

Mr. Schwarzbach joins inFactor from Orchard Platform where he most recently served as a Manager on the Business Development team. Orchard Platform is the leading provider of data, technology, and software to the online lending industry.

SOLO FUNDS ALLOWS YOU TO SEAMLESSLY BORROW FROM YOUR PEERS (Black Enterprise), Rated: B

According to a recent statement, SoLo’s founders uniquely understood the plight that American workers were facing every day because they too were once in their shoes. It is not uncommon to seek a small loan from friends and family, but the founders were not seeing a quick and easy lending solution to help facilitate the process.

Traditional banks don’t lend small dollars, and payday lenders charge excessively high interest rates that for many in emergency situations are almost impossible to pay back. There was simply no affordable way to get a small dollar loan. The team thought that the limited resources for small-dollar loans only plagued the minority communities like the ones they were raised in, but that was wrong; they discovered a more mainstream problem. According to the statement, 78% of American workers live paycheck to paycheck and 47% of the country can’t cover a $400 emergency expense without borrowing from someone else or selling a personal asset.

Liquid FSI Adds Key Board Member (deBank), Rated: B

Liquid FSI, a direct lender and creator of the Convert2Pay platform, which provides on-demand payment for medical invoices, added Barry Blecherman to its Board of Advisors.

While a few recent graduates of the NYU Tandon School of Engineering were helping the Liquid FSI team with some algorithms for their technology platform, they mentioned Blecherman, a professor of Finance and Risk Engineering at the Tandon School.

United Kingdom

Welendus loanbook hits £100,000 in just three months (Peer2Peer Finance News), Rated: AAA

WELENDUS investors have funded £100,000 of short-term loans in just three months of its beta stage, the platform has announced.

Nadeem Siam (pictured), founder of the platform, says a full launch of the product is planned soon but Welendus has already built up more than 4,000 users.

Klarna: 53% of retailers say “always on” sales are damaging profits (Tamebay), Rated: A

Research by payments provider Klarna shows that discounting is no longer confined to the traditional winter and summer sales. The new rules of retail mean discounting has become a fluid and unpredictable phenomenon with over half (57%) of consumers expecting regular sales.

The research of 500 British retailers highlighted the negative impact this can have on the bottom line of merchants. Over half of retailers surveyed (53%) say the “always on” nature of sales is having a negative impact on profits – 11% said discounting cost them over £25,000 throughout 2017. This isn’t felt just by smaller retailers, but merchants of all sizes – in fact, it’s those with 100-239 employees that feel the burden most with 66% saying constant discounts are impacting profits.

Investing Show: What you need to know about crowdfunding, peer to peer, and Innovative Finance Isas (This is Money), Rated: A

Stewart Cazier, of alternative lending platform Thincats, details what investors need to know about peer to peer, crowdfunding and Innovative Finance Isas on the Investing Show.

He explains to Simon Lambert, of This is Money, and Richard Hunter, of Interactive Investor, how alternative lending works, what investors need to consider, how to diversify and why it’s important not to consider it risk-free or put all your eggs in one basket.

Five questions for: Samantha Bamert, CEO of AskIf (Money Week), Rated: A

Ask Inclusive Finance (AskIf) is a commercial enterprise with an ambitious social mission – to close the sizeable funding gap for loans to financeable small companies unable to secure funding from banks. Smaller estimates suggest this funding gap could be upwards of £2.2bn per year.

Other research estimates much larger numbers. AskIf is a platform lender bringing together funders, a network of lending partners and the borrowers themselves. By providing support and funding to small companies, we’ll enable job creation, economic value and opportunity in many communities across the UK.

JP Jenkins – Continued New Initiatives (PR Newswire), Rated: B

JP Jenkins reports that its co-owner, Peterhouse Corporate Finance, has closed its 200th capital raise in the past three years, with a total funding of circa £200m for smaller growth companies.

Significant new capital has recently been provided by Malcolm Burne, a substantial shareholder and Executive Director, to expand the JPJ franchise further. The Company has also entered into partnership & collaborative agreements with US Capital Partners, private placements, Equidate a US private companies Stock Market, and Primary Markets an International Unlisted Exchange.

China

Chinese Online Lender Weidai Plans $ 400 Million IPO (Bloomberg), Rated: AAA

Chinese peer-to-peer lender Weidai Hangzhou Financial Information Service Co. is planning an initial public offering that could raise about $400 million, according to people with knowledge of the matter.

There hasn’t been a major listing of a Chinese financial technology company in the U.S. or Hong Kong since LexinFintech Holdings Ltd., which raised $124 million in a downsized U.S. IPO in December, according to data compiled by Bloomberg. Qudian Inc., which completed a $1 billion IPO in October, has since fallen 52 percent from its offer price.

European Union

Insurance and the Open Banking wave: seven use cases (Holland Fintech), Rated: A

Source: Holland Fintech

INNOPAY has defined a first set of use cases for insurance companies. The use cases have been mapped on the most important value levers for insurance to capture relevancy and see where exactly the use cases drive value. The mapping is presented in figure 1 and a first description of the cases is given below.

  1. New (cyber)insurance product for a new client segment: insure TPPs in PSD2 landscape: data sharing through third parties implies new (cyber) risks and thus accountability in case of data breaches.
  2. Better deal engines: PSD2 provides third parties access to payment account information data (AIS). This data can be mined and relevant insights on customer behaviour can be extracted. This behaviour can then be for example spending on insurance to see if a better offer can be made to the customer or looking for patterns which can imply a better risk profile and thus better pricing on insurance products for the customer.
  3. Improve personalised advice: next to mining, the data can be used to improve personalized advice. Although TPPs are by law only allowed to present the account information of customers, insurance companies can use that information to give advice about their financial situation.
  4. Optimise claims management: together with other data sources, account information that is shared by customers’ banks can be used to create new data sets that could be used to improve reconciliation and reimburse the right amount to customers and gain better insights on possible fraud (by looking at for example customer spending patterns).
  5. Up to date customer records: although there is no Open Banking standard yet and all banks are developing their own view and strategy on opening up data beyond PSD2 compliance, there are already good examples insurance companies can build upon.
  6. Expanding service proposition to providing accounts: with the possibility to execute a transaction (PIS) on behalf of the customer or to check available funds (CAF) the functional scope of PSD2 is limited.
  7. Digital identity verification: banks can help in identifying a person during a digital onboarding or digital identity verification process. This functionality is for example already operated by the banks in The Netherlands under the iDIN scheme.

Swiss Crowdlender Banks on Blockchain (Finews), Rated: B

A Swiss crowd-lending platform is using the blockchain technology to improve the way it brokers loans to companies. It will also introduce tokens as a currency of valuation.

Swisspeers, a Winterthur-based platform specialized in loans to small- and medium-sized companies is registering transactions on the Ethereum blockchain. The company is going to use the so-called Smart Contract developed specifically for its purposes, Swisspeers said on Thursday.

International

Not just dumb pipes: Fintech investment slows as banks try to gain back control (Tearsheet), Rated: AAA

Banks’ investment in fintech companies is slowing down as they refocus on improving core banking infrastructure, according to a report by CB Insights.

The Banks in Fintech report, released this week, found that banks have been foregoing big investments and partnerships over the past five quarters with a preference for building products in house — particularly in lending, payments and personal financial management. In both the U.S. and Europe banks spent more of their architecture investment dollars on capital markets software companies than blockchain startups.

Source: CBInsights

KPMG’s Pulse of Fintech report for the fourth quarter of 2017 noted that while deal activity among venture capital and private equity firms remained steady compared to 2016, the earliest stage of VC financing could see fewer deals and a volume decline in particular segments like online lending in the coming year. It’s a sign of the industry’s maturity; banks are showing their efforts to “fight fintech with fintech,” Lindsay Davis, an intelligence analyst at CB Insights, said in a presentation.

Source: Tearsheet

Blockchain Integration Is Leading to a Revolution in Global Trade (The Market Mogul), Rated: AAA

In every step of the trade financing process, blockchain technology seems to offer an efficiency boost in commodity transactions and the global supply chains. From contract generation level, which includes time-consuming reviews of the operation by the Letter of Credit issuing bank, to the settlement level, which often proves problematic due to payment platform incompatibility, fintech offers smart solutions.

Although credit fintech is on the rise, blockchain was mostly used for peer-to-peer lending and that the trade financing gap persists, according to the Asian Development Bank. 70% of financial institutions which responded to the survey claimed that the technology would allow for greater exposure to SME risk, mostly because of significant cost reduction in compliance and due diligence.

Mambu unleashes digital marketplace (Fintech Futures), Rated: A

Software-as-a-Service (SaaS) banking engine provider Mambu has launched its digital marketplace to offer cloud-enabled apps, products and tools for banking and lending.

Mambu Marketplace offers a choice of global and localised solutions which can be integrated with the SaaS engine. Its offerings are based on an API-driven architecture.

Will fintech realize its potential for financial inclusion? (LinkedIn), Rated: A

But it’s increasingly clear that many of the financially underserved are also technologically underserved. The GSMA’s Mobile Economy 2018 reports that nearly 40% of the world’s 5 billion mobile subscribers have no internet access; most of the offline, live in the low- and middle-income countries that could benefit the most from digital financial services. Many mobile subscribers live outside of 3G or 4G signal range, which slows service or limits what they can do with their devices. Many unconnected users must contend with poor network performance, high connectivity and handset costs, poor digital literacy, or a lack of locally relevant content.

Digital lending innovations: Small businesses face a $5 trillion financing gap. Inefficiencies in customer acquisition and analysis prevent lenders from making reliable lending decisions and entrepreneurs from getting the financing that they need. But new technologies and data sources can help small businesses: Mexico’s Konfio analyzes thousands of data points – including biographic information, financial history, electronic invoicing, and social media usage – to make lending decisions quickly and inexpensively.

India

Instamojo plans to expand into SME lending, logistics: CEO Sampad Swain (Livemint), Rated: AAA

Online payment solution provider Instamojo Technologies Pvt. Ltd plans to expand into business loans, logistics and advertising services for small merchants, as more small and medium enterprises (SMEs) turn to digital means to sell and market their product, a top company executive told Mint.

Bengaluru-based Instamojo, which focuses primarily on SMEs, currently has 400,000 SMEs using its payment service, and it is also targeting to onboard at least 1 million SME customers by the end of FY19, the company’s chief executive Sampad Swain said in an interview.

Peer to Peer (P2P) Lending – a Niche in the Financial Ecosystem (PR Newswire), Rated: A

Investment avenues are available either in the form of instruments per se (e.g. equity stocks, bonds, etc.) or as vehicles for participating in the instruments e.g. Mutual Funds, Portfolio Management Services, Alternate Investment Funds, etc. Some of the vehicles are available in small ticket sizes, e.g. Mutual Funds, whereas some require a sizable ticket e.g. PMS (Rs 25 lakh) or AIF (Rs 1 crore). There is a differentiated investment avenue, which is neither a tradable instrument nor a structured vehicle, but a facilitator for retail investors. This is called Peer to Peer (P2P) Lending where there is an online intermediary, which brings the lender and borrower together to facilitate direct lending by the lender to the borrower on mutually agreed terms. This is an online marketplace where the digital platforms like e.g. IndiaMoneyMart would conduct due diligence and credit assessment of the borrower and connect the two individuals.

Asia

Outsmarting the traditional experts with the aid of AI (Asia Asset Management), Rated: A

FinEX Asia offers Asian investors access to US consumer credit assets

Asian institutional investors often find it difficult to gain exposure to US consumer credit assets because of the diverse array of such products and a lack of investment channels.
Canada

Canadian Fintech PayBright Announces  E-Commerce Financing Solution is Now Available on IBM Websphere (Crowdfund Insider), Rated: AAA

Canadian fintech lender PayBright announced on Thursday its e-commerce financing solution is now available for merchants operating the IBM Websphere Commerce platform.

According to PayBright, the e-commerce solution integrates with merchant’s e-commerce platforms and provides Canadian customers with an additional payment option at checkout. Upon selecting PayBright as a payment method, customers can finalize their purchases in a matter of seconds. Merchants then receive their funds directly from PayBright the next business day with no credit risk. Customers then pay for their purchases in affordable monthly installments over time, with interest rates as low as 0%. 

Authors:

George Popescu
Allen Taylor