Monday June 18 2018, Daily News Digest

funding circle

News Comments Today’s main news: Opendoor secures $325M in financing. RateSetter IFISA tops 100M GBP. China Rapid Finance’s earnings call slides. Alior Bank, solarisBank, Raisin, Mastercard partner on European digital bank. Harmoney to lend through its own platform. Amazon launches lending platform in India. Today’s main analysis: Rising interest rates and inflation. Today’s thought-provoking articles: Is P2P lending dying? The economic […]

funding circle

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United States

United Kingdom

International

Australia/New Zealand

India

Other

News Summary

United States

Opendoor now has $ 325 million more. SoftBank could come next. (Recode) Rated: AAA

Opendoor has already taken out $1.5 billion in loans for home buying. And the company now says it has accepted another $325 million in new financing that values it at more than $2 billion, according to a person familiar with the matter.

Opendoor will expand to 50 cities with the $325 million round. But SoftBank, with its huge $100 billion checkbook, could help Opendoor expand to even more as soon as later this year. The Japanese investor typically invests hundreds of millions of dollars into private companies, and that sort of check would be expected here, though some of the money tends to buy out existing investors.

Rising Rates and Inflation (PeerIQ), Rated: AAA

The Fed raised interest rates for the 2nd time in 2018 and the target Federal Funds Rate now stands at 1.75% – 2%. The committee indicated that it would raise rates twice more in 2018, a departure from the previous stance of 3 rate hikes in 2018.

The Fed summarizes member views using the “dot-plot”. The dot plot consolidates every committee member’s estimates of rates at the end of 2018, 2019, 2020 and the for long-term. The green line shows the median estimate indicating that most Fed members expect rates to be between 2.25% – 2.5% at the end of 2018, and between 3% – 3.25% at the end of 2019.

Source: Federal Reserve, Bloomberg
Source: Bloomberg, PeerIQ

Forward Rates – Where do we go from here?

Source: Bloomberg, PeerIQ

Braviant Holdings Announces $ 50 Million Credit Facility with Keystone National Group (PR Newswire) Rated: A

Braviant Holdings, a provider of tech-enabled credit solutions for underserved Americans, has entered into a $50 million senior secured credit facility with institutional investment firm Keystone National Group.

The Keystone debt facility allows Braviant to expand its newly launched near prime lending platform, Chorus Credit. Chorus is Braviant’s latest offering in support of the company’s mission to promote financial inclusion for 51 million adults considered underbanked by the FDIC. While the FDIC estimates that these adults make up 19.9% of U.S. households, data from the Fair Isaac Corporation, better known as FICO, suggests that 43% of U.S. consumers have below 700 credit scores. In the traditional banking sector, a lower than average FICO score severely limits access to credit for almost half of the nation’s population. Chorus aims to close the credit gap for middle America by offering $2,500 to $10,000 personal loans that are repaid in small, affordable installments.

Is P2PLending Dying? (P2P Lending Expert) Rated: AAA

Seriously. I’m asking. Is p2plending dying? Returns have sucked the last couple of years for all investors, but especially us retail investors since the 2015 and 2016 vintages have performed so poorly. My own returns are 400-500 basis points lower than my returns on my 2013 and 2014 vintage loans were and I know some colleagues and friends who have lost money on these investments.

But can the industry survive?

Source: P2P Lending Expert

How Will the Fed’s Interest Rate Hike Impact the Average Joe? (Dough Roller) Rated: A

On Wednesday, The Federal Reserve decided it was going to increase the federal funds rate by 25 basis points, from 1.75% to 2%. This is the second rate increase already this year. In March, new chairman Jerome Powell and the Fed increased the federal funds rate from 1.5% to 1.75%. The Fed also indicated that they’d be targeting two more increases this year alone.

As I said before, when the Fed increases rates, it usually means something is going well for the economy. And all signs are pointing to that being the case. Unemployment is currently at 3.8%. In the last 50 years, unemployment has only been this low two times. That’s significant, and it means that more people are finding jobs. It may also signify a strengthening job market for you. The Fed projects unemployment will drop to 3.6 percent by the end of the year, too.

Zelle is on track to be more popular than Venmo in 2018 (Business Insider) Rated: A

Zelle is a year-old service that lets you instantly transfer money to someone else, much like Venmo or Square Cash.

But Zelle differs from either service in a major way: because it was built by seven of the largest US banks, it’s often able to integrate more seamlessly with your bank’s mobile app. While other services make you wait a few days for the money you received from friends to show up in your bank account, Zelle can transfer the money almost instantly.

For those reasons, analysts at eMarketer expect Zelle to “leapfrog” other payments services before the end of the year.

Credit Union SMB Loan Approvals Hit Record Lows (PYMNTS) Rated: A

The latest data from the monthly Biz2Credit Small Business Lending Index suggests a slump in small business lending among U.S. credit unions.

press release issued on Wednesday (June 13) detailed the May Index’s latest findings, which found that large banks with more than $10 billion in assets are approving of nearly 30 percent of small business loan applications, a two-tenths of a percent increase from April levels. That figure is also a new high for post-recession big bank lending to small businesses.

Digital-only banks grapple with integrating ‘human’ interaction into their products (Tearsheet) Rated: A

Digital-only banks cater to younger customers who don’t want to talk to bankers at brick-and-mortar branches — or bother visiting a branch at all. Or so they think.

Recent customer surveys indicate otherwise, according to research findings released this month from Celent, commissioned by Samsung. It revealed that customers want some kind of human interaction for complex issues. The study found that about half of U.S. banking customers aged 18 to 44 said they banked digitally, but prefer to resolve some matters in-person. Overall, most customers surveyed preferred dealing with humans on matters like setting up financial goals or getting investment advice. To respond to fraud, a lost or stolen card, or identity theft, a majority of those surveyed across age categories preferred to phone the contact center or address it in a physical branch.

Source: Tearsheet

Real Estate Finance Is Changing, Thanks to ‘Fintech’ Startups (The Bridge) Rated: A

If your student loan debt is larger than your salary, investing in real estate might sound like a joke. But it’s doable, said Dave Conroy of the startup Meridio, a website in beta testing that lets users invest amounts of money that you might have in your wallet right now–even $20–into specific properties. Using blockchain technology keeps each transaction cost low, said Conroy, whose company is an offshoot of Bushwick-based ConsenSys, which is building myriad applications based on the Ethereum platform.

For investors, the service would reduce transactions costs and make a real-estate portfolio more liquid. For owners, it would unlock more capital and streamline transactions. While Meridio won’t provide market intelligence about properties to invest in, prospective investors can call on their own experience, says Conroy, who previously worked for the National Association of Realtors.

Why digital banking and robo advice are pairing up (Financial Planning) Rated: A

Banks and digital wealth startups are headed toward the same goal from different starting points.

Each side is increasingly seeking to package automated investment advice with checking because customers are expressing an interest in getting both services from one provider.

Fifth Third Bancorp’s securities unit teamed up with Fidelity recently to offer automated advice, while the microinvesting app Acorns rolled out a debit card called Spend and opened up 50,000 checking accounts in two days.

Wells Fargo simplifies payments pricing to compete with Square (Payments Source) Rated: A

Wells Fargo will simplify the prices it charges small businesses to accept credit and debit card transactions as the bank responds to pressure from startups such as Jack Dorsey’s Square Inc.

The changes, which are tailored for small businesses that process $100,000 a year or less, eliminate many of the complicated pricing policies that varied from client to client, according to Danny Peltz, who leads treasury management and merchant services at the company. Business customers will also be able to apply online for payment processing capabilities with Wells Fargo, Peltz said.

New Technologies and New Customer Experiences Drive Banking Today (Lend Academy) Rated: A

American Banker’s Penny Crosman sat with Cathy Bessant, Chief Operations and Technology Officer, Bank of America to discuss the bank’s use of AI.  She described how the bank has inventors all over the world in their distributed innovation model.

Peer to Peer Micro-Credit Site Puddle Shuts Down (Crowdfund Insider) Rated: A

Puddle, an online lender that provided micro-credit in a peer to peer platform, is shutting down.

In an email circulated by the company, Puddle founders stated that after five years of operation the businesses model was “unsustainable.”

RealtyMogul, Comunidad Realty Partners Sell Dallas Area Investment Property (Herald Courier) Rated: B

RealtyMogul, a pioneer in providing private real estate to discerning investors, announced that it has sold an investment property in partnership with Comunidad Realty Partners at greater than 1.5 times its purchase price.

The property, Lodge at Main, a 208-unit multifamily apartment complex in the Dallas/Fort Worth, Texas area was acquired in 2015.

California may force online business lenders to disclose rates (American Banker) Rated: AAA

A bill pending in California aims to tame the disorderly, confusing and largely unregulated world of online small-business lending by mandating that borrowers receive standard price disclosures.

The bill, which passed the Senate without a vote to spare and has failed to garner much support from either the online lending industry or its critics, still faces a tough fight in the state Assembly. But if the measure does get enacted in California, it could serve as a blueprint for other states.

The legislation tackles the question of whether commercial lenders should be required to disclose the price of financing in a way that enables borrowers to compare multiple offers. Just as nettlesome is the question of how any such comparison metric should be calculated.

Source: American Banker

The bill would apply to small businesses that borrow $500,000 or less.

United Kingdom

RateSetter Reports IFISA Tops £100 Million in Record Time (Crowdfund Insider) Rated: AAA

UK based peer-to-peer lender RateSetter is reporting that subscriptions to its IFISA have surpassed £100 million. This milestone took four months to reach and, according to RateSetter, faster than any other P2P lender. To date, RateSetter has originated over £2.5 billion in online loans to both businesses and individuals.  RateSetter states that more than 10,000 IFISA accounts have now been opened.  The average annual return received by investors stands at 4.4% with more than £100 million in interest having been paid.

Peer-to-peer lender Ratesetter to raise £30m as London float looms (City A.M.) Rated: A

Peer-to-peer lending business Ratesetter is working on a £30m fundraising which is expected to be a prelude to a London float.

According to Sky News Ra

tesetter is working with investment bank Lazard and broker Peel Hunt to raise £30m from investors.

The funding round would value Ratesetter at about £280m.

The fundraising is expected to be a precursor to a stock market flotation which could take place as early as next year.

THE ECONOMIC IMPACT OF LENDING THROUGH FUNDING CIRCLE (Funding Circle) Rated: AAA

In the UK, where Funding Circle has been established the longest, the platform is now competing directly with banks in the small business lending market – with net lending through the platform exceeding that of the entire UK banking system for two successive quarters at the end of 2017. A survey of Funding Circle’s customers undertaken for the study suggests 89 percent of the platform’s UK small business customers would approach
Funding Circle first again in future, rather than going to a bank.

Source: Funding Circle

Read the full report here.

Funding Circle CEO on the Fintech Frenzy in Europe (Yahoo Finance) Rated: A

How the big three shaped P2P (Peer2Peer Finance) Rated: AAA

ALTHOUGH we still tend to think of peer-to-peer lending as a young sector, it is now 13 years since Zopa became the first lender in the market. It was joined five years later by Funding Circle and RateSetter and since then the big three have dominated the P2P market.

Here are some of the key moments in their journeys.

London Block Exchange To Strike Deal With UK Bank (Crypto Daily) Rated: A

London Block Exchange, a UK based crypto provider is alleged to be pairing up with a new UK based bank, ClearBank.

If this news is indeed true, this will mark the first time a lender has struck a deal with a cryptocurrency-based entity.

The UK proves its tech chops, Google’s massive diversity gap and Brexit cause business tensions (Elite Business) Rated: A

Out of Europe’s 34 unicorns, the UK has produced 13. These have a combined value of $23bn, equal to 38% of the European total. This puts the UK ahead of Germany  and France, which have six and three scaleups valued over $1bn respectively. Given the nation has already spawned success stories like Deliveroo and Funding Circle, it’s hardly surprising that VC investment is also booming in the UK. Last year British startups raised $7.9bn compared to Germany’s $3.2bn and France‘s $2.8bn.

Brexit has made UK SMEs worry about talent

Having polled companies in 11 countries, researchers revealed that UK entrepreneurs were much less confident about the conscious uncoupling than those in the EU. Overall, 57% of respondents felt that their biggest challenge was that they had too little time and that they were doing everything themselves. This was double the 24% who thought hiring the right people were their biggest worry.

Alternative finance funds see mixed success (Peer2Peer Finance) Rated: A

Over the past year, P2P Global Investments (P2PGI), VPC Specialty Lending Investments and Ranger Direct Lending (RDL) have moved away from pure P2P to boost returns and narrow their discounts, while the Funding Circle SME Income Fund (FCIF) has remained true to its roots, all with varying outcomes.

The FCIF investment trust solely backs loans originated via the Funding Circle platform and saw its net asset value (NAV) return 6.9 per cent last year, while trading on a healthy premium.

In comparison, RDL – which has recently announced its intention to close – returned 5.4 per cent, VPC – which has shifted from P2P towards balance sheet lenders – saw its NAV total return grow by 3.07 per cent, while P2PGI – which last year merged its manager MW Eaglewood with Pollen Street Capital and is focusing more on asset-backed alternative lenders – reported a NAV return of 3.03 per cent during 2017. RDL and P2PGI are both trading at double-digit discounts to NAV.

Updated Crowd2Fund app includes IFISA management tools (Peer2Peer Finance) Rated: B

PEER-TO-PEER platform Crowd2Fund has relaunched its app to include Innovative Finance ISA (IFISA) management features via their smartphones.

Digital Challenger Redwood Bank Raises £9.8 Million (Crowdfund Insider) Rated: A

Redwood is targeting the SME market. Products include mortgages for business owners and professional landlords, as well as a range of savings accounts. Redwood seeks to offer British businesses fast, simple, transparent loans and savings accounts, coupled with superlative service. They also promise that money is being invested back into British business and into the communities they are a part of. Warrington Borough Council has a 33% stake in the firm that was pegged at £30 million.

BIS wants tighter rules for funds offering credit, fintech (Reuters) Rated: A

Regulations introduced after the financial crisis a decade ago to smooth out banking booms and busts should be extended to funds that provide credit, or shadow banks, and fintech firms, the Bank for International Settlements (BIS) said on Sunday.

The introduction of “macroprudential” policy requiring banks to build up separate “countercyclical” buffers of capital if credit markets become frothy was a core crisis-era innovation.

The buffers can be released if loans begin turning sour and maintain resilience of the financial system to shocks – a departure from the traditional “microprudential” focus on the stability of individual banks.

China

China Rapid Finance 2018 Q1 – Results – Earnings Call Slides (Seeking Alpha) Rated: AAA

Source: Seeking Alpha
Source: Seeking Alpha

Chinese P2P giant Lufax dodges valuation bullet (Nasdaq) Rated: A

Lufax is wisely trying to grow up in private. The Chinese financial technology giant, which focuses on peer-to-peer lending and wealth management, plans to raise more than $1 billion at a $40 billion valuation ahead of a delayed Hong Kong flotation, says Reuters. That makes sense. Listing now could upset Beijing, and might only be achievable at a discounted price. Abundant venture capital allows the Ping An-backed startup to keep growing without a distracting market debut.

European Union

Alior Bank, solarisBank, Raisin and Mastercard to unveil European digital bank (Fintech Futures) Rated: AAA

Poland’s Alior Bank has teamed with solarisBankRaisin and Mastercard to unleash a pan-European digital bank.

The new offering, which is planned to be launched in the fourth quarter of 2018, will be built on the “strengths of all partners”.

Alior Bank will deliver multicurrency accounts with international transfers and deposits.

solarisBank will add the banking infrastructure with its technological, compliance and regulatory framework.

Raisin through its network of partner banks, is adding various savings and investment possibilities to the offering.

N26 launches a revised metal card (Tech Crunch) Rated: A

Fintech startup N26 is updating its N26  Metal product and launching it tomorrow. You might remember that the company first announced its premium card at TechCrunch Disrupt Berlin in December 2017. Shortly after the conference, the card was available in early access for existing N26 Black customers.

But the company had to go back to the drawing board and update the card design. N26 Metal customers had some complaints about the design of the card in particular.

International

Fintechs are staring down the future of banking (Financial Post) Rated: A

For instance, U.S.-based Lending Club, which has been around since 2007 and which is public, has arranged US$35 billion in consumer loans for its two million borrowers. The average loan — and it originates about US$2.4 billion a quarter — is about US$14,000.

Those themes were on full display this week in Toronto at an event organized by the KiWi Private Credit Fund, which raises capital from investors and purchases unsecured consumer loans and secured small business loans originated by established U.S.-based lending marketplaces.

“But they are not good at pricing a 9 per cent or 12 per cent risk,” he added, all of which allows entities such as his, to meet that need. It has US$27 million in assets; an average loan of almost US$14,000 and targets a return in the six- to eight-per-cent range.

Australia/New Zealand

Harmoney is to begin lending money through its own online platform (Interest) Rated: AAA

Peer to peer lending facilitator Harmoney Corp is making a number of tweaks to its operation, which will include the ability to lend its own money through its own platform.

The company has also renamed its ‘platform fee’ – recently the subject of Commerce Commission court action – as an ‘establishment fee’ and dropped the fee by $50 to $450. The company has also tweaked some of its interest rates higher (see below tables).

Harmoney will now be operating two different markets within its platform; the existing P2P facility and a new ‘wholesale market’ operated through a new subsidiary Harmoney Nominee.

Australian regulator sues Westpac for staffer’s poor financial advice (Reuters) Rated: A

An Australian regulator filed a lawsuit against No. 2 lender Westpac Banking Corp (WBC.AX) over a financial planner it alleges gave poor advice for years, upping its scrutiny of a sector already under fire amid an embarrassing public inquiry.

Australia’s A$5 billion ($3.7 billion) financial planning sector has provided some of the most damning evidence at an inquiry into finance sector misconduct, ordered by the government after a string of banking scandals including fraud.

P2P lender cuts rates (Good Returns) Rated: A

Peer to peer lender Lending Crowd has cut its borrower interest rates for all new business and personal loan applications including vehicle purchases and debt consolidations.

A1 grade personal borrowers will have a market leading rate of 6.89% pa and SME businesses will have rates available from 7.98%. Interest rates across all loan grades will range from a low of 6.89%
to a high of 18.96% (previously 7.90% to 19.75%).

Parents giving $ 10k towards kid’s first car (Finder) Rated: A

Survey shows 60% of parents are giving kids $10,594 to buy their first car.

According to research conducted by RateSetter, parents are stumping up $10k to get their child their first set of wheels.

RateSetter found that among parents who bought their child a car, 15% chose a new model, 71% opted for a used one and 14% donated their own vehicle. The majority of families could afford a car under $10,000, while 26% spent between $10,000 and $20,000. A lucky 12% of kids were gifted over $20,000 towards their ride. Parents in Victoria spend the most on their child, up to $13,386. In NSW, the average outlay was $10,404.

India

P2P lending companies change tack in bid to become NBFCs (Business Standard) Rated: AAA

Peer-to-peer (P2P) lending companies are changing their business model as they migrate to becoming (NBFCs).

RBI had created a special category called NBFC-P2P, in view of the proliferation of entities. While mandating Rs 20 million as minimum net worth, RBI had also imposed a Rs 1-mn cap for individual lending on such platforms.

So far, a couple of these entities have got an NBFC licence from RBI. Faircent says it got the licence about 20 days earlier.

Amazon launches lending platform for sellers (The Economic Times) Rated: AAA

Amazon India has launched a platform for lenders and sellers wherein sellers can choose from competitive rates and loan offers. It will also open its APIs to lenders to plug in and lend to the sellers as part of the new programme, called the seller lending network.

India will be the first geography for Amazon where it has launched such a seller platform.

Fiscal 2015 World Bank Lending Report highlights India as one of the biggest Loan Beneficiary (Digital Journal) Rated: AAA

Fintechs offer loans to individuals with low credit scores as well. For instance, in the case of Qbera, individuals with a minimum credit score of 600 can qualify for personal finance. This is not quite so in the case of private banks – individuals need to have a minimum credit score of 750 to be eligible.

Aye Finance Secures $ 21.5M in Series C Funding (Finsmes) Rated: A

Aye Finance, a Gurgaon, India-based provider of financial services to micro and small businesses, secured $21.5m in Series C funding.

Backers included CapitalG, SAIF Partners and LFT.

The company intends to use the funds to accelerate business growth.

P2P lending: Can India replicate the UK experience to achieve Sabka Saath, Sabka Vikas? (Economic Times) Rated: A

India is still struggling with a huge credit gap that is holding back the economy. Getting a bank loan is an extremely cumbersome and long-drawn process for salaried individuals and small businesses, alike. According to a study conducted jointly by ASSOCHAM and EY, around 19% of India’s population remains unserved by the traditional banking sector.

Several million MSMEs that lack a tangible financial record are thus not eligible for credit from legacy financial institutions who still use traditional credit and financial data to evaluate eligibility. For the Indian economy to achieve the next level of growth, the current gap of nearly $200 billion in credit supply to MSMEs and significant under-banked population of India needs to be addressed immediately.

Asia

FSC reins in P2P firms (Korea Joongang Daily) Rated: AAA

In Korea, P2P firms, which directly connect borrowers with investors through online platforms, are not under the direct supervision or management of financial authorities. The Financial Services Commission (FSC) only indirectly supervises them by requiring registration of P2P firms’ lending subsidiaries, which most P2P firms use to carry out the process of lending money to borrowers.

But this safeguard also has many loopholes. TheHighOneFunding, for example, had uploaded the name of a different person as CEO when it registered its lending subsidiary with government regulators.

With more investors attracted to the idea of making easy money through high interest rates on P2P lending, the cumulative amount of loans on such platforms has dramatically increased, from 37.3 billion won in late 2015 to 3.50 trillion won as of May.

MENA

Where’s the money, honey? (Gulf News) Rated: AAA

According to the Khalifa Fund for Enterprise Development, nearly 50 to 70 per cent of loan applications made by SMEs in the UAE are declined by traditional banks, while loans to SMEs account for around four to five per cent of the outstanding bank credit in the UAE.

Enter peer-to-peer lending.

Over the years, such platforms have become big business: In 2016, the size of the peer-to-peer lending market in the US, UK, the European Union, Australia and New Zealand was estimated to be more than $72 billion, according to AltFi. In China, loan originations in 2015 were estimated at $101 billion.

Authors:

George Popescu
Allen Taylor

Wednesday June 13 2018, Daily News Digest

Financial Strain by category

News Comments Today’s main news: Money360 surpasses $750M in commercial real estate loans closed. Attorneys defend $16M LendingClub fee. Funding Circle lending unlocked 75K jobs in 2017. Westpac ends Prospa relationship. Today’s main analysis: Should financial advice be tailored along credit and gender lines? Today’s thought-provoking articles: GreenSky look fairly valued, but there are competitive risks. 4 companies driving […]

Financial Strain by category

News Comments

United States

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News Summary

United States

Money360 Surpasses $ 750 Million in Commercial Real Estate Loans Closed (Globe Newswire), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate loans, today announced it has surpassed $750 million in loans closed since inception. This includes $82.5 million in loans closed in May 2018.

Notable loans closed in 2018 include:

  • A $26 million bridge loan for a specialty retail center in Punta Gorda, FL, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $15.6 million bridge loan for an office building in Houston, TX, brought to Money360 by Rich Perry at Churchill Commercial Capital
  • A $17.25 million bridge loan for a medical office in Newport Beach, CA, brought to Money360 by Scott Monroe at NorthMarq Capital, Inc.
  • A $7.9 million bridge loan for Raytheon’s industrial space in Albuquerque, NM, brought to Money360 by Jake Clopton at Clopton Capital
  • A $9.2 million bridge loan for a neighborhood center in Tulsa, OK, brought to Money360 by Mark Reichter at Q10 / Triad Capital Advisors, Inc.
  • A $5 million bridge loan for an office park property in South Bend, IN, brought to Money360 by Dean Giannakopoulos at Marcus & Millichap Capital Corp.
  • A $5 million bridge loan for a manufactured housing property and park in West Sacramento, CA, brought to Money360 by Jake Clopton at Clopton Capital
  • A $3 million bridge loan for a mid/high rise multifamily building in Detroit, MI, brought to Money360 by Robert Krupka at Gelt Financial
  • A $2.3 million bridge loan to a self-storage building in Panama City Beach, FL, brought to Money360 by Doug Brooks at Marcus & Millichap Capital Corporation
  • A $1.6 million bridge loan to a multifamily building in Macon, GA, brought to Money360 by Naveed Khan

Attys Defend $ 16M LendingClub Fee Bid That ‘Shocked’ Judge (Law360) Rated: AAA

Attorneys seeking $16 million for representing LendingClub Corp. investors in securities class actions against the peer-to-peer lending company defended their fee bid Monday to a California federal judge who previously said the amount “shocked” him, saying their work produced an “outstanding result under any measure.”

The 28-page motion filed by attorneys for Robbins Geller Rudman & Dowd LLP, lead counsel for the lead plaintiff, argues that the requested 13.1 percent cut of the $125 million settlement is reasonable in light of the results achieved, the risks…

GreenSky Looks Fairly Valued, But Competitive Risks Remain (Forbes) Rated: AAA

GreenSky followed through with its plans to go public within weeks of confidentially filing with the SEC last month – making it the largest fintech IPO in the country since LendingClub and OnDeck went public nearly four years ago. The company offered 38 million shares at $23 per share to raise $874 million (with the actual proceeds being $830 million after underwriting fees). The company’s shares have largely traded around this level since then. This points to a valuation of $4.4 billion for GreenSky – around the figure .

GreenSky’s role as an intermediary between lenders and potential borrowers with strong credit histories makes its overall business model a risk-averse one, as it bears negligible credit risk. At the same time, the relationships it has built with banks, home improvement companies and healthcare providers promise to drive growth at a steady pace over the foreseeable future, even as the company explores other growth segments.

Four companies driving the bank tech discussion, with only one a FAANG (American Banker) Rated: AAA

Facebook, Apple, Amazon, Netflix and Google garner so much attention that they have their own collective shorthand, FAANG. But at American Banker’s Digital Banking conference this week, a mostly different set of companies were top of mind: Call them SASA, or Starbucks, Amazon, Sears and Acorns.

More than 40% of the 55 million U.S. smartphone users will have made an in-store mobile payment through Starbucks’s app, and that just over 23 million consumers over the age of 14 will use the Starbucks app to make a point-of-sale purchase at least once every six months, according to Gavin Michael, head of technology for Citigroup’s Global Consumer Bank, citing data from research firm eMarketer.

Should financial advice be tailored along credit and gender lines? (American Banker) Rated: AAA

Women with credit scores below 700, according to an analysis conducted by Elevate’s Center for the New Middle Class, an independent research arm of the online lender.

Source: American Banker/Elevate

Fifty-six percent of women with subprime scores say their finances cause them significant stress. About 45% of men with subprime credit scores say the same, as well as only 23% of women with prime ratings and 16% of men with prime ratings.

Seventy percent of women with subprime credit scores work full time, versus 62% of women with prime scores.

The woman with subprime credit is 41% more likely to have children in her home than a prime woman. She is also 79% more likely to have an elderly parent living with her.

Only 39% of Non-Prime Women Believe They Have the Skills to Manage Their Finances (SC Now) Rated: A

Most surprisingly, only 39% of this group believe they have the skills to manage their finances, despite the fact that ongoing research from myriad sources have found women to be the primary financial stewards of their households.

Key findings in the research include:

  • Two-thirds of non-prime women live paycheck to paycheck.
  • They are 3x more likely to have lost a job in the last year compared to prime women
  • Only 34% of non-prime women hold salaried jobs
  • They are 4x more likely to have trouble predicting next month’s income compared to prime women
  • More than 4 out of 5 non-prime women admit to running out of money at least once a year
  • More than one quarter admit to running out of money every month
  • They are 24% more likely to say their finances cause them stress compared to non-prime men
  • Only 13% of non-prime women would have money on-hand to cover an emergency of $1200
  • Non-prime women are 6x more likely to have used a payday loan

But another myth persists: Seasonal businesses suffer most of all. SBA’s data doesn’t bear this out, showing companies across varied industries tend to follow similar patterns in terms of failure. Manufacturing-based businesses, for example, are no more protected from failure than seasonally driven businesses like restaurants and retail stores, meaning other factors determine companies’ likelihood of long-term success.

An Ohio State University study indicated that  of restaurants don’t make it past the first year. Another 2005 study amended that, saying that the 60 percent figure applied to the first three years.

With CB Insights finding that  of small business failures can be attributed to cash flow problems, it’s imperative that seasonal business owners find ways to “spread the wealth.”

Kabbage, for example, ties its line of credit to a small business’s live data, allowing the company to adjust lines of credit in real time to match a business’s seasonal needs.

Why Digital Lenders Are Tightening Their Lending Criteria (PYMNTS) Rated: AAA

In the early days of online lending, the big appeal was access to funds for potential borrowers with few, if any, options for securing capital.

According to recent reports, some of the largest marketplace lending players in the field — SoFi, LendingClub, AvantProsper — are being pushed by their investors to batten down their credit hatches and demand better credit scores from their borrowers, as well as shorter maturities so they can make more attractive offerings to investors as they look to repackage those loans into asset-backed securities.

According to KBRA, the weighted average of FICO credit scores of Prosper’s loans, packaged in ABS, increased to 717 in a March 2018 deal from 704 in a sale two years earlier. And they weren’t the only lender to see its average score go up — SoFi, increased the weighted average of its FICO credit scores to 744 in a sale earlier this year from 732 in a deal at the start of last year.

Overlooked Millionaires: Finding A Home In The Democratized Family Office Model Of Financial Advice (Forbes) Rated: A

Over the last 20 years, the number of American investors with between $2 million and $20 million in investible assets has grown remarkably. According to 

Optimal Blue, Finastra partner for pricing integration (Mortgage Professional America) Rated: B

Optimal Blue and Finastra have announced an expansion of their relationship under which Optimal Blue will be integrated Finastra’s Fusion MortgagebotPOS product.

The new integration enables banks and credit unions to provide mortgage applicants with Optimal Blue’s live pricing searches via any point-of-sale channel. Fusion MortgagebotPOS is a web-based platform that allows lenders to receive applications through every point-of-sale channel: consumer-direct via the internet, in the branch or call center, or through professional loan officers.

Direct 1031 Exchange Launches New Online Platform for Accredited Investors (Sys-Con Media) Rated: A

A new online platform is now available for accredited investors seeking direct access to Section 1031 exchange investment opportunities with the launch of real estate investment sponsor Direct 1031 Exchange. The company provides Section 1031 exchange offerings directly to investors using the Delaware statutory trust structure under SEC Rule 506(c).

Through Direct 1031 Exchange’s online investment portal, accredited investors can participate in 506(c) DST offerings sponsored by the firm with no upfront load or commission paid by the investor.

LendStreet and Its Unique Approach to the Debt Settlement Space (Lend Academy) Rated: A

LendStreet is a lender that works with consumers who are experiencing financial difficulties. These are people who have taken on too much debt and find themselves in a hole, unable to pay it all back. But rather than declaring bankruptcy, these people want to work things out and reduce their debt through a debt settlement.

This is the point when the debt settlement companies come in. LendStreet lends only to customers whose debt is being or will be negotiated by a debt settlement company. Most of LendStreet’s customers are already enrolled with debt settlement companies before getting to LendStreet. Those who come directly to LendStreet are paired with a debt settlement company to negotiate down their debt, which will be funded by a LendStreet loan.

Chris Sugden of Edison Partners (Lend Academy) Rated: A

Chris Sugden is the Managing Partner of Edison Partners, a growth equity firm based in Princeton, New Jersey. They provide growth capital for small business doing $5 million to $20 million in annual revenue, typically based on the east coast between DC and Boston. They have never invested in a Silicon Valley startup.

In this podcast you will learn:

  • The history of Edison Partners and their unique New Jersey location.
  • The difference between East Coast and West Coast entrepreneurs.
  • The three different verticals they cover.
  • The impact that Marcus will have on the broader fintech space.
  • The shift Chris has seen with the banks as they embrace fintech.
  • The interesting fintech trends Chris is focused on right now.

Radius in Boston working with fintech firm on online business checking platform (American Banker) Rated: A

Radius Bank in Boston has lined up its next fintech project.

The $1.2 billion-asset online bank is working with a Treasury Prime, a San Francisco startup, to create a business checking account. The Tailored Checking Account will allow business owners around the country to quickly open accounts online.

SME smartphone lending set to take off (P2P Finance News), Rated: A

Fintech platform Kabbage predicts that 20 per cent of US dollars lent to SMEs will be via smartphone apps by the end of 2018.

Kabbage analysed nearly 150,000 US small businesses and found an increasing trend towards lending organised via mobile devices, with the number of loans increasing more than 300 per cent.

Online Lender Accused Of Using Tribe To Shield Illegal Loans (Law 360) Rated: A

An internet lending company and others have engaged in a plot to charge illegally high interest rates on loans while attempting to use a Michigan tribe’s sovereign immunity as a shield from suit, a group of borrowers said in a proposed class action filed in California federal court Monday.

Four plaintiffs from various states claimed in their complaint that even though Big Picture Loans LLC said it was owned and operated by the Lac Vieux Desert Band of Lake Superior Chippewa Indians, loans made in Big…

Nobel laureate Kahneman says human financial advisors are still crucial (CNBC) Rated: A

Daniel Kahneman, a Nobel Prize-winning economist, said Tuesday financial advisors still play a major role in the finance world — despite recent technological disruptions in the industry — as they act as therapists for investors.

Robo-advisors are growing at a very fast rate, surpassing $200 billion in assets under management last year, according to BackEnd Benchmarking, which releases quarterly data on robo-advisors.

Lending Express Opens Shop in Silicon Valley & Adds Moshe Kazimirsky to Team (Crowdfund Insider) Rated: B

Lending Express, an AI-powered marketplace for business loans, has opened a new Silicon Valley office in San Mateo, as well as the appointment of Moshe Kazimirsky to VP of Strategic Partnerships and Business Development to support the West Coast team. The announcement comes on the heels of Lending Express’ May $2.7 million seed funding round led by Entrée Capital, iAngels, and existing investors.

PeerStreet’s CEO Brew Johnson and Leadership Team Wins Comparably’s 2018 Culture Awards in Multiple Categories (Business Wire) Rated: B

PeerStreet, a marketplace for investing in real estate backed loans, is honored to announce that it has won Comparably’s 2018 Culture Awards in the following categories:

  • Best CEOs for Diversity
  • Best CEOs for Women
  • Best Managers
  • Best Leadership Team

Robots could replace as many as 10,000 jobs at Citi’s investment bank (Business Insider) Rated: A

Robots could replace as many as 10,000 human jobs at the banking giant Citi within five years, its president told the Financial Times.

Wells Fargo bans cryptocurrency purchases on its credit cards (Payments Source) Rated: B

Wells Fargo & Co. customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere.

United Kingdom

Lending through Funding Circle unlocked 75,000 jobs in 2017 (Pr Newswire) Rated: AAA

A new report published today by Oxford Economics reveals that lending through Funding Circle, the global small business loans platform, unlocked 75,000 jobs in the United States and Europe in 2017.

Peer-to-peer lender Funding Circle to create 200 UK jobs (B Daily) Rated: A

Peer-to-peer lending platform Funding Circle is creating 200 jobs in the UK.

The London-headquartered firm has this morning (June 13) confirmed plans to take on 400 new employees in 2018, half of whom will be recruited in the UK.

LendInvest’s path from adversity to opportunity (City A.M.) Rated: A

Although the online marketplace model had been proven to work – Amazon and eBay had been established over a decade earlier – LendInvest was initially both “offline” and “pretty uninteresting”. It wasn’t until 2012, with £30m investors’ capital under management, that the founders became intrigued by the role tech could play.

The path to success is littered with unforeseen obstacles, good days can follow bad, tailwinds become headwinds. LendInvest is no exception. When the company was young, raising debt finance often felt like an uphill struggle. It took many air miles and international calls, but eventually an eastern European bank offered a £2m funding line, later increased to £6m.

Ranger Direct shares end higher after bowing to activist pressure to wind up (Financial Times) Rated: A

Ranger Direct Lending operates a £128 million investment company which has faced pressure from activist investors who own almost 30% of the company.

The board proposed yesterday of winding down the company as Ares Management withdrew itself from consideration to manage the trust. Ranger’s board also suggested shareholders vote against newly nominated directors by activist investors.

Ranger Direct Lending has struggled as defaults have crept up in the sector.

Monzo launches task automation with IFTTT (Tearsheet) Rated: A

Personal finance apps offer customers insights into their budgeting and spending habits, but U.K.-based digital bank Monzo is taking that a step further by letting its customers design their own rules on how they want to interact with their money.

Monzo’s tie-up with If This Then That, rolled out in early June, lets customers automate tasks using their financial data through personalized rules. IFTTT is a web and app-based platform to help customers get apps and devices to work together. It lets users set up “if, then” rules; for example, “if I post an Instagram, post it as a native photo on Twitter,” or “if I add a new task to an Amazon Alexa to-do list, add it to the iPhone reminders app,” and so on. IFTTT’s integration with consumer financial data lets them experiment with new use cases for financial data and lets the bank learn more about customer preferences and behavior.

Collateral investors may have to join queue of creditors (Peer2Peer Finance) Rated: A

COLLATERAL investors may end up having to recoup any unpaid interest owed as a creditor of the company, the administrator of the closed peer-to-peer lending platform has revealed.

An update from BDO said its initial view was that due to section 26 of the Financial Services and Markets Act – which deems that agreements with unregulated parties are unenforceable – investors would be treated as creditors.

This means they would have to submit documentation to BDO on what they are owed and wait to see what funds can be recouped through the administration.

European Union

B2B FinTech Could Earn Index Ventures $ 2 Billion This Year (PYMNTS) Rated: A

Venture capitalist (VC) firm Index Ventures is on its way to earn $1.6 billion from its early investments in B2B FinTech, according to Forbesreports Monday (June 11). Index Ventures’ portfolio includes iZettle and Adyen, with unconfirmed reports of a Funding Circle initial public offering (IPO) that could push Index Ventures into the $2 billion mark.

LendInvest joins Luxembourg fintech hub (Finextra) Rated: B

LendInvest, the UK’s leading online marketplace platform for property finance, has become a fellow of the Luxembourg House of Financial Technology (LHoFT), the country’s leading FinTech innovation hub.

LendInvest has had a presence in Luxembourg since 2014 when it established its first Luxembourg-domiciled fund.

Fintech threatens to eclipse banks that do not adapt digitally (Financial Times) Rated: A

Writing an opinion piece for the FT BBVA Executive Chairman Francisco Gonzalez talks about the rise of fintech and big tech in banking. He explains that banks still have an advantage when it comes to security, privacy and compliance.

A new regulatory model is needed for the new era of digital banking and data. Banks need to build on what they do best and evolve to ensure they stay relevant. He believes there is a paradigm shift occurring in banking and that banks need to find a new way to support customers and build out their assets

Australia

Westpac Ends Prospa Collaboration After IPO Postponement (PYMNTS) Rated: AAA

Days after Australian alternative lending platform Prospa delayed its Initial Public Offering (IPO) indefinitely, one of its bank partners, Westpac, announced it was ending its relationship with the FinTech.

Reports in The Australian Financial Review (AFR) on Monday (June 11) said Westpac is ending its referral program that sees small business owners rejected for a bank loan linked to the Prospa platform.

Dover Financial Group calls in outstanding debts from financial planners (Australian Financial Review) Rated: A

Dover Financial Group lured financial advisers by offering to postpone payment of annual licence fees for a year or more, but the collapsed company is now calling for immediate payments of those debts, leaving planners, who are already worried about their future, furious.

India

With Rs 35 cr in disbursals, Lendbox is creating a new asset class for investors (Your Story) Rated: AAA

Basing only 20 percent of its risk assessment engine on the CIBIL score, the platform assesses a borrower’s credit-worthiness based on their social, professional, behavioural analysis, including their salary expenditure trends and limits on credit card. The founders claim that the platform takes close to 130 data points into consideration before deciding on a suitable interest rate.

The borrowers are then classified between A1 (A2 and A3) and B3, with the rate of interest ranging from 12 to 36 percent.

Ekmeet says that close to 85 percent of loan requests are denied by the platform, and only 20 percent of their total users are from Tier II towns and cities.

Asia

Kakao Bank’s chatbot will answer up to 80% of requests (Fintech Futures) Rated: A

Kakao Bank, South Korea’s largest internet-only bank, is already showing the beta version of its customer support chatbot, which is scheduled to be launched sometime this month.

The bank says that the tech will help relieve the stress on its customer services department, which receives up to 80% of requests that could be automated.

Canada

Luge Capital goes huge with $ 75m fintech funding (Fintech Futures) Rated: AAA

Initially, $50 million of the raised capital was announced in October 2017 by the Caisse de dépôt et placement du Québec (CDPQ) and Desjardins Group, two of the fund’s major investors.

Sun Life Financial, the Fonds de Solidarité FTQ and La Capitale are also “significant” participants. Luge says it may expand the fund up to $100 million in the coming months.

Real estate crowdfunding in Canada: portal insights for 2017/18 (IT Business Blog) Rated: A

Real estate online investment or crowdfunding has been a sector that has attracted significant interest in the U.S. over the last several years, with more than 100 portals launched to serve rapidly growing developer and investor interest. In fact, industry research hub crowdsourcing.org estimates that the industry will be worth more than $300 billion USD by 2025.

Latin America

Defaults the largest driver of Brazil banking spreads -cenbank (Reuters) Rated: AAA

Credit defaults have been the main factor keeping Brazilian banks from cutting interest rates to households and companies, the central bank said on Tuesday, even as benchmark rates have fallen to all-time lows.

The average cost of credit fell 1.3 percentage points in 2017 to 21.3 percent, according to a central bank report, compared with a 6.75 percentage point decline in the benchmark Selic interest rate. Spreads fell 3.8 percentage points to 18.9 percentage points.

Defaults, which reached 3.2 percent at the end of 2017 according to a widely used metric, forced banks to keep interest rates high to account for potential losses, the central bank said.

Defaults were behind an average 37.4 percent of banking spreads in 2015-2017, the largest contributor to bumping up credit costs to consumers. Other reasons were administrative expenses, taxes and financial margins, a central bank report showed.

Authors:

George Popescu
Allen Taylor

Monday May 21 2018 Daily News Digest

ICO red flags

News Comments Today’s main news: Prospa launches $146M IPO. Experian, HSBC UK partner on credit application solution. RateSetter Australia extends green deal. Student Loan Genius raises $3.5M. Australia court rules against Harmoney. Faircent gets certified for NBFC-P2P. Today’s main analysis: WSJ investigates ICO fraud. Today’s thought-provoking articles: One student explains her student loan turmoil. China’s foreign investment restrictions for P2P lending […]

ICO red flags

News Comments

United States

United Kingdom

International

Australia

India

Other

News Summary

United States

 

Wealthfront’s experiment in risk parity has a rocky start (Financial Times) Rated: AAA

Our case here involves Wealthfront, an automated investing service founded by all-star venture capitalist Andy Rachleff. Boasting over $10.5bn under management, the platform offers a wide-range of thoughtful strategies to the casual investor, including indexes optimised to harvest tax-losses and a smart-beta product, overseen by Random Walk proselytiser Burton Malkiel.

Back to Wealthfront’s risk parity offering. In an attempt to lure investors, it backtested its new strategy versus its competitors at AQR and Bridgewater. Here are the results:

Source: Financial Times

I’ve Paid $ 18,000 To A $ 24,000 Student Loan, & I Still Owe $ 24,000 (Bustle) Rated: AAA

The loan, ironically called a “Smart Option” loan, has a variable interest rate that fluctuates based on changes in the financial market — which may have been explained to me at the time (I truly don’t remember), but I know I didn’t fully grasp what that meant.

Source: Bustle

Now, eight years later, that loan — one of nine that left me $95,000 in debt upon graduation (because, yes, interest does accrue while you’re in school) — very clearly marks the exact moment when I lost control of my own financial destiny.

According to a February 2018 study published by the Levy Economic Institute, a nonpartisan policy think tank at Bard College, there are 44.2 million Americans with student loans, which adds up to about $1.4 trillion in debt. There already exists a myriad of research-driven articles that wax on the impact of the student loan crisis on the future of this country (screwed), our economy (broken), and the weight of the loan crisis (crippling)

Student Loan Genius Raises $ 3.5M in Seed Series Prime Financing (Finsmes) Rated: AAA

Student Loan Genius (SLG), an Austin, Texas-based employee benefits platform, raised $3.5m in Seed Series Prime financing.

The round was led by Vestigo Ventures, with participation from CMFG Ventures, Prudential Financial and Rubicon Venture Capital.

The company intends to use the funds to support commercialization of its offering as well as to grow its technology, sales and marketing teams.

Cloudvirga Raises $ 50M in Series C Funding (Finsmes) Rated: A

Cloudvirga, an Irvine, Calif.-based provider of digital mortgage point-of-sale (POS) software provider, closed a $50m Series C funding round.

The round was led by Riverwood Capital with participation from Upfront Ventures. In conjunction with the funding, Riverwood executives Scott Ransenberg and Jay Schneider will join Cloudvirga’s board of directors.

Under-the-radar Wilmington fintech companies burst onto consumer credit scene (Delaware Online) Rated: A

One is Fair Square Financial, which last week snagged a $100 million investment from Vikram Pandit, the former CEO of Citigroup.

It’s an infusion of cash that the online credit card company says will allow it to expand beyond its downtown co-working space this year while doubling its workforce to 100 employees during the next two years.

The expansion decision is the result of surprisingly strong customer demand for its online-serviced, low-fee Ollo cards, Fair Square CEO Rob Habgood said. The credit cards carry a variable interest rate that currently sits at a lofty 24.99 percent.

Fintech is disrupting big banks, but here’s what it still needs to learn from them (The Next Web) Rated: A

Much of the hype around fintech focuses on what traditional banks do wrong: they’re slow to adopt new technology; they don’t center the customer; they’re too big to respond nimbly to change. This narrative is part of why fintech continues to attract massive investment, with $31 billion total flowing into the sector last year, according to KPMG.

The truth is that there’s actually a lot that banks do right — things that fintech startups can struggle to replicate. I mean, there’s a reason why they’ve been successful.

Here are the three areas where I feel fintech’s needs and banks’ expertise overlap.

Will Consumers Take On Too Much Debt In 2018? (PYMNTS) Rated: A

The rate of new delinquencies on credit cards stood at 6.42 percent in Q1, up from 5.9 percent for the same period last year. According to Moody’s, the delinquency trend for the next year is for an “increase.” The Q1 credit card delinquency rate trails the 7.3 percent rate for auto loans but is higher than the 3.4 percent rate for residential mortgages.

Meanwhile, the rate of total new household debt delinquencies was about 4.5 percent in Q1 of 2018, “down slightly from a year ago,” Moody’s said. “Over the next year, we believe delinquencies will rise a bit as lenders modestly loosen underwriting standards.”

Direct Lending Partners Hires Industry Leader as Director of Originations and Capital Markets (PR.com) Rated: B

Dream Live Prosper (DLP), an award-winning family company led by Don Wenner (Founder and CEO), is excited to announce the appointment of Greg E Schecher as Director of Originations and Capital Markets.

Based out of the company’s Southeast headquarters in St. Augustine, Florida, Greg will lead the firm’s CRE bridge loan lending and marketplace lending platform.

United Kingdom

Equifax powers HSBC UK’s first live credit application solution (Fintech Futures) Rated: AAA

HSBC UK has created the “first live” use case of open banking for credit applications using the InterConnect cloud platform from Equifax.

According to Equifax, the solution will help quick affordability assessments by allowing individuals to submit their bank transaction information electronically, in less than five minutes, during an application for credit.

Each submission is presented directly to HSBC UK’s underwriting team in real-time, providing the bank with view of a customer’s affordability and offering faster lending decisions.

Peer-to-peer lending: beware the risks (The Times) Rated: A

About 150,000 Britons have lent nearly £10bn in this way over the past decade, earning around 4.5% interest on average. By contrast, the average interest rate on an easy access savings account is just 0.51%.

The bigger platforms, such as Zopa, Funding Circle and RateSetter, are therefore attractive alternatives for would-be savers.

The market was boosted by the launch in 2016 of innovative finance Isas, which allow people to invest £20,000 a year tax-free in P2P platforms and equity-based crowdfunding, where they buy stakes in companies.

The Disruptive Rise of FinTech (Technative) Rated: A

The fintech industry is one of the fastest growing areas of the British economy and is generating more than £20 billion annually. The sector continues to grow, it currently employs over 60,000 people and has produced more billion pound-valued start-ups than any other British economic sector.

 

P2P lender urges social media firms to allow crypto ads (Peer2Peer Finance) Rated: A

A BAN on cryptocurrency adverts will do more harm than good, a crypto-backed peer-to-peer lender has warned.

Lendingblock, which lets individuals lend in a range of digital currencies such as Bitcoin, Ethereum and Ripple, said rather than Google, Facebook and Twitter pursuing a current ban on cryptocurrency adverts to help clamp down on scams, they should help promote education and awareness.

Lendingblock warned a complete blackout on information may be “the easiest option” but warned that cryptocurrencies aren’t going anywhere so it would be better to partner with the industry and ensure consumers understand the market.

More funding for smes (Manufacturing and Engineering Magazine) Rated: A

The Manufacturer has partnered up with the alternative finance specialist ThinCats to make £100 million of funding available to UK manufacturers, as more and more investors are becoming increasingly keen to help fund SMEs.

The main issue for some SMEs is that they do not have the largest amounts of assets against which the banks are more willing to lend. As a result, many of them can’t invest in their growth, or delay investment until they reach the point they can fund it themselves. The wider knock-on effect of this problem is that the UK’s productivity and growth is being held back.

Crypto world gets most complete and secured crypto exchange with Bitmillex (The Cryptocurrency Analytics) Rated: A

What separates Bitmillex from other crypto exchanges is that the platform was developed out of the long-standing demand of a credible cryptocurrency exchange which will prioritize fund security and also will be able to extend a much wider range of investing and trading options than what is offered by current regular exchanges.  

Speaking further, Mr. Briton highlighted the other state of the art features of Bitmillex which keeps it ahead of other crypto exchanges-

  • Most advanced security and hosting protection through cloud hosted servers that are connected to custom hardware security modules and multiple protective layers to withstand any attack and hack attempts. In addition, 98% of all balances are to be stored in secure offline cold storage.
  • Multiple social trade offerings through Auto-Trade, Peer-to-Peer BTC market and Peer to Peer Lending & Borrowing opportunity. (use the term copy trading)
  • Bitmillex has introduced MTG trading software to ensure a ground-breaking multi-terminal and multi-platform trading experience  (MT4)
  • Traders have the flexibility to hold funds in fiat and trade major forex pairs when the crypto market is bearish
  • Bitmillex is offering its revolutionary Debit Card to users that will be linked to their wallets and will provide them immediate access to their balance at ATMs or POS in fiat currency worldwide

Fintech envoy for Northern Ireland appointed (Open Access Government) Rated: B

Georgina O’Leary, Director of Innovation, Research and Development at Allstate has been appointed as the government’s new fintech envoy for Northern Ireland.

China

Foreign investment restrictions in P2P lending intermediaries (China Business Law Review) Rated: AAA

Current regulations and policies on peer-to-peer lending do not directly restrict or prohibit foreign investment in P2P lending intermediaries.

Relying on a network, a P2P lending intermediary will generally charge a certain consulting fee, service fee, etc., once a lender and borrower that have been brought together establish a lending relationship.

Local financial service office recordal/registration. Article 5 of the measures specifies that, within 10 working days after collecting its business licence, a P2P lending intermediary, or one of its branches, that proposes to launch P2P lending information intermediary services is required to carry out, on the strength of relevant materials, recordal/registration with the local financial regulator of the place where it has its business registration. Once it has completed recordal/registration with the local regulator, the P2P lending intermediary is required to apply for the appropriate telecoms service operating permit in accordance with relevant regulations of the competent telecoms authority before it can launch its services.

European Union

Following the Paypal acquisition: iZettle’s founders are the latest Swedish tech billionaires (Business Insider) Rated: AAA

Mojang founder Markus “Notch” Persson, Skype’s Niklas Zennström and Spotify’s founding duo Daniel Ek and Martin Lorentzon are Sweden’s richest people in tech today – all worth $1 billion or more.

Following Paypal’s announcement that it would buy the Swedish payments company iZettle for $2,2 billion (19 billion SEK), Jacob de Geer and Magnus Nilsson – founders of iZettle – have joined the few dozen Swedish entrepreneurs worth 1 billion krona or more.

International

Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud (Wall Street Journal) Rated: AAA

In a review of documents produced for 1,450 digital coin offerings, The Wall Street Journal has found 271 with red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.

Source: The Wall Street Journal

Data Centers Take Center Stage in Real-Estate Investing (Barron’s) Rated: AAA

“An autonomous car will need 40 times more bandwidth than the cars we use today,” says East. “The demand for data centers is growing 30% per year in the U.S. and 70% in China, but there are only six public companies in the supplier’s market.” They are: Equinix (EQIX), CoreSite Realty (COR), CyrusOne(CONE), Digital Realty Trust (DLR), QTS Realty Trust (QTS), and Switch (SWCH).

Data centers aren’t easy markets to enter. It’s not hard to purchase a piece of land to build the property, but the facility needs to be outfitted in fiber, equipped with interconnected networks, and wired for massive electric power and top-tier security devices. It takes about $1,000 to build one square foot of data center, said East, compared with the average cost of $300 for conventional real estate.

Capgemini And Efma Launch Innovative FinTech Portal (Payment Week) Rated: A

Capgemini and Efma today announced the launch of FinTechVisor, an innovative platform designed to bring FinTechs and financial institutions together to collaborate. The FinTechVisor portal offers a world-wide networking and collaborative community for FinTechs and financial institutions to become game-changers by co-creating the future of the financial services industry.

Launched today at the CCX Forum in London, the portal, which connects financial institutions and FinTechs, will have a feature that allows bankers and insurers to rate FinTechs and comment on their solutions, as well as a “matchmaker-like” personalized function for financial institutions to find a FinTech partner who complements their needs and interests.

InnerScope Hearing Technologies, Inc. Announces Klarna Bank as a Financing Partner (Globe Newswire) Rated: B

Hearing Technologies InnerScopeInc. (OTCQB:INND) announced today the complete integration of www.Klarna.com for a simple and easy one-click payment solutions for its online customers who shop at www.hearingbenefit.com and www.nohasslehearing.com websites.

InnerScope and Klarna have teamed up to offer a frictionless one-click checkout solution which gives customers a choice of 2 simple no-hassle payment options, Pay Now, or Slice It options.

  • The Pay Now option is for customers who want to pay in full at checkout can do it quickly and securely with a credit/debit card.
  • The Slice it option with its instant financing and a quick and simple credit application process allowing the customers to spread the cost of their purchases over a 6 to 24-month period at 0% annual percent rate (“APR”), depending on transaction value, giving them flexibility and increased purchasing power.
Australia

Online lender Prospa launches $ 146m IPO (News) Rated: AAA

Online lender Prospa has launched a $146 million initial public offering, offering shares at $3.64.

Prospa, which lends to small businesses, says the majority of funds raised in the IPO, which includes institutional, retail and employee offers, will be used to grow its existing business, add new products and expand into New Zealand.

RateSetter Australia extends green deal (Peer2Peer Finance) Rated: AAA

RATESETTER Australia has announced an 18-month extension to its green loan marketplace.

The UK peer-to-peer lender’s Australian subsidiary is working with the Australian government’s Clean Energy Finance Corporation (CEFC) to bring clean energy borrowers and investors together.

In its first year it helped more than 1,000 households and small businesses finance green energy products.

 

High Court backs Commerce Commission over Harmoney (Scoop News) Rated: AAA

The High Court has sided with the Commerce Commission on how to interpret peer-to-peer lender Harmoney’s platform fees, deeming them to be credit fees and falling under the regulator’s purview.

The commission, which oversees the Credit Contracts and Consumer Finance Act 2003, claimed Harmoney’s platform fees were an unreasonable credit fee and sought a declaration from the court backing up its interpretation.

Justice Patricia Courtney today backed the commission’s interpretation, saying Harmoney’s documents amounted to a credit contract and that the way the peer-to-peer lender was structured went “beyond mere matchmaking”, providing a nominal creditor to hold loans as a bare trustee for investors and undertaking the full administration of the transactions.

Fintech disruptor will benefit from Banking Royal Commission (Motley Fool) Rated: A

Zip Co Ltd (ASX: Z1P) provides online credit for consumers and businesses at point-of-sale through brands zipMoney and zipPay.

Afterpay Touch Group Ltd (ASX: APT) provides a platform that allows retail merchants to offer consumers to ‘buy now, receive now, pay later’ without having to enter into a traditional loan agreement.

Money3 Corporation Limited (ASX: MNY) started out as a a payday lender, which it plans to exit in the next financial year. The company is predominantly involved in providing secured auto loans, which make up around 80% of its loan book.

Westpac made blind pensioner a guarantor without risk advice, inquiry hears (Reuters) Rated: A

Australia’s Westpac Banking Corp admitted on Monday to signing up a legally blind pensioner as loan guarantor for her daughter’s business without warning her of the risks, then threatened to evict her when the business failed.

The testimony, given to a powerful inquiry into the country’s financial sector, came as Australia’s “big four” lenders all admitted to misconduct in their submissions to a third round of public hearings that focuses on loans to small businesses.

Other transgressions included fraudulent loans and double-charging interest, the inquiry heard, a further hit to the sector’s reputation after previous rounds of hearings uncovered widespread abuses in Australia’s financial planning industry.

FinTech Australia announces new CEO (Fintech Australia) Rated: B

Brad Kitschke has been appointed as CEO of FinTech Australia.

 

India

Faircent Gets RBI Nod For NBFC-P2P Certification (Inc 42) Rated: AAA

Gurugram-based P2P lending startup Faircent has received its non-banking financial companies (NBFC)-Peer-to-Peer (P2P) certification from the RBI (Reserve Bank of India).

The accreditation makes Faircent the first P2P lending platform in the country to receive the certificate of registration as an NBFC-P2P by the national regulator.

FinTech firms assisting banks with customer acquisition (Business Standard News) Rated: A

MoneyTap

People earning more than Rs. 20,000 per month can utilise this app to borrow anywhere between Rs.3,000 to Rs.500,000. Offering flexible payback options, MoneyTap allows borrowers to select their own EMI plans.

CoinTribe

Endeavoring to fill the gaps in SME unsecured loan segment, CoinTribe as a loan marketplace makes it easier for banks to confidently enter the uncharted domains.

Lending on peer-to-peer platforms is fraught with higher risks (Business Standard) Rated: A

Peer-to-peer or P2P lending has emerged as an alternative option for investors who wish to earn higher rates of return than what traditional fixed-income instruments can offer. However, lending on these platforms also entails higher risk, which investors need to be aware of before venturing into this relatively new investment avenue.

6 investments with high return (The Economic Times) Rated: A

Peer-to-peer (P2P) lending is a relatively recent option and is a form of crowd-funding used to raise loans which are paid back with interest by bringing together people who need to borrow, from those who want to invest. For the funds that you invest, the interest rate may be set by the P2P platform or mutual agreement between the borrower and lender.

Risks: Since this is an unsecured loan where there is no face-to-face interaction, a P2P lender, i.e., the investor needs to be aware of the risks involved such as default on the part of the borrowers.

Asia

Finance: RHB plans to win over SMEs with digital agenda (The Edge Markets) Rated: A

Small and medium enterprises (SMEs) can no longer avoid going digital if they want to stay relevant. And RHB Bank Bhd, which has a new five-year strategy, is looking to help them do just that.

Jeffrey Ng, the bank’s head of group business and transaction banking, says the digital economy is the biggest trend impacting SMEs, and many of them will require assistance to adopt the technology. Ng was previously head of RHB’s SME division.

For RHB, this means onboarding SMEs into its electronic financial supply chain platforms. Suppliers and buyers can perform payments for goods entirely on the bank’s platforms and receive payments instantly. SMEs that want to offer cashless payments can also do so with RHB’s solutions.

How Vietnam’s Fintech Market Could Reach Nearly $ 8 Billion By 2020 (Forbes) Rated: A

According to PricewaterhouseCoopers, 

George Popescu
Allen Taylor

Monday November 6 2017, Daily News Digest

SoFi CLP 2017-6 structure

News Comments Today’s main news: Lending Club considering bid for bank charter. N26 to launch in the UK. TransferWise hooks $280M investment for APAC expansion. Zopa vows rate hike won’t impact loan performance. Hexindai debuts on NASDAQ with 60% increase. Westpac profits AU$7.99B. Kaodim raises $7M. Today’s main analysis: SoFi’s latest consumer lending deal. Today’s thought-provoking articles: How payment tech is […]

SoFi CLP 2017-6 structure

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

News Summary

United States

Lending Club eyes charter as landscape evolves (Global Capital), Rated: AAA

Lending Club is exploring the idea of operating as a bank or obtaining a fintech bank charter in order to keep pace with a changing lending and regulatory landscape, an executive from the marketplace lender said on Thursday.

Speaking at the Digital Lending + Investing conference in New York, Valerie Kay, Lending Club’s head of institutional investor group, said that the platform is considering both pathways as the business grows.

How payment technology is being disrupted (The Next Web), Rated: AAA

One of the earliest changes involving the payment industry is how banks and customers behavior is shifting with one another. Quite simply, people have different expectations with how money should move, as well as how quickly. This is a cross-generational phenomenon and something that banks are trying to keep up with.

According to Bank Innovation, approximately 70 percent of millennials now do their banking online.

According to Business Insider, peer-to-peer payments alone are on pace to be worth $86 billion by 2018. And with the popularity of apps like VenmoPayPal, and even Square Cashcontinuously on the rise, this trend doesn’t show signs of slowing down anytime soon.

CurrencyPay, an online payment system that not only finances major equipment for businesses, but extends online payment methods from credit and debit cards to include ACH or wire, all the while reducing fees across the board.

SoFi’s Latest Consumer Lending Deal (PeerIQ), Rated: AAA

On Thursday, President Trump announced his nomination of Jerome Powell to succeed Fed Chairwoman Janet Yellen as the next chairman of the central bank.

Also on Thursday, President Trump rolled out his new tax plan which reduces the number of tax brackets from seven to four and cuts the corporate tax rate to 20% from 35%. Relevant to marketplace lenders, the tax plan reduces the mortgage interest deduction cap by half.

SoFi’s Latest Consumer Lending Deal

SCLP 2017-6 is the largest deal on SoFi’s shelf, and the first since SCLP 2017-5, which priced concurrently with Mike Cagney’s resignation. As we discussed in our previous blog post, SCLP 2017-5 priced slightly wider on the news (10 to 15 bps). SoFi’s latest consumer lending deal, SCLP 2017-6, is the first deal from SoFi with borrowers living in FEMA declared disaster areas, comprising approximately 12% of the deal.

Source: PeerIQ, Company Filings, Kroll Bond Rating Agency, S&P

SCLP 2017-6 Structure
Although it may seem that SoFi is structuring deals more aggressively, the A and B classes have higher initial CE when compared to SCLP 2017-5 by 2.38% and 0.76% respectively.

Source: PeerIQ, Company Filings, Kroll Bond Rating Agency, S&P

Square’s Jack Dorsey: We’re moving as fast as we can with bank application (Fast Company), Rated: A

“I think the [regulatory] environment really changes depending on who you’re talking about,” says Dorsey, who traveled to New York this week for the unveiling of Square Register, a new hardware device. “There’s a lot of appreciation for the fact that we’ve spent eight years serving an underserved customer, an underbanked customer, both on the seller and the individual side.” Before Square unveiled its signature card reader, he adds, micro-merchants “couldn’t participate in the economy in the way that the economy was moving.”

Investors see “perfect storm” in marketplace loan ABS (Global Capital), Rated: A

An investor roundtable at the Digital Lending + Investing conference in New York on Thursday highlighted developments in the securitization of marketplace loans over the last 12-18 months. The transition to a hybrid funding model for lenders, in addition to the emergence of more sophisticated deal structures, have …

MoneyLion takes on America’s savings crisis with the launch of MoneyLion Plus (BusinessWire), Rated: A

Despite solid economic and wage growth in the U.S. since the 2008 crisis, a host of studies point to critically low rates of savings and widening income inequality among American consumers. In the face of this savings crisis, mobile consumer finance platform, A monthly subscription gives MoneyLion Plus members access to the following benefits:

  • Guided savings: MoneyLion Plus makes it easy and convenient to save $50 or more per month. MoneyLion’s technology analyzes each member’s cash flows to determine when to set aside and save money from their checking account. Via the MoneyLion mobile app, members are provided with personalized daily budgeting tips to help them optimize their spending and increase their savings even further.
  • Fully-managed investment account: The funds saved are automatically invested into a fully-managed investment account featuring a diversified portfolio of ETFs built to suit the financial needs and life stage of each member, all without any additional trading or management fees. These portfolios are based on simple investment strategies that will help members grow their wealth.
  • Low-cost access to credit: Unexpected expenses can reset savings back to square one, preventing longer-term growth of wealth. Access to personal loans with APRs of 5.99% or less, regardless of credit score, offers MoneyLion Plus members an affordable means to manage their cash flow needs and avoid costly overdraft or late payment fees. 
  • Cashback bonus: MoneyLion Plus offers its members additional rewards, including an instant $1 cashback bonus deposited into a member’s investment account each day they log into the MoneyLion app. Members also earn rewards based on their investment account balance.
  • MoneyLion mobile app: Members can access all of their benefits on-the-go via MoneyLion’s mobile app, including viewing their savings progress, getting personalized tips and offers for saving more, and accessing their loan funds in just a few taps.

Credit Karma Launches Online Vehicle Center (Finovate), Rated: A

Consumer credit monitoring and financial health startup Credit Karma has launched a new offering today that changes those routines. The company’s new automotive information center is a one-stop shop for helping consumers to manage and organize their vehicle-related finances and information. Included among the capabilities are an overview of the user’s DMV profile, with vehicle and drivers license information, vehicle value estimations, and manufacturer recall notices.

The two most notable capabilities are the auto insurance score and comparison tool and the vehicle refinancing decision tool.

Fintech Lenders Are Holding Larger Portion of the Personal Loan Market (Lend EDU), Rated: A

During the Digital Lending + Investment Conference in New York, the consumer credit reporting agency Transunion released the results of a study called ”Fact versus Fiction: FinTech Lenders.” In a nutshell, the study concluded that fintech lenders were not riskier than other lenders, and they are starting to represent a more significant part of the loan industry in the USA.

By the end of the year, the fintech lenders comprised 30 percent of outstanding personal loan balances which is up from four percent in 2012. Up through June in 2017, fintechs represented 32% of the personal loan market.

In the second quarter of 2016, 14.8 million people had a personal loan; after one year, that number increased to 16.1 million. Additionally, the total outstanding personal loan volume more than doubled from $45 billion in Q2 2012 to $106 billion by Q2 2017.

Wells Fargo Launches New Banking App “Greenhouse” (Crowdfund Insider), Rated: A

Banking giant Wells Fargo announced on Thursday the launch of its new banking app, Greenhouse. The company described the app as a new mobile banking experience that provides tools to help consumers manage their money and know where they stand financially. 

According to Wells Fargo, consumers using the Greenhouse app will be able to have money management with two accounts that work together, immediate access to their Greenhouse account, and the ability to send and receive payments.

Marketplace Lending News Roundup – November 4 (Lend Academy), Rated: A

Redpoint Capital Group Sells Stake to Dundon Capital Partners (BusinessWire), Rated: A

Redpoint Capital Group, LLC (“Redpoint Capital”), a leading alternative credit manager, announced today that it has agreed to sell a stake in its affiliated General Partner and Management Company to an affiliate of Dundon Capital Partners, LLC (“DCP”). DCP is led by Thomas (“Tom”) Dundon, one of the founders and former CEO and Chairman of Santander Consumer USA (“SCUSA”), a leading publicly-traded non-captive finance company.

As part of the transaction, both Tom Dundon and DCP Partner, John Zutter, will sit on Redpoint Capital’s Board of Directors along with Redpoint Capital Managing Partners Alex Dunev and Andy Thomas.

Digital Lending Innovation Starts with the Simple Things, Bank of America Says (Bank Innovation), Rated: A

Financial services should focus on “making the easy stuff really easy,” Schleck said yesterday during a panel discussion at the American Banker Digital Lending and Investing conference in New York.

Schleck was the sole representative from a traditional bank during the discussion, with fellow panelists hailing from alternative fintech companies and lenders  – Lending Club, Funding Circle, and Varo Money.

The key to BofA’s innovation in this space was a cross between data (also highlighted by others on the panel) and simplicity, Schleck said, pointing to the bank’s success with mobile direct deposit as an example.

Citizens Digitizes SMB Lending Process With Fundation (PYMNTS), Rated: A

Citizens Bank is enhancing its small and medium-sized business (SMB) lending offering by digitizing the loan application process, according to a press release published by the financial institution (FI) on Thursday (Nov. 2).

The bank is launching a new platform, built in collaboration with alternative online lender Fundation, allowing SMB customers of the bank to apply for a loan or line of credit and receive an approval online.

BlackRock pivots to US west coast as part of tech push (Financial Times), Rated: A

BlackRock is pivoting its business to the US west coast, moving Mark McCombe, head of Americas, to San Francisco as part of a broader plan by the world’s top asset manager to step up its focus on technology and innovation.

More than 40 per cent of BlackRock’s $5.9tn in client assets are managed from San Francisco, which accounts for a third of group revenue.

New Online Portal Offers Loans Up to $ 500,000 to African American Entrepreneurs in Chicago (Black Enterprise), Rated: A

The national advocacy group Small Business Majority, national online lender Fundera, and micro-lender Accion have developed SimpleGrowth, a new online lending marketplace. Calling SimpleGrowth a first-of-its-kind local lending portal, officials say the platform will allow African American entrepreneurs in Chicago to connect with area lenders via a website.

Individuals can seek loans ranging from $500 to $500,000 at various rates, depending on the business owner’s readiness and other factors.

There are 230,000 small businesses in Chicago, but an unusually high percentage of those businesses are owned by African Americans. Cook County, Illinois—which includes Chicago—has the most African American-owned small businesses of any county in the country at 110,000, the U.S. Census Bureau’s 2012 analysis of small businesses reports.

The financing will come from Chicago lenders including Accion, Local Initiatives Support Corporation Small Business and the Women’s Business Development Center, all Community Development Financial Institutions that support small business entrepreneurship. Businesses can apply for the loans for free.

LoanDepot Starts JV (Orange County Business Journal), Rated: B

LoanDepot LLC, the nation’s second largest non-bank consumer lender, announced a joint venture with OfferPad, a real estate investment company, to speed up the process of mortgage approval.

The joint venture will be a stand-alone mortgage broker with LoanDepot acting as the wholesale lender, Calle said. It is expected to launch in the first quarter and will be based in Phoenix.

Online Lender Better Mortgage Names Jeff Corbett New Director of Business Development (Crowdfund Insider), Rated: B

Better Mortgage, a digital mortgage company working to improve access to home financing through transparency, honest guidance, and zero loan officer commissions, announced on Friday it has appointed Jeff Corbett as its Director of Business Development and adding him to its growing Strategic Partnership team.

Silicon Valley Start-ups Join the Line-up for Blockchain Expo North America (Coinspeaker), Rated: B

Amongst those speaking is Karma – a cross-border peer-to-peer lending platform, working to eliminate inefficiencies in the P2P lending industry. Karma will be taking to the stage in the ICOs, Tokens and Cryptofinance conference track on November 29, to introduce their service to delegates ahead of their closed ICO sale later this month.

Goji Appoints Peter Breitstone As New CEO (Crowdfund Insider), Rated: B

Specialist provider of P2P and marketplace lending products and services, Goji, announced on Friday it has appointed Peter Breitstone as its new CEO. According to the company, Breitstone has over 20 years of senior executive leadership experience at several global insurance companies, including Insureon, Zurich, and Aon. Breitstone also built and ran Environmental Partners, an insurance brokerage specializing in Environmental Risk and Insurance Management, which he sold to Aon.

Weekly WealthTech Report: The First CEFEX-Certified Robo (Wealth Management), Rated: B

PlanCorp is putting its experience and research into a new hybrid robo advisor called BrightPlan, which it says is the first of its kind to be certified by the Centre for Fiduciary Excellence for providing prudent fiduciary practices to clients. The online service offers goals-based financial planning without requiring users to invest.

Clients can choose either a digital-only service, or tap into Plancorp’s team of wealth managers.

United Kingdom

European Fintech N26 to Launch in the UK in Early 2018 (Crowdfund Insider), Rated: AAA

N26, a digital-only challenger bank based in Germany, announced on Friday it is launching its services in the UK in early 2018. This news comes after the fintech startup announced plans to launch in the U.S. next year. UK customers may now get early access by signing up directly on the company’s UK homepage.

TransferWise announces $ 280m investment round as company looks towards APAC expansion (AltFi), Rated: AAA

The international money transfer service raised $280m in a Series E round as it plans for global expansion and challenge to banking disruptors.

The round was led by asset management firm Old Mutual Global Investors (OMGI), investing funds managed by its small and mid-cap UK equities desk, and Silicon Valley venture capital firm IVP.

Zopa says rate hike will not impact loan performance (P2P Finance News), Rated: AAA

ZOPA has reassured investors that the Bank of England’s interest rate hike will not impact the performance of the peer-to-peer platform’s loans.

On Thursday, the central bank raised the base rate from 0.25 per cent to 0.5 per cent – the first increase in a decade.

LendInvest to enter BTL market after securing new funding line (Bridging&Commercial), Rated: A

LendInvest has agreed a long-term financing facility with Citi which will help the lender enter the UK’s £40bn buy-to-let market.

LendInvest now manages over £500m of lending capital on behalf of its institutional investors.

UK interest rates rise for first time in 10 years (Growth Business), Rated: A

For the first time in more than ten years, the Bank of England has raised interest rates. The official bank rate has been lifted from 0.25 per cent to 0.5 per cent, the first increase since July 2007.

The hike has divided opinion and it is yet to be seen how severely the impact will hit the UK. Mr Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.

With an alternative outlook, Giles Cross, CMO at FOLK2FOLK, says, “For years low interest rates have been bad news for consumers wanting a positive return on their money in real terms. So today’s announcement may come as a small relief to many people who are looking for an increase. Whilst the reality is that consumers may not see the outcome passed on from their financial services provider or bank for a long time.

British fintech lender Cashplus seeks licence (Times of Malta), Rated: A

Cashplus said yesterday it will soon apply for a UK banking licence as part of the British fintech firm’s plan to step up its challenge to traditional banks.

The move will allow Cashplus to convert the £200 million of customers’ funds it holds into bank deposits, its chief executive Richard Wagner told Reuters.

Volkswagen explores obtaining UK banking licence (Financial Times), Rated: A

Volkswagen is preparing to apply for a UK banking licence so it can carry on providing finance to motorists after Britain leaves the EU.

Lendy considers offering auto-invest products (P2P Finance News), Rated: A

LENDY is seeking views from investors on the introduction of an auto-invest product.

The peer-to-peer property lender has issued a survey to its customers to find out their views on a product that would self-select loans for lenders.

Simon Champ of P2PGI and Pollen Street Capital (Lend Academy), Rated: A

In this podcast you will learn:

  • How Simon first became interested in the online lending space.
  • Simon’s original goal when he started P2PGI.
  • What it was like trying to raise the initial capital for the fund in 2014.
  • How many platforms they launched with initially.
  • The scope of the fund: both lending verticals and geographies.
  • How Brexit and the currency challenges of the British Pound has impacted the fund.
  • How the fund has evolved from P2P to a broader direct lending focus.
  • The main challenge of pure peer to peer lending platforms.
  • How they are using leverage today at P2PGI.
  • The P2PGI approach to due diligence and how they decide to make an investment in a new platform.
  • The historical returns of the fund and Simon’s views of the challenges here.
  • His view on the poor performance at US consumer platforms in 2015 and 2016.
  • Why P2PGI left Marshall Wace and merged with Pollen Street Capital.
  • Simon’s view on the evolution of the lending space and where it is going.

CoInvestor Provides First Digital Access For Advisers Into LendInvest’s Real Estate Opportunity Fund (MondoVisione), Rated: A

CoInvestor, the alternative assets platform, has been chosen by LendInvest Capital as a preferred method for UK advisers to invest in its Luxembourg-domiciled Real Estate Opportunity Fund.

Interview with Stuart Law, CEO and co-founder of Assetz Capital (P2P-Banking), Rated: A

Assetz Capital is now the UK’s second-largest peer-to-peer business and property lender and also the second largest in Europe.

What are the three main advantages for investors?

Firstly, we only lend to businesses who we assess as credit worthy businesses with tangible assets.

Secondly, we cater for all types of investors.

Thirdly, we are also the only major UK P2P platform to still offer a manual investment option.

What are the three main advantages for borrowers?

Rather than being just a website with automated credit assessments, Assetz Capital is run by finance, banking, credit and lending professionals with huge industry experience, alongside our large UK-wide network of employed Regional Relationship Directors who visit potential borrowers and help structure the loans.

We’re also a lean business, and as such we have lower overheads than traditional lending institutions.  Coupled with the fact that we only lend to credit worthy businesses holding tangible assets, this means our cost of borrowing for businesses is kept low.

Assetz Capital has succeeded in growing loan originations sharply in the past 12 months. How did you achieve that and were intermediaries like brokers a major factor?

To date, more than 350 successfully funded projects have come through brokers, and we predict that this will grow to approaching 1,000 by the end of the 2018 year.

Singaporean sovereign wealth fund piles into OakNorth fundraise (AltFi), Rated: A

Challenger bank OakNorth entered into the UK’s stable of unicorns in October when it raised £154m.

The £154m round valued OakNorth at £934m (approximately $1.3bn). The money came from three investors, The Clermont Group, Toscafund and Coltrane, which collectively took a 16 per cent stake in the company. Today, the trio has been joined by a fourth investor: GIC, Singapore’s sovereign wealth fund.

Anyone for a Crowd VCT? (AltFi), Rated: A

Currently the excellent Wise Alpha is plastered all over the Waterloo and City line. And in recent months Crowdcube has also been blasting out adverts at the Waterloo train station. Not to be outdone, Seedrs is making a regular appearance on the London tube as are a whole number of digital banking apps. Even Abundance in recent years has been making an appearance on billboards at railway stations as far away as Winchester. Now we’re seeing Funding Circle blasting out its message nationwide as part of its multi-million-pound advertising campaign.

This is all very welcome, but I think it poses some broader questions about what the alternative finance space needs to make itself seem more mainstream. I see no reason why a big player such as Funding Circle shouldn’t use big national brand advertising, but I doubt its overall effectiveness.  My sense is that much smaller, baby steps are needed to mainstream the sector and originate new customers – and, crucially, build brand acceptance amongst investors.

Three alternative reasons to consider peer-to-peer investing (Your Money), Rated: B

However, any investment where capital is at risk – such as alternative lending – is not covered by the Financial Services Compensation Scheme (FSCS) and should not be considered as a substitute for cash deposits. So, why should investors look at the burgeoning alternative lending sector? There are three possible reasons:

  • Diversification
  • Funding your income needs
  • Managing pension allowances – Alternative lending certainly offers attractive returns relative to other investment options, as well as against cash at the bank. ThinCats has achieved average returns for investors of 7%-8.5%(as at 11 Oct).

Hello Soda Raises £5.5M in Funding (FINSMES), Rated: B

Hello Soda, a Manchester, UK-based international big data and text analytics company, raised £5.5m in equity and debt funding.

China

Chinese peer-to-peer lender Hexindai shrugs off tighter scrutiny concerns, rising more than 60pc on Nasdaq debut (SCMP), Rated: AAA

Shares in Hexindai, China’s fifth biggest P2P lender, surged more than 60 per cent on its Nasdaq debut on Friday, shrugging off looming concerns of possible tighter scrutiny on P2P lending platforms by Chinese authorities.

Shares in the company traded up 65 per cent to US16.50, just 20 minutes into the listing under the symbol HX, from its offering price of US$10 per American depositary share. The company aims to raise up to US$88 million through the flotation.

China’s unicorns face questions over fundraising (Financial Times), Rated: AAA

Jianpu Technology, the Chinese financial comparison site poised to list later this year, has been stripped of its status as a “unicorn” worth $1bn after regulatory filings revealed it had inflated the funds raised from investors.

Peer-to-peer lender Ppdai’s fundraisings detailed in its filing also fall short of earlier disclosures, according to calculations by Crunchbase, which collates its data from a variety of mostly publicly available channels, including US Securities and Exchange Commission documents.

Qudian’s initial public offering prospectus put its bad-loan ratio at 0.5 per cent — an unusually low but not impossible figure, especially if was selling off bad debt to third parties, which is a common practice among online lenders.

Source: Financial Times

Qudian’s prospectus did not advertise a clear pre-IPO fundraising figure. However, Crunchbase says the company raised about $873m from a number of investors before it went public.

Source: Financial Times

Chinese auto-trading IPO may prove to be a lemon (NASDAQ), Rated: A

Yixin could raise more than $800 million in a Hong Kong float. The Chinese firm wants to be to cars what Ctrip has become for mainland travellers: a one-stop online shop. It is well-positioned for China’s car boom and changing attitudes towards borrowing, but a punchy valuation means it could struggle after listing.

China’s car market is booming. And Yixin smartly targets people born from the 1980s onwards. They are more open to borrowing than their thrifty parents, and many don’t have credit scores, making it tricky for them to borrow from banks instead.

Yixin Group, an online auto-trading and financing company backed by Chinese internet giant Tencent, is planning to raise up to $867 million through an initial public offering in Hong Kong, Thomson Reuters publication IFR reported on Nov. 2.

IDG Capital, CreditEase help retail investors tap new economy (China Daily), Rated: B

Leading venture capital firm IDG Capital and Credit Wealth Management, an independent wealth management arm of CreditEase Group, has formed a comprehensive strategic partnership at the latter’s 2017 private equity investment forum held in Beijing on Friday.

The system enables analysis of 20,000 institutions via 60 dimensions such as styles of their management teams, when they exit from companies they have invested in and who buy into these companies.

European Union

Early Facebook Backer Tied to Russia Bank, Kushner Platform (Bloomberg), Rated: A

A prominent Silicon Valley investor who was an early backer of Facebook Inc.partnered in two investments with the Russian state-controlled bank VTB Bank PJSC before it was sanctioned, his spokesman confirmed Friday.

Yuri Milner, the Russian-born founder of DST Global, also invested $850,000 of his personal money last year in Cadre, a real-estate investing platform co-founded and partially owned by the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser. Milner’s spokesman said that VTB played no part in his Cadre investment, which was done solely on the business merits of Cadre.

You too can become an investor in exciting new Irish innovation (Independent), Rated: A

Backing young companies sounds expensive and risky but it doesn’t have to be either. Today with no more than €50 you can start lending to fledgling Irish businesses through a peer-to-peer platform like Linked Finance. The same €50 could back numerous new ideas on a crowdfunding platform like Fund It.

Today there are 17,000 people lending a total of over €35m through Linked Finance alone but there’s €99bn more sitting in Irish deposit accounts, according to the Central Bank’s July 2017 figures.

International

An Acceleration in Fintech Capital Raising (Lend Academy), Rated: AAA

The recent CB Insights Fintech Trends Briefing points to the rise in fintech financings as Q3’17 saw 278 deals to VC-backed fintech companies, the largest quarter since Q1’12. While total capital invested is down 25 percent from Q2’17 to $4bn the pace of the deals show investors appetite for fintech companies is still very strong.

Facial recognition startup Megvii Face++ raised $460mn in their most recent investment round led by China State-Owned Venture Capital Fund and the China-Russia Investment Fund.

German based online lender Spotcap raised $26mn in equity and debt funding.

Credit Sesame, a San Francisco and Mountain View, Calif. – based personalized credit service and financial wellness company, raised over $42mn in funding.

FS Card Inc., a Washington, DC-based financial services company focused on underserved consumers, raised a $150mn credit facility.

Finova Financial, provider of fair and affordable digital alternatives for Americans underserved by the traditional banking system, secured $102.5mn in equity and credit facility funding.

LendingHome, a San Francisco, CA-based real estate marketplace lender, raised $457mn in capital, which includes both permanent equity and the launch of LendingHome Opportunity Fund II.

BlueVine, a Redwood City, CA-based provider of working capital financing to small and medium-sized businesses, secured up to $130mn in debt capital financing.

OakNorth, a London, UK bank that provides debt finance to fast-growth businesses and established property developers, received a $202mn investment.

SalaryFinance, a London U.K.-based innovative financial wellbeing employee benefits company, completed a $52mn funding round.

How banks can use ETHLend to reduce interest rates globally (TechBullion), Rated: A

P2P platforms are great for smaller loans (i.e. paying off credit cards or repairing a damaged car), but they might not be as affordable and available for larger purchases (i.e. a home purchase or a new car). Especially in developing markets, such larger finance goals might be out of reach due to the lack of credit scoring systems or access to capital in the first place.

Now, how could ETHLend be used to fulfill this market? Let us imagine that a bank or an institutional financer is looking to finance asset backed loans. They have a minimum loan amount of $100,000, and because of this they will be unable to accept loan terms for smaller loans. These banks and institutional financiers would be able to go onto the ETHLend platform, and offer their liquidity to another investor (wholesale borrower) who has large amounts of digital tokens (cryptocurrency) to pledge as collateral.

The investor (wholesale borrower) can then take that $100,000 they got from the bank and turn around and offer loans on a smaller scale to people on the platform or in their local markets, whom do not need to pledge collaterals.

Lendoit – The Decentralized Marketplace Lending Platform Where Everyone Benefits (Chipin), Rated: A

Current P2P platforms are not really P2P because they need to have intermediaries like issuing banks or trust accounts for the system to work. This is a problem as intermediaries usually lack transparency and are also restricted geographically.

For instance, the annual interest of a loan in Brazil may be more than 50% while it is only 1% in Japan.

Source: Chipin

Lendoit is a decentralized peer-to-peer lending marketplace platform that connects borrowers and lenders globally in a fast, easy, and extremely secure manner by using the blockchain and smart contracts.

With the blockchain, Lendoit is able to automate all of the processes required in P2P money lending without sacrificing anything. Instead, everything will be much cheaper and more efficient which is exactly the solution to problems of cross-border loans.

Smart Loan Contracts contain the borrower’s details including his or her score as well as containing the conditions of loans and their respective tenders.

The Smart Reputation Contract works similarly to credit score; in Lendoit, they act as the global score of an Ethereum address and can be utilized for other purposes other than credit transactions.

The Smart Conversion Contract is responsible for converting currencies into the LOAN token when it comes to making transactions on the platform.

Lendoit Global Payments will launch a token for sale for the aptly named LOAN token.

  • Token name: LOAN
  • Token base: Ethereum (ERC-20 compliant)
  • Token supply: TBA
  • Token sale duration: December 13th, 2017

P2P Lending Offers Participants More Efficiency and Convenience in the Financial Services Sector (NewsBTC), Rated: B

The global lending marketplace market is projected to reach $290bn. by 2020, with an expected compound annual growth rate of 51% from 2014-2020.

Colombia Fintech Startups Alegra and Bankity to Compete for Funding at Finnosummit in Miami Next Week (Finance Colombia), Rated: A

Later this month in Miami, a group of 10 Latin American fintech startups will gather in Miami to compete. Two companies, Alegra and Bankity, are from Colombia and will be vying against peers from Mexico, Brazil, Argentina, and Chile for the $50,000 USD prize.

The competition is part of Visa’s Everywhere Initiative and will be taking place within Finnovista’s larger Finnosummit on November 9 in Florida’s largest city.

Bankity offers the first intelligent banking card in Latin America.

Alegra, founded by Santiago Villegas and Jorge Soto, is also great because it aims to help small business owners with tedious tasks like invoicing and reporting with its cloud-based accounting software.

Blockchain is bringing the sharing economy to everyone (VentureBeat), Rated: A

The sharing economy relies on a distributed workforce, shareable assets, and peer-to-peer transactions and contracts. Companies in these emerging marketplaces handle payments through smart contracts and blockchain technology. This greatly lowers costs, improves trust and transparency with the community, and simplifies transactions at a global scale by making them near-instantaneous, even when distributing payments to thousands of digital wallets at once.

One of the biggest markets for data is social media and online retail. DataWallet, based in San Francisco, helps users download their digital identity and upload it to a blockchain-powered data exchange where companies can purchase it, with payments made to users through the blockchain.

Ride-sharing company LaZooz, based in Tel Aviv, is building a decentralized, Uber-like app that uses blockchain to pay drivers and other community participants. WeTrust, in Fremont, CA, is doing something similar in the peer-to-peer lending space, charging only a max fee of .3 percent instead of 1 percent, like LendingClub.

Australia

Westpac posts AU$ 7.99b yearly profit, sends digital Customer Service Hub live (ZDNet), Rated: AAA

Westpac has processed its first live home loans through its new technology platform, the Customer Service Hub, with the bank saying the initiative aimed at speeding up and simplifying the home loan process as its largest transformation program to date.

For the 2017 financial year, the bank reported AU$7.99 billion in after-tax profit, on revenue of AU$21.8 billion, an increase of 4 percent year-on-year.

As of September 30, 2017, Westpac boasted 13.8 million customers; 4.53 million were considered digitally active, with 72 percent of them using a mobile platform.

Additionally, through its AU$100 million venture capital firm Reinventure, Westpac has made 16 investments covering areas such as blockchain and digital currencies, payments, peer-to-peer lending, as well as big data and data analytics.

The bank also this year entered into a “strategic” relationship with Australian-listed payments firm Zipmoney, investing AU$40 million by way of a private share placement in August to allow the integration of the fintech’s products and services across Westpac’s network throughout Australia, as well as other initiatives including the provision of in-development business-to-business products and services.

In April, the bank went live with Samsung Pay, opening up the phone-based wallet to debit and credit card cardholders across both Mastercard and Visa. This came a year after it launched Android Pay, in addition to Westpac’s own tap and pay function, which was unveiled to customers in 2014.

Banks wealth models are ‘unravelling’ (Financial Review), Rated: A

Independent investment and superannuation platforms like Hub24 and Netwealth are readying to reap the rewards of the “unravelling” of the bank’s traditional wealth management models.

The best interest duty is a key plank of a package of financial advice reforms, known as the Future of Financial Advice (FOFA), introduced in July 2013. This was tested with the corporate watchdog recently ordering Melbourne-based financial planning firm to pay $1.1 million in fines and costs as part of the first civil penalty imposed for breaching its duty to act in the best interest of its clients.

Last week, BT Financial Group (BTFG) said it would expand its life insurance APL from its sole in-house product, adding a minimum of three alternative insurers by March next year.

Increasingly, these platforms are snaring a fair whack of adviser business in the $750 billion platform market, which is growing at 10 per cent a year.

Netwealth has about $16 billion in funds under advice and more than 2000 financial advisers and planners using its services. When it lists on the ASX with an $879.2 million market capitalisation late next month, it will be the second biggest IPO of the calendar year to date

Australian FinTech SelfWealth IPO Offering Self Directed Investors Alternative to Traditional Broker Trading (BusinessWire), Rated: A

SelfWealth Limited (“SelfWealth” or “the Company”), an Australian FinTech business offering a flat fee brokerage service and social portfolio construction network for Australian investors, is pleased to announce the opening of its Initial Public Offering (IPO) to raise up to A$7.5 million (with a minimum subscription of A$5.0 million).

SelfWealth is offering for issue 37.5 million shares priced at A$0.20 per new share; the indicative market captialisation of SelfWealth will be approximately A$26.1 million. The Company’s ASX ticker code will be SWF.

India

Here are four lending platforms that are helping unbanked SMEs (The Hans India), Rated: A

Despite being a major part of the Indian economy, Small and medium-sized enterprises (SMEs) in India face multiple challenges.

From inadequate banking to lack of constant cash supply, these SMEs are deprived of the smooth and consistent growth factors

These four SME lending platforms are bridging the requirements digitally:

  1. Lendingkart – The company aims to transform small business lending by making it convenient for SMEs to access credit easily.
  2. CoinTribe – Another online loan disbursement platform, CoinTribe provides quick and easy collateral-free loans to small businesses and individuals.

    It is the only online lending platform which has back-tested its credit model with large banks.

  3. Faircent – Largest peer to peer lending website, Faircent caters to retail and business loans.
  4. TAB Capital – The platform has commissioned an advanced proprietary algorithm that leverages big data and analytics to simplify and accelerate loan application, verification, approval and disbursement.

China’s Fosun leads $ 10 million round in fin-tech startup Kissht (VC Circle), Rated: A

OnEMi Technology Solutions Pvt. Ltd, which runs lending startup Kissht, has raised $10 million (Rs 67 crore) led by China’s Fosun International, a report in a financial daily stated.

In June this year, the startup raised $2 million (around Rs 13 crore) from Endiya and Ventureast.

India’s Largest Bank Goes Big on Blockchain (Cryptocoins News), Rated: B

The State Bank of India is gearing up to implement blockchain solutions in a number of financial processes including the management of its Know Your Customer (KYC) system.

SBI is now pressing ahead with its first implementation of the decentralized technology by using an enterprise blockchain solution for managing its Know Your Customer (KYC) system, via a new partnership with Intel that sees the technology giant become the consortium’s official technology advisor.

Asia

Square Peg, SIG Asia lead $ 7m round in SEA service marketplace Kaodim (Deal Street Asia), Rated: AAA

Southeast Asian service marketplace Kaodim Group has raised $7 million (MYR 29.5 million) in a funding round led by Australia venture capital firm Square Peg Capital and Shanghai-headquartered SIG Asia Investments.

A clear path to transforming Singapore’s financial services sector (Channel News Asia), Rated: A

Minister for Education (Higher Education and Skills) and Monetary Authority of Singapore board member Ong Ye Kung unveiled the Industry Transformation Map (ITM) for the financial services sector on Monday (Oct 30).

The ITM outlines key growth strategies for the financial sector that aim to generate greater productivity, attain higher growth rates, and create 4,000 jobs each year up to 2020.

These include strengthening financing channels for small- and medium-sized enterprises (SMEs), simplifying the regulatory framework for venture capitalmanagers, introducing dual class share structures for high-tech companies, and encouraging other sources of private sector financing for start-ups and entrepreneurs.

According to a Deutsche Bank report released last year, debt burdens have risen from less than 240 per cent of GDP in 2009 to 265 per cent in 2015. This is largely due to Singapore’s high levels of private sector leverage, for which there are limits to greater growth.

Singapore plays fintech evangelist on global mission (Business Times), Rated: A

IN TWO short years, Singapore has zipped into pole position in the fintech space, challenging rivals such as London in drawing intellectual and funding capital into the city-state with its open adoption of new technology and more broadly, innovation.

The strategy, led by the Monetary Authority of Singapore (MAS), is now widening to a regional and global endeavour, as MAS expands into cross-border projects that could pay significant digital dividends in time.

This will chiefly include blockchain experiments, with MAS now looking at ways to expand an inter-bank payments pilot to create a cross-border payments system between two countries, Ravi Menon, managing director of MAS, said in a wide-ranging interview with The Business Times.

Middle East

Seven in ten UAE residents unsure how to achieve their financial goals (The National), Rated: AAA

Seven in ten UAE residents are unsure of the steps needed to achieve their financial goals, a poll by National Bonds revealed on Monday, as the UAE investment company launched a new campaign to encourage better saving habits.

According to the poll of almost 400 residents conducted in the first nine months of the year, 69 per cent of respondents lack awareness about financial planning.

Despite the lack of clarity on how to save and invest their money, 53 per cent were most interested in receiving financial advice related to retirement planning. This was consistent among Arabs, Asians and Western expats, according to National Bonds, while Emiratis are more concerned with advice on financial health.

Authors:


George Popescu


Allen Taylor

Tuesday August 8 2017, Daily News Digest

LendingClub

News Comments Today’s main news: OnDeck posts quarterly adjusted profit. OnDeck expands partnership with JPMorgan Chase. More than half Wellesley borrowers are in default or behind on payments. Tencent tests credit scoring. Westpac Banking invests in zipMoney. SoftBank says Q1 profit jumped 50.1% after adding Vision Fund. Fintech investments tripled in Singapore. Today’s main analysis: LendingClub Q2 earnings. Today’s thought-provoking articles: […]

LendingClub

News Comments

United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Latin America

Africa

News Summary

United States

Online lender OnDeck posts surprise quarterly adjusted profit (NASDAQ), Rated: AAA

Online lender OnDeck Capital <ONDK.N> posted a surprise quarterly adjusted profit on Monday, driven by lower costs and higher interest income.

Excluding items, OnDeck earned 2 cents per share in the second quarter ended June 30, compared with the average analyst estimate of loss of 1 cent, according to Thomson Reuters I/B/E/S.

Net loss attributable to common shareholders narrowed to $1.49 million, or 2 cents per share, in the quarter, from a loss of $17.9 million, or 25 cents per share, a year earlier.

Originations fell 21.3 percent to $464.4 million.

Operating expenses fell about 6.3 percent to $44.6 million.

OnDeck Will Focus on Better Borrowers, Expanded Partnerships to Grow Originations (Bank Innovation), Rated: AAA

The online lender will continue this focus on higher quality borrowers going into the remainder of 2017, and will also be expanding several of its loan features, including prepaid benefits for term loans and a “more tailored” underwriting experience for businesses, said Breslow.

OnDeck Capital up more than 6% after earnings beat (Seeking Alpha), Rated: AAA

  • Adjusted EBITDA of $3.3M vs. a negative $12.4M a year earlier.
  • Full-year guidance is reiterated: Revenue of $342M-$352M, and adjusted EBITDA of $5M-$15M. Q3 revenue is seen at $82M-$86M, with adjusted EBITDA of $1M-$5M.

OnDeck announces expanded partnership with JPMorgan Chase (MarketWatch), Rated: AAA

OnDeck Capital, Inc. ONDK, +18.48% on Monday announced it had expanded a collaboration with JPMorgan Chase, JPM, -0.02% which is providing technology that runs the online lending platform.

Chase extends relationship with OnDeck (Finextra), Rated: A

JPMorgan Chase (NYSE: JPM) and OnDeck (NYSE: ONDK) today announced a contract extension to continue their collaboration on the bank’s digital small business lending product, Chase Business Quick Capital, for up to four years.

Why On Deck Capital Stock Jumped More Than 20% on Monday (The Motley Fool), Rated: A

Shares of On Deck Capital (NYSE:ONDK) were up more than 21% as of 3:15 p.m. EDT, after the company announced a smaller net loss during the second quarter and a promising expansion in its partnership with JPMorgan Chase (NYSE:JPM). Shares of LendingClub(NYSE:LC), its primary rival in the world of online lending, rose 7%, as investors see On Deck’s recent performance as a good omen for the industry as a whole.

A focus on higher-quality borrowers seems to have relaxed investors’ worries about the company’s loan quality, a perennial concern given that the average On Deck loan carries an APR in excess of 40% per year.

Lending Club Q2 2017 Earnings – Back to Growth (Lend Academy), Rated: AAA

Lending Club’s second quarter earnings marked an important milestone for the company – a return to growth. Originations have been hovering around $1.9 billion since Q2 of last year. This quarter Lending Club announced originations of $2.15 billion for the quarter, up 10% from the prior quarter of $1.96 billion. While this is still down from their previous highs, it shows that the company is back on a growth trajectory.

Source: Lend Academy

Last quarter the company announced banks were funding 40% of loans, but that reached higher in the second quarter to 44%.

Source: Lend Academy

Borrowers

  • Achieved 10% sequential growth to over $2.1 billion in originations, driven by strong borrower demand
  • Successfully launched multiple conversion initiatives, including pricing optimization and a redesigned website
  • Improved sales and marketing efficiency by over 7% sequentially
  • Credit continues to perform in line with expectations as observed in both vintage and portfolio trendsInvestors
  • Successfully executed the first self-sponsored securitization thereby opening a new funding source, expanding the investor base with 20 new investors, and generating a new repeatable revenue stream
  • Record number of managed accounts and institutional investors participating on the platform in the quarter
  • Successfully launched new iOS mobile application for retail investors

LendingClub Shares Soar 13% on Smaller Loss (Fortune), Rated: A

Online lending platform operator LendingClub reported a smaller loss on Monday, helped by higher net interest income and a drop in expenses.

Shares of the company (LC, +12.86%) were up 13.2% at $5.90 in after-hours trading.

LendingClub shares rise 8 percent on positive outlook, higher revenue (Reuters), Rated: A

Online lender LendingClub Corp (LC.N) raised its earnings outlook on Monday after reporting the second-highest quarterly revenue in its history and a drop in costs, sending shares up nearly 8 percent.

LendingClub now expects full-year total net revenue to be in the range of $585 million to $600 million, compared with its earlier forecast of $575 million to $595 million.

Shares of the company, which connects consumers looking for loans with individual or institutional investors such as banks through its website, were up 7.8 percent at $5.46 in after-hours trading.

Online lenders upbeat about turnaround progress, but worries linger (Today Online), Rated: A

LendingClub Corp <LC.N> and OnDeck Capital Inc <ONDK.N> surprised investors on Monday with strong growth forecasts that sent the online lenders’ stocks soaring, but analysts said the sector’s health was still a concern.

OnDeck shares closed 18.5 percent higher at $5, and LendingClub ended up 4.8 percent $5.46. The stocks rose in after-hours trading but remain far below their initial public offering prices of $20 and $15, respectively.

Executives of both companies were upbeat about the progress in their turnaround plans after they reported second-quarter results.

Earnest Corp is looking to sell itself for $200 million, Bloomberg News reported on Friday, far less than the $300 million it has raised from investors.

Online Lenders Clear a Low Bar—Higher Ones Lie Ahead (WSJ), Rated: AAA

The online lending industry regained its footing in the second quarter, more than a year after it was knocked off-balance by severe disruptions in the loan marketplace. But investors’ sky-high hopes for the sector may have been lowered permanently.

Investors also were relieved that On Deck reiterated it would turn profitable later this year. Shares rose a sharp 18.5% Monday, but they fetch only about a fourth of their December 2014 IPO price, a sign of just how much the hype around these lenders has deflated.

Crucially, On Deck has moved on from funding loans through an online marketplace, the aspect of its business model that was truly disruptive. It now funds the vast majority through its own balance sheet, making On Deck more like an ordinary bank.

Both companies have to worry about rising competition. Innovative payment companies like Square and PayPal are extending more microloans to their merchant customers. Meanwhile, giants of finance like Goldman Sachs are extending more unsecured personal loans, which is LendingClub’s sweet spot.

Fintech Firm Fiserv Raises Offer for Monitise to $ 98 Million (The New York Times), Rated: A

U.S. financial technology provider Fiserv made an improved offer for Monitise worth about 75 million pounds ($98 million) on Monday, hoping to secure backing from the British financial services technology group’s investors.

Fiserv’s earlier offer, which valued the group at about 70 million pounds, drew criticism from Monitise’s investors led by Cavendish Asset Management, for being too low, given that the British group was worth over 1 billion pounds three year ago.

Fiserv’s final offer of 3.1 pence in cash per share represents a premium of 34.8 percent over Monitise’s closing price on June 12, the last before the initial offer was made.

Banco Santander, Monitise’s top shareholder with a 4.67 percent stake, had submitted a letter of intent to back the deal, as had Visa Inc, a large customer and investor with a 2.41 percent stake.

LendingRobot Series Second Quarter Report (LendingRobot), Rated: A

LendingRobot Series finished the second quarter with a healthy YTD aggregated return of 2.7%. Each Series’ return and portfolio health is in line with projections. Since April 1st, LendingRobot Series has added over 2,800 loans to its portfolio, more than doubling the number of loans held in each series.

Source: LendingRobot

 

Legislative Update 161 (Experian Email), Rated: A

Highlights this issue:

  • On July 10, the CFPB published a final rule prohibiting the use of mandatory predispute arbitration clauses that prevent class action lawsuits in consumer contracts for a wide array of financial products. The final rule was published in the Federal Register on July 19, and will become effective 60 days after that date, or September 18. All consumer contracts with arbitration clauses will need to comply with the rule within 180 days of the effective date, which will be March 19, 2018.
  • The House of Representatives is working to pass 12 appropriations bills by September 30 to fund federal agencies for the Fiscal Year 2018. The House Appropriations Committee passed the spending bill for financial regulatory agencies on July 13. The measure included several provisions important to Experian and our clients.
  • On July 19, Representatives Patrick McHenry (R-N.C.) and Gregory Meeks (DNY) introduced the Protecting Consumers Access to Credit Act. The bill would codify the legal precedent under federal banking laws that preempts a loan’s interest as valid when made.
  • Legislators in California continue to debate legislation that would enact a broadband privacy law in the state, similar to the rule issued by the FCC and then overturned by Congress. A.B. 375 would prohibit an internet service provider from using, disclosing, selling or permitting access to customer personal information.

Read the full update here.

4 Reasons Online Lenders Are Innovating With Purchasing Cards (Entrepreneur), Rated: A

In recent years, Kabbage and others have stepped up to introduce a purchasing card product to their borrowers, and with their early success, many lenders are now following suit for the following four reasons:

  1. Staying on top of the customer’s mind
  2. Speaking the language of large corporate partner targets
  3. Underwriting use of funds
  4. Revenue sharing

New Financial Technology Upgrades Bank’s Credit Review Process (PayNet Email), Rated: A

Enables Banks To Review All Credits and Focus on the Highest Risks

The real challenge is convincing bank management that they do not have to apply the same credit review process to the entire portfolio.  Adopting different processes based upon exposure size and measured risk (APD for example) should be the goal of every bank.  In other words, focus credit review efforts to those accounts that represent the greatest risk to the bank – and that is what you are hoping to do with your credit review process.

Conducting credit reviews are a “waste of time” in most cases because nothing has changed. What form that documentation takes is where PayNet can be most helpful to the prospect.

PayNet is introducing PayNet Credit Review Express, a risk management tool which streamlines the credit review process making credit review easier and less costly.

Credit Review Express assesses the credit risk of each C&I borrower each month. Banks can assign their definition of risk from delinquency to probability of default to assign high, medium or low risk to each borrower. Currently, PayNet sees less than 2% of C&I borrowers as high risk credits. Other features include automated action steps (such as Watch, Restructure, Work-out) and a customized dashboard to monitor and track activity.

FDIC defends right to charter new banks against OCC criticism (American Banker), Rated: A

The Federal Deposit Insurance Corp. defended its authority to approve prospective new banks in response to suggestions by acting Comptroller of the Currency Keith Noreika that his agency should be able to approve applications on its own.

Rumour mill churns in US online lending sector (AltFi), Rated: A

Whispers abound of a major financing round, an acquisition and an IPO within the US online lending space.

Perhaps chief among the rumours was the suggestion that SoFi may at last be on the brink of an IPO that was first mooted by CEO Mike Cagney in 2014.

Meanwhile, SoftBank continued to build on its portfolio-for-the-future with a $250m equity investment in small business lending fintech Kabbage.

Cities where student loan borrowers struggle with debt the most (Credible), Rated: A

So it’s important for borrowers, especially recent grads, to think about the best places to live — the cities in which they’re not only likely to find a well-paying job, but also where rents and other living expenses aren’t so exorbitant so as to add to their pile of debt.

5 cities where student loans borrowers struggle the most with debt:

  • 1. San Jose, California
  • 2. Fort Worth, Texas
  • 3. Boston, Massachusetts
  • 4. Los Angeles, California
  • 5. Denver, Colorado

5 cities where student loans borrowers struggle the least with debt:

  • 1. Dallas, TX
  • 2. Jacksonville, FL
  • 3. Houston, TX
  • 4. Columbus, OH
  • 5. Austin, TX

The key indicator for affordability was how much of a borrower’s monthly income would go towards their student loan payments and monthly housing costs.

Source: Credible

 

Marketplace Lending Explained (WealthManagement.com), Rated: A

Marketplace lending has grown by nearly 150 percent on a compound annual basis for the last half-decade. Strong growth and real longevity mean that most advisors have to consider the role that marketplace lending plays in their clients’ portfolios.

Source: WealthManagement.com

Refinancing high-rate credit card debt or other hard-money-type loans among high-quality borrowers via a marketplace lender is sensible and provides good value to all parties.

As part of a fixed income allocation, what are the risks in marketplace loans? There is the credit risk of the borrower first and foremost—here the asset can be seen as clearly pro-cyclical; in other words, as the economy improves, the asset strengthens. Correspondingly, as the economy weakens, the credit of the borrower will weaken. Additionally, there has recently been some weakness in consumer credit, primarily in auto loans and credit card defaults, though these have been largely limited to the subprime aspects of these loan categories.

United Kingdom

The Growing Alternative Finance Industry (Business Zone), Rated: AAA

The latest equity crowdfunding statistics released by OFF3R last month revealed that the first half of 2017 was the strongest 6 months for equity crowdfunding to date.

Six of the leading equity crowdfunding platforms that form the OFF3R Index raised nearly £130M in 2017 for UK private companies. This is £2M above the previous half yearly record that was reached back in the second half of 2015. March 2017, where Over £40 million was raised, buoyed the latest data and the period as a whole was characterised by some very large fundraises from Q1 2017.

The data also revealed that peer to peer lendinglevels continue to rise in the UK. The peer to peer lending statistics showed that over £1.8 billion was lent in the first half of 2017 by the nine platforms that make up the OFF3R Index. This is an increase of over £350 million from the previous half year period at the end of 2016.

The data also revealed that Assetz Capital had a record breaking month in June 2017. The total amount lent of over £30 million by the platform was higher than any previous period since the OFF3R Index began.

Toxic loans blight property peer-to-peer lender Wellesley – with more than half its borrowers behind on payments or in default (This is Money), Rated: AAA

More than half of the customers of an internet loan firm run by an aristocratic financier are behind on their payments or in default, the Mail can reveal.

Wellesley, a peer-to-peer lender which allows property developers to borrow cash from savers, is grappling with losses on its loan book.

Online lender Tandem acquires Harrods Bank in bid to expand services (Belfast Telegraph), Rated: A

Start-up lender Tandem has snapped up Harrods Bank in a deal that will bring it closer to launching a savings account.

The undisclosed deal will hand the online-only lender £80 million of additional capital and enable it to regain its banking licence , if it wins regulatory backing.

The institutional investor selling down its stake in VPC Speciality Lending (AltFi), Rated: A

Old Mutual, a sigificant shareholder in the £351m VPC Speciality Lending fund, has further reduced its holding in the closed ended portfolio following previous reductions in exposure earlier in the year.

Its holding in the fund fell below 6 per cent back in March 2017, now it has sold more shares with its stake now less than 4.99 per cent, according to regulatory filings.

VC firm behind Zopa among judges at PitchIt funding competition (P2P Finance News), Rated: B

A VENTURE capital (VC) firm that backed Zopa in its early days has been named among judges for the second annual PitchIt Europe competition.

Rob Moffat, partner at Balderton Capital, an early Zopa backer, will be one of the VC judges alongside Seedcamp’s Reshma Sohoni, Blenheim Chalcot’s Dan Cobley and managing director of CommerzVentures Patrick Meisberger.

China

Tencent credit check takes mobile payments battle to Alibaba (Financial Times), Rated: AAA

Tencent is developing a credit scoring system as it ramps up its battle with rival Alibaba for a share of China’s $5.5tn mobile payments market.

Ant Financial, Alibaba’s payments affiliate, launched its Sesame Credit two years ago, parlaying its data on consumers into a measure of their trustworthiness, providing comfort for small businesses and consumers alike.

Credit scoring is popular in China, especially among younger subscribers who lack a credit history but might be eligible for a high rating that would let them rent hotel rooms, bikes or phone chargers without leaving a deposit. The services are particularly valuable given the lack of access to credit cards in the country.

Tencent is testing a credit scoring service among a small group of its subscribers, upping the stakes as the two tech titans engage in an aggressive promotion this week encouraging Chinese to forgo cash in favour of payments made with a swipe of the phone.

Top 100 List of Chinese Internet firms in 2017: Tencent surpassed Alibaba to become NO.1, and Letv was Out of the List. (Xing Ping She), Rated: AAA

Recently, Internet Society of China (ISA) and the information center of Industry and Information Technology Ministry Jointly issued the list of “China’s Top 100 Internet Companies in 2017”. For this time, Tencent overtook Alibaba to become the No.1. Tencent, Alibaba and Baidu were still the top three for five consecutive years, while Letv was out of the list.

The top 10 of the list were:

  • No.1 Tencent
  • No.2 Alibaba
  • No.3 Baidu
  • No.4 Jingdong
  • No.5 NetEase
  • No.6 Sina
  • No.7 Sohu
  • No.8 Meituan
  • No.9 Ctrip
  • No.10 360

The list of “China’s top 100 Internet Companies” has been published every year since 2013 and has been published five times so far.The evaluation index combines seven core indicators of enterprise scale, profitability, innovation, growth, influence and social responsibility.

Central bank to regulate rapidly growing fintech (China Daily), Rated: AAA

In a report released last weekend, the People’s Bank of China said some financial products offered through internet channels by fintech companies are “systemically important” and hence will be included in its macro-prudential assessment or MPA.

The aim is to prevent cyclical risks and cross-market risk transmission, it said.

Analysts said this is the first time that the PBOC said it will include fintech businesses in its MPA.

With $ 3.58 bn in newly increased loan balance, Weli Dai becomes the largest microcredit platform in China (Xing Ping She), Rated: A

On 7th August, a Webank staff said in WeChat Moments that the loan balance of Weli Dai reached a milestone of over 100 billion RMB (equivalent to $14.91 bn). In a speech at the LendIt on July 16, Fang Zhengyu, the director of retail credit section in Webank, revealed that the loan balance of Weli Dai was $1.13 bn. And it has increased by $3.58 bn within just 22 days. What an amazing growth!

Weli Dai is focused on providing a cash loans product, with the loans amount from ¥500 to ¥300,000, and is operated in pure online pattern. With its white list invitation system, Weli Dai identifies the target customers effectively. The loan period is flexible from one day to twenty months, which makes users borrow and repay money at any time. Many factors contributed to the performance of Webank today, the most important is that Webank developed its business in the huge customer base of QQ and WeChat. Besides, Webank has built partnerships with nearly 40 banks for jointly making loans.

Hong Kong startup close to US$ 500mil valuation (The Star), Rated: A

TNG FinTech Group Inc, a Hong Kong-based digital wallet operator founded in 2013, is poised to close a funding round and is targeting a valuation of about US$500mil, according to a person familiar with the matter.

It has attracted almost US$60mil in the series A round from investors including a Beijing-based private equity fund, said the person, who asked not to be named discussing private deliberations.

TNG, which offers global money transfers, foreign-exchange transactions and bill payments, expects to be profitable this year and is targeting a listing in either New York or Hong Kong by 2019, the person said.

Jeffrey Chen of ZhongAn Insurance (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is Jin (Jeffrey) Chen, the CEO of ZhongAn Insurance. I sat down with him when I was in Shanghai recently for Lang Di Fintech (LendIt’s Chinese event) and we conducted this interview with the assistance of his translator.

People’s Bank of China Has Fintech on Its Mind (Fox Business), Rated: A

The People’s Bank of China said in a report that it is considering expanding its risk-assessment system beyond banks to include major online financial businesses. Last month, it reached agreement with 45 nonbank financial firms– including payment systems affiliated with internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd.–on joining a new payment-clearing platform called Wanglian, according to listed-company documents.

This effectively gives the PBOC a clearer view of payments, enhancing regulation, said Tencent, which owns the TenPay payment system.

European Union

Fellow Finance Adds Invoice Financing (P2P-Banking), Rated: A

Finnish p2p lending service Fellow Finance has opened a new invoice finance service for companies, which allows businesses to convert their trade receivables into cash immediately. In the new invoice finance service, a company gets funding against its invoice receivables directly from investors.

In adjacent Estonia p2p lending marketplace Investly, which specializes on invoice financing for Estonian and UK SMEs, is growing. The last figures we reported for them show 78% month on month and 319% y-o-y growth.

Balderton Capital on European Fintech (Stitcher), Rated: A

Rob Moffat is a Partner at Balderton Capital, a London-based venture capital firm that has invested in fintech businesses including GoCardless, Revolut, Crowdcube, Nutmeg, Seedcamp, ComplyAdvantage, Wonga, Zopa and more. Prior to joining Balderton, Rob worked at Bain & Company and Google. Rob holds degrees from Cambridge and INSEAD.

Listen to the podcast here.

International

Senate To Mull Financial Choice Act, UK Officials Look For Tighter Controls (PYMNTS), Rated: A

As has been noted in the financial and trade press, the Financial Choice Act, which was passed last month by the U.S. House of Representatives, now awaits a vote in the U.S. Senate.

In other regulatory news, one executive in Britain is calling for tighter financial regulations in the United Kingdom. Douglas Flint, departing chairman of Britain’s largest bank, HSBC, said in a statement that, amid issues such as Brexit and a revamp of the European financial order, a lack of homogeneity in regulation means there should be cooperation between overseers to find — and stop — “bad actors.” Flint advocated that “greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts.”

Visa And The QR Code Evolution/Revolution (PYMNTS), Rated: A

As it turns out, putting that spec on the shelf helped to inform the development of the EMVCo QR code standard, which was released yesterday into a payments ecosystem that looks at them as anything but uninteresting.

China is a prime example as, over the course of the last five years, the QR code-based mobile payment has almost entirely displaced cash in the country — and leapfrogged credit and debit cards — to become Chinese consumers’ preferred alternative for payment. There are $5.5 trillion worth of mobile payments made in China per year, the vast, vast majority of which are handled via QR code.

But perhaps most striking is India and its government’s November 2016 decision to move toward a cashless society. That led the country to the accompanying adoption of a QR code-focused payments scheme based on Visa’s mVisa standard.

Getting To Scale

Visa is currently developing mVisa as a worldwide solution. The key to scale, Shrauger told Webster, is making it useful and accessible for their two client groups — merchants and their customers.

Australia

Westpac Banking Invests $ 40 Million into zipMoney (Crowdfund Insider), Rated: AAA

zipMoney (ASX:ZML) has announced a $40 million strategic investment from Westpac Banking (ASX:WBC). The investment was paired with an agreement for the two companies to explore the integration of Zip’s products and services into Westpac’s network across Australia. The investment will be by subscription of ordinary equity of 49,382,716 shares at a price of $0.81 per share. This represents a 14.1% premium over the close of $0.71 on August 4th.

India

How technology is helping investors achieve their financial aspirations (Financial Express), Rated: A

Most Indians save first and think of spending later. However, when it comes time for them to plan their expenses, they end up relying on mental estimates of their financial position. As a result, most people are never confident of 1) how much to save and 2) whether they can reach their financial aspirations with their current investment plan. This is especially true for young professionals who want to save for a secure future but also want a more fulfilling life experience. What is required is financial advice that delivers the answers to these questions in a clear and quantified way.

A solution to these issues has come from the field of artificial intelligence. Cognitive technologies is a branch of artificial intelligence that deals with the application of computers towards tasks traditionally performed by people. The aim of this process is to design a software solution that has comprehensive and detailed instructions, that enables it to do the same work that a person can. The benefits of this approach are that the same work can be done at a much faster pace, at a higher accuracy and at a lower cost.

Asia

Japan’s SoftBank says Q1 profit jumps 50.1% after inclusion of Vision Fund (CNBC), Rated: AAA

Japan’s SoftBank Group Corp on Monday reported a 50.1 percent rise in first-quarter operating profit, after the company included Vision Fund, the world’s largest private equity fund, as a new reportable segment and booked a valuation gain.

The internet and telecoms giant said profit for the quarter through June increased to 479.2 billion yen ($4.33 billion).

Fintech investments tripled in Singapore (The Star), Rated: AAA

GLOBAL investment in financial technology (fintech) firms more than doubled in the second quarter of the year, compared with the first quarter, to US$8.4bil (S$11.4bil) across 293 deals, KPMG said in a recent report.

Investment in fintech in Singapore more than tripled to US$61.5mil (S$83.3mil), although there were only four deals, compared with seven the quarter before.

Indonesian P2P Lending Platform UangTeman Secures Million During Series A Funding Round Led By K2 Venture Capital (Crowdfund Insider), Rated: A

On Monday, Indonesia-based peer-to-peer lending platform UangTeman announced it successfully secured $12 million during its Series A funding round, which was led by K2 Venture Capital, with participation from STI Financial Group and Draper Associates.

Middle East

UAE Authorities Plan SMB Crowdfunding Framework (PYMNTS), Rated: AAA

United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market, news reports on Sunday (Aug. 6) said.

Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85 percent of all UAE companies. In Dubai, that number is even higher, at nearly 95 percent of all businesses, reports added.

Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70 percent of small business loan applications in the UAE are rejected by traditional banks, despite efforts from the national government and the Central Bank of the UAE to promote SMB financing.

Latin America

Mexican fund invests in peer-to-peer lending network (Latin Lawyer), Rated: A

Greenberg Traurig SC in Mexico City has helped Mexican venture capital fund Ignia invest in peer-to-peer lending network Afluenta.

Africa

Why African fintech startups are becoming even more attractive for investors (Quartz), Rated: AAA

Take Flutterwave, a payments company which builds infrastructure to ease processing payments across Africa, it’s just raised $10 million in its Series A round. Significantly, the round was led by leading Silicon Valley venture capital funds Greycroft and Green Visor Capital, with participation from Y Combinator and Glynn Capital.

Fintech startups are the “most attractive,” for tech investors looking towards Africa, according to a recent report by Disrupt Africa. Nearly 20% of fintech startups tracked raised money in the last two years and in 2016, there was a 84% increase in the number of fintech startups secured investment compared to the previous year. In total, since 2015, fintech startups in Africa had raised $93 million in investment as of June 2017. Flutterwave’s raise takes that total past the $100 million mark.

In more advanced economies, fintech startups are focused on disrupting the traditional banking industry by changing how people access financial services. But in most parts of sub Saharan Africa, that’s not the case. In fact, fintech startups are typically creating products and services to plug many of the gaps which currently exist.

Indeed, as of 2014, only 34% of adults in sub Saharan Africa had bank accounts. Given the sheer size of the market which remains under-served, fintech startups are presented with a huge opportunity. And for investors, all that represents a major upside.

Authors:

George Popescu
Allen Taylor

 

Monday January 30 2017, Daily News Digest

price & yield table for SCLP 2017-1

News Comments Today’s main news: ABA Banks seeks MPL partnership. Zopa passes 2bil GBP milestone. Today’s main analysis: SoFi Unsecured Consumer 2017-1. Today’s thought-provoking articles: Orchard Online Lending Snapshot. Five mistakes to avoid when starting a FinTech company. Spanish banks lead FinTech VC in Europe. Tyro, RateSetter, Stockspot and Westpac on past and future. United States ABA seeks MPL partnership. […]

price & yield table for SCLP 2017-1

News Comments

United States

United Kingdom

European Union

Australia

India

Asia

News Summary

United States

U.S. bank trade group seeks marketplace lending partnership (Reuters), Rated: AAA

The American Bankers Association, a trade group for U.S. banks, has been hunting for a marketplace lending platform to help its members ramp up their digital offerings.

The ABA has run a formal bidding process to secure a marketplace lending partner, spokesman John Hall confirmed on Friday. He could not say which companies were under consideration because the information was confidential.

Weekly Industry Update: January 29, 2017 (PeerIQ), Rated: AAA

The ABS market finished January on a high note with strong buyer interest. SoFi and Mosaic priced their first and inaugural transactions respectively in 2017, which were both heavily oversubscribed.
FinTech financings continue apace. Nyca announced the successful closing of a

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

It was reported this week that LendingRobot launched a robo-advisor hedge fund for accredited investors that will invest in loans from LendingClub, Prosper, Funding Circle, and Lending Home. loanDepot announced that they have funded $100 billion in home, personal, and home equity loans since their inception in 2010. In yet another sign that positive sentiment seems to be returning to the industry, BorrowersFirst, an online consumer lending platform, announced last week that it has secured an additional $100 million in debt financing to accelerate loan originations and fund continued growth of its balance sheet. The Office of the Comptroller of the Currency issued OCC Bulletin 2017-7 as a supplement to OCC Bulletin 2013-29, which “governs the risk management frameworks maintained by OCC- regulated banks in establishing, monitoring and concluding third party relationships (including relationships with bank affiliates).” On Monday, we announced that LendIt has partnered with us for our 2017 Meetups–as a way to enrich the events–strengthening the depth and breadth of ourrelationships in the industry.

DiversyFund Takes Crowdfunding Real Estate Investment Giants Head On (Military Technologies), Rated: A

DiversyFund, Inc., announces the launching of its new full-service online crowdfunding real estate investment platform. DiversyFund principals, Craig Cecilio and Alan Lewis, have been delivering exclusive investment opportunities that generate high returns for their investors for over a decade. The company has planned to offer some unique features to its investors in the upcoming months. These are aimed to disrupt the current status quo of the industry.

With their new online crowdsourcing platform, DiversyFund is planning to become the key sponsor and lead developer to the majority of their projects, if not all of them. This is a key difference in their crowdfunding real estate investment platform. It makes them stand out since many of their competitors work with third-party sponsored projects and act only as mediators by providing technology to implement funding for outsourced deals.

AirBnb’s Fintech Future (The Financial Revolutionist), Rated: A

This week, word “leaked” that Airbnb is in advanced talks to acquire Tilt, a group payments/social network hybrid start-up that helps people split the cost of rent, dinners and events. Whether or not this deal happens (it probably will), the rumors support our view that of all the next-wave tech giants known as WASSUPPs (WeWork, AirBnb, Slack, Snap, Uber, Pinterest and Palantir), AirBnb is the most aggressive in embracing fintech as core to its business.

Crowdfunding takes aim at commercial real estate (Westfair Online), Rated: A

Despite a lack of data on the exact size of the real estate crowdfunding market in the U.S. – no federal agency or national trade association tracks those deals – the investment vehicle apparently is attracting a particular class of investor.

“This investor is typically younger,” said Ben Sayles, director in the Boston office of real estate brokerage HFF. “From what I am seeing, this person is high-earning, usually in the tech world – though maybe in the financial world – and doesn’t have a lot of expenses. They probably rent their apartment, do not have a car and have an extra income that they want to put to work.”

Among real estate professionals, the use of crowdfunding to raise capital also appears to be concentrated within a particular demographic.

“For a smaller commercial real estate developer or investor, the non-Donald Trump type, this can be a cheaper source of financing for a $10 million to $30 million project,” said professor Anthony Macari, executive director of graduate programs at Sacred Heart University in Fairfield.

Three Crowdfunding Sectors to Watch in in the US in 2017 (Crowdfunding), Rated: A

With investors becoming increasingly more comfortable with new Fintech platforms, the amount of money invested in crowdfunding in the Americas jumped from $11.4 billion in 2014 to $36.49 billion in 2015 — and Technavio market research analysts predict the overall industry will grow at a compounded average annual rate of 27% through 2020.

Since the first provisions of the JOBS Act went into effect, real estate has remained one of the most popular crowdfunding investment classes. The physical nature of buildings and land lends real estate more security than higher risk startups. And with a self-proclaimed real estate mogul now in the White House, many leading experts are predicting a record year for real estate. We are also seeing increasing issuer adoption — more real estate firms are launching their own crowdfunding platforms, and a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack.

In addition to standard real estate crowdfunding platforms, we think we will see an influx of hybrid platforms that allow users to not only invest but to solve other problems as well.

Last year’s announcement from OPEC to cut production in combination with President-elect Trump’s oil friendly appointments has oil and gas prices on the rise. Oil prices have already climbed 17.5 percent as of December 27 and show no signs of slowing. And investors are taking notice. EnergyFunders, a crowdfunding marketplace that allows investors to directly invest in U.S. oil and gas wells, reported a 45 percent increase in signups after OPEC’s announcement.

Impact investing, or investing in companies that bring about positive change in the world, is growing in popularity as more millennials enter the market. A recent survey from U.S. Trust states 93% of millennials believe that social impact is key to their investing decisions. Ryan Ràfols, CEO of Newchip.co an aggregation platform that uses Robo-advising to showcase impact investing crowdfunding offering, explains;

“Millennials want to invest in companies that can make a return while making a difference in the world.”

Elon Law dean addresses poor SoFi ranking (Biz Journals), Rated: A

Social Finance Inc. (commonly known as SoFi) ranks Elon among the bottom 10 law schools in the nation in its Return on Education Law School Rankings. It ranked Elon eighth out of the 10 worse schools. Elon’s graduates, SoFi said, average $87,680 in salary and $145,610 in debt.

Luke Bierman, dean of Elon Law, which is based in Greensboro, said he doesn’t argue that a law school degree requires a sizeable investment from a student in terms of both time and money. But he said Elon adopted a new curriculum two years ago intended to make it quicker and less expensive for a student to earn a law degree. He said the school’s current tuition is 20 percent below the national average for private law schools and said the new curriculum allows a student to graduate in 2.5 years as opposed to the three years required through a traditional curriculum.

He said the study released by SoFi doesn’t reflect students who have enrolled at Elon since the adoption of the new curriculum. The first group enrolled solely under the new curriculum, he said, will be graduating in December. He said it’s Elon’s hope that those students will be graduating with less debt.

Bitcoin P2P Lending Remains A Risky Business (Live Bitcoin News), Rated: A

On paper, the service provided by companies such as BTCJam is an excellent way to use Bitcoin. Extending loans to people from all over the world is a great solution to promote Bitcoin usage. Unfortunately, this concept still needs a lot of work, as there are a lot of caveats to using services such as BTCJam right now. In most cases, a lot of the loans are never repaid in full.

It is evident a lot of BTCJam users are losing money unless they are the borrowers for a specific amount of Bitcoin. In fact, some Reddit users argue the only people who benefit from using BTCJam are the ones who borrow money, and everyone else is losing money left, right, and center. BTCJam has been dealing with these issues for quite some time, yet it seems very little has changed over the past year or so.

Global Debt Registry Successfully Completes SOC 1 and 2 Attestation (Global Debt Registry Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced receipt of its Service Organization Control [SOC] 1 and SOC 2 Type 1 attestation engagement report, providing independent validation that the Company’s internal security controls are in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) applicable Trust Services Principles and Criteria. Just days after International Data Privacy Day on January 28, this attestation showcases GDR’s continued dedication to meeting the highest industry standards for protecting confidential consumer information.

GDR’s SOC 1 and 2 Report demonstrates that the Company has the necessary internal controls and processes in place to protect consumer data, maintain operational integrity, and comply with industry standards and regulations.  The SOC 2 engagement included evaluating GDR in accordance with the trust principles of security, availability, processing integrity, and confidentiality. The AICPA created the SOC guidelines to provide an authoritative benchmark for service organizations to demonstrate implementation of proper policies, operational practices and controls.

As a partner to online lenders, investors, warehouse lenders and other industry stakeholders, GDR delivers real validation and helps ensure asset certainty including protection against double pledging and double selling of assets with its suite of digital due diligence solutions. The Company contracted with KirkpatrickPrice for its SOC 1 and 2 engagement to meet the ongoing public and private reporting requirements of its financial institution clients.

GDR is also compliant with a number of additional industry standards, including PCI DSS (Payment Card Industry Data Security Standard), the GLBA (Gramm Leach Bliley Act) Safeguards Rule, and ISO 27002 (International Organization for Standardization 27002). As evidenced by the SOC 1 and 2 Report, the Company is continuing its focus on meeting the highest standards of data and information protection and operational integrity for its clients.

The 4 Best P2P Lending Platforms For Investors In 2017 — Detailed Analysis (Forbes), Rated: A

With interest rates at all-time lows since 2008 and many historically “safe” investments like government bonds carrying negative yields, investing in P2P loans in 2017 is a no-brainer.

Founded in 2007, Lending Club is the world’s largest P2P lending platform with over $20 billion in loan issuance. Lending Club has grown exponentially and currently has a 45% market share. It raised over $900 million from its IPO in 2014, but its share price has since fallen 72%.

Launched in 2006, Prosper was the first P2P platform in the US. It has since funded over $6 billion in loans and serviced over 2 million customers. Prosper grades borrowers through its Prosper Score. This proprietary system focuses on criteria such as debt-to-income ratio and other “soft checks” conducted by credit bureaus.

Launched in 2014 by a bunch of ex-Googlers, Upstart has originated more than $300 million worth of loans. Upstart uses unique grading criteria. It looks at FICO scores but also considers educational background. The firm has the lowest default rates across the industry thus far. Over 94% of loans are on track to be repaid in full. The company makes its money solely on origination fees from the borrower.

Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands. Funding Circle was founded by Sam Hodges who, after the 96th time of being rejected by banks, decided to take action. The company only makes business loans and operates in the US, UK, Germany, Spain, and the Netherlands.

Why More Consumers Are Seeking Alternative Investments (Newswire.net), Rated: A

However, modern consumers are starting to look at alternative investments, which stray from “conventional” standards either because they’re riskier, newer, less tested, or involve unknown variables. What you need to know about alternative investing is this: it’s on the rise, and there may be a benefit in jumping in early.

Types of Alternative Investments

  • Private lending. Private lending has grown in popularity in recent years, thanks to peer-to-peer apps that make it possible, such as Lending Club. Here, you may lend some of your own money to one or more private borrowers, who pay you back with interest.
  • Currencies. Currencies are constantly shifting in value against each other as various countries grow or shrink economically. Investing in a country’s currency when they’re poised for growth with an app like XE could result in a major gain.
  • Other tech-based solutions. There is also a rising number of new apps and technological solutions opening the doors to new investment possibilities. The rise of machine learning and automated investing solutions, like Wealthfront, is an example of this.

Manhattan Beach’s PeerStreet opens real estate investing to individuals (TBR News), Rated: B

Headquartered in Manhattan Beach just across the street from the town’s iconic 24-hour diner, The Kettle, PeerStreet may be located in a small beach town, but the reach of this real estate investment firm is national.

Crosby describes PeerStreet as an eTrade for real estate investing.

The business began right in the heart of Manhattan Beach, and currently has 50 employees. According to Johnson, they’ve recently received funding from venture capitalist Andreesen Horowitz and investor Michael Burry.

United Kingdom

Peer-to-peer lender Zopa passes £2 billion loans milestone (Business Insider), Rated: AAA

Zopa, the fintech businesses credited with inventing peer-to-peer lending, has passed £2 billion ($2.5 billion) in loans over its online platform.

The milestone means Zopa is still just about Britain’s biggest peer-to-peer lender by historical loan book. Funding Circle, which lends to small businesses, has lent £1.92 billion since its launch in 2010.

Zopa says in a release on Monday that the £2 billion in lending represents 300,000 loans made to 246,000 borrowers since its founding in 2005. 75,000 investors funded the lending over the platform.

Five mistakes to avoid when starting a fintech company (Banking Technology), Rated: AAA

However, what I feel very comfortable doing is pointing out some things that failed companies do, based on my experience in Startupbootcamp as well as building a number of successful companies. Here it goes:

  1. They forget to validate

Intuition, experience and opinions are important and helpful. However, building a fintech start-up based only on these three is very risky. A business can’t be built on limited data. Without really understanding if there is a real pain you are solving, a need you are fulfilling or knowing how many people would pay for your product or service you are multiplying the possibility of going after the wrong market, building the wrong solution or having the wrong commercial model or doing the wrong thing.

  1. They lose focus

 

Successful entrepreneurs focus on one thing at a time and they are very good at saying “No” to anything that would distract their real focus. This does not mean that they are not aware of what is going on around them or blindsided to changes or competition but they just know how to use their time efficiently.

  1. They focus too much on being “investable” and forget to build a sustainable business

It is easy to fall trapped to the chants of investors. It can be easy to believe that you have a sustainable business when an investor says that the company you started working on 12 months ago is worth £2 million. That does not mean that you have a business. It means that you can build a viable business. The criterion that investors use is not normally sustainability but potential for a large payout. Sometimes, those two factors are contradictory. Investors have to go for big money and some of these attempts fail.

  1. They don’t invest enough in team and culture

Building a fintech company is hard. The pressure is incredibly strong and never stops. Under continuous pressure, it is very easy for teams to crack and fall apart which in many occasions kill the company. A start-up’s biggest challenge is getting the team right and having the different skill sets covered to succeed. Complementing each other’s strengths and weaknesses is extremely important in small teams, especially with co-founders.

  1. They underestimate what it takes

The journey of an entrepreneur is incredibly hard and requires grit, execution and a lot of patience. In many cases, entrepreneurs get caught in the “fintech celebrity” hype and think that being on panels, and ranking high in different top lists and Twitter means success. Building a real business takes a lot of hours “in the basement”. Once the reality hits, many founders get bored and quit or fade.

Welendus – One Week on Seedrs (Welendus Email), Rated: A

One week has passed since the release of our Seedrs fundraise campaign with significant results.

Over the past week, Welendus attracted over 50 investors and raised over 25% of our target which only proves the level of interest people have in Welendus. The level of engagement and the discussion is another indication of how much people love Welendus.

We are raising £300k for equity in our company and would like to invite you to be one of our first investors and shareholders. You can access our Seedrs campaign at

Assetz Capital CEO Stuart Law Shares His 2017 P2P Lending Predictions (Crowdfund Insider), Rated: A

Nearly one month after ringing in the new year, Stuart Law, CEO and co-founder of peer-to-peer lending platform Assetz Capitalprovided his alternative finance predictions for 2017. 

Law stated:

“Brexit has already had a very positive effect on the peer-to-peer (P2P) market, and all indications signal that it will grow further in 2017 whilst bank lending remains subdued. With the larger platforms announcing record second half results in the six-month period after the Brexit vote, they are also attracting increasing amounts of capital in the form of equity.  Smaller P2P players however will likely struggle to lure the necessary lending or growth capital to survive independently, so we expect a degree of consolidation and some to drop out of the market altogether.

Alternative finance has certainly started to make its mark with savvy investors, but the biggest attraction to date will be the Innovative Finance (IF) ISA.  We predict that this will attract a huge amount of capital onto the main platforms and represent as much as 30% of all capital inflows to P2P platforms this year, assuming all large P2P lenders such as Assetz Capital get approved before the end of March 2016, and perhaps as much as 50% in 2018.

“The desire to invest in secured loans will increase amongst lenders and professionals.”

P2P Lender Flender Closes Successful Seedrs Campaign (Crowdfund Insider), Rated: A

P2P lending platform Flender has officially closed its successful equity crowdfunding campaign on Seedrs. Originally seeking £500,000, the initiative secured a total of £501,700 from more than 230 investors.

Flender stated it does not consider itself a traditional P2P platform with an anonymous marketplace. Instead, its team believes that it will help businesses create lasting bonds with customers, and for consumers to reach through their existing networks and be part of each other’s success. And at the same time, underpinned with legal contracts created by the platform between borrowers and lenders.

ArchOver Announces P2P Business Lending Services Expansion (Crowdfund Insider), Rated: A

On Friday, peer-to-peer business lending platform ArchOver announced it is expanding its current “Secure & Insured” lending model by launching “Secure & Assigned” business loans.

According to the lender, the first Secured & Assigned loan will be for Ergowealth, a firm of chartered financial planners based in Marlow, Buckinghamshire.

The loan announcement comes just a couple of months after ArchOver revealed it was extending its exclusive partnership with international credit insurer and collections company Coface by a further three years.

Banks and lenders face clampdown from the Bank of England on household borrowing (This is Money), Rated: A

The Bank is due to release figures this week showing that the growth in personal loans and credit cards is running at more than 10 per cent a year.

Lenders have been slashing rates in the past six weeks and banks including TSB are offering unsecured personal loans at less than 3 per cent.

The rock bottom rates come alongside cheap loans by peer-to-peer lenders which bypass the banks by allowing loans between private individuals. Ratesetter and Zopa are offering loans at just 3.1 per cent and 3.2 per cent respectively.

Funding Circle welcomes new BDM (Bridging & Commercial), Rated: B

Funding Circle has announced the appointment of Sarah Beard as its new business development manager.

Prior to joining Funding Circle, Sarah spent three years at Lease Plan as an account manager and three-and-a-half years at Hitachi Capital Business Finance, where she managed a portfolio of 30 introducers.

Sarah, who will be based in Bristol, said she was very excited about joining the company.

European Union

Spanish Banks Lead FinTech VC Investments Against Their European Peers (The Corner), Rated: AAA

Citi’s analysts also take a look at how different the FinTech evolution has been in the West: (1) the U.S. pivoted to InsurTech in 2016; and (2) two of the largest U.S. FinTech VC funding rounds in 2016 were in the health insurance space. Big data, the Internet of Things (IoT), and wearable devices, among other trends, will help insurance companies use FinTech to be more creative and customized.

Europe remains a laggard for start-ups/VC investing at about 10% of global FinTech VC investment in 2015-16. This is not a big surprise as Europe has a smaller VC market versus the U.S., it has none of the large technology/Internet companies that exist in the U.S. or China and its banking system (despite the sector’s weak stock prices, earnings and capital challenges of the past decade) offers more of a full-service provision versus U.S. or Chinese peers.

As reported by Citi:

European banks are increasingly interested in FinTech and with more bank investors and affiliates, we will see more of a shift to business-to-business (B2B). In 2017 we expect more focus on B2B FinTech topics, such as Artificial Intelligence, especially in London which is a hotspot with DeepMind and its concentration of universities; regulatory tech both in the U.K. and the U.S.; and cybersecurity primarily in the U.S. and Israel.

European Crowdfunding Networks Calls for Members to Assist with EU Crowdfunding Regulatory Review (Crowdfund Insider), Rated: AAA

The European Crowdfunding Network (ECN), a pan-European alternative finance advocacy group, is asking members to participate regarding input on the Capital Markets Union.  Specifically, the ECN will be working with the Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) regarding input on obstacles to cross-border

The ECN will also launch an open survey to all EU securities and lending crowdfunding platforms with will deliver input for the European Commission’s review of the Capital Market Union and which will be followed up by individual interviews with interested parties.crowdfunding for both online lending (peer to peer lending) and equity crowdfunding.

Australia

Tyro, RateSetter, Stockspot and Westpac on 2016 and the year ahead (The Mitchel Lake Group), Rated: AAA

CK: The transferability of information is huge with a growing number of middleware, SaaS applications and APIs. Sharing data and improving collaboration in the market is continually on the improve, benefiting the customer.

DF: Investors are much more discerning in the businesses they back. This will be better in the medium term, but it’s been difficult for some businesses locally.

CB: This year Stockspot became the first robo-adviser in the world to give clients the flexibility to personalise their portfolio with the launch of Stockspot Themes. We’ve already managed to generate some fantastic net returns for early adopters (6.2% and 9.2% per year) while charging clients less.

DF: For RateSetter, expanding our offering from consumer lending to business lending was a significant development. In Australia there’s been a real lack of business financing options outside residential property-secured bank finance and expensive short-term working capital finance, so we’re excited that RateSetter now offers Australian businesses a low-rate funding alternative to help them grow and prosper.

JS: My biggest highlight has been Tyro receiving a bank license. We are the only tech company to have achieved this so far. This was such a massive win for us and the sector. Following this, we were then able to deliver next-gen banking, a cloud-based, totally mobile & totally integrated banking solution for SMEs and growth companies.

JS: The FinTech community has limited potential if banking is not opened up. In a way, Australia is cursed by the entrenched bank oligopoly. If we don’t get our act together and open up banking, the next-gen banking providers will not be Australian.

CB: There are two things the Government could do to improve fairness for consumers when it comes to investing and superannuation. One is to require all superannuation and managed funds to provide fee and performance data to comparison websites so consumers can easily compare fund options. The second is to implement a public tender for the right to manage default super funds as outlined by the [Grattan Institute]( Chile established public tenders for the right to manage default super funds and it has reduced average annual super fees by 50%.

John Cummins Appointed New CIO for Australian Marketplace Lender SocietyOne (Crowdfund Insider), Rated: A

The Australian largest marketplace lending platform SocietyOne announced John Cummins has joined the group as CIO, according to The Advisor. Reporting to SocietyOne CEO and MD Jason Yetton, Cummins will be responsible for SocietyOne’s funding requirements to support demand from an expanding number of borrower customers, including building on SocietyOne’s existing network of investor funders which features large financial institutions, mutual banks, credit unions, high net worth individuals and SMSFs.

India

India Money Mart Serves as a P2P Lending Platform (Military Technologies), Rated: A

With India Money Mart serving as a P2P lending platform, borrowers and lenders find transactions easy. This online market place provides a reliable platform for both lenders and borrowers in India with a minimal operational cost.Lenders and borrowers can avail loan facilities at their own will. Borrowers can choose single or multiple lenders at the same time. IMM ensures that these transactions are carried forward without any hassles or meeting one another personally.

Through an easy lending process, Kissht helps consumers avail quick loans (YourStory), Rated: A

There is an entire population that has the money to repay loans, yet mainstream banks reject their loan applications. This does not favour consumer spending, although consumption has grown in this country. According to data available with the RBI there are only around 27 million credit cards in the country, and 300 million bank accounts. In 2016, although personal loans were 22 percent of all bank credit disbursed, several Indians remained without personal credit.

With this as the backdrop, Krishnan Vishwanathan, a consultant from McKinsey, wanted to find a fix to help people consume. Giving up his lucrative career, he set up Kissht, which means EMI  in Hindi, to provide collateral-free loans for products that consumers want to purchase. The total loans disbursed so far are to the tune of Rs 17 crore, with over 9,000 customers.

Asia

Peer-to-peer lending platform awaits BOT nod (The Nation), Rated: A

VORAPOL PHORNVANICH, chief executive of PeerPower, a financial-technology start-up, aims to create a new online peer-to-peer lending platform for investors and borrowers.

“At present, investors and savers in Thailand earn a relatively low return on their funds, averaging 0.5 per cent for savings accounts, 2-2.5 per cent for fixed deposits and 4-4.5 per cent for corporate bonds.

“On the other hand, if you are a borrower, you have to pay a relatively high interest rate on consumer loans, which have no collateral. Interest rates are currently as high as 15-36 per cent per annum. The interest-rate spread is huge, so we think this new online platform can help narrow the gap between deposit and lending rates as happens in other countries.”

Authors:

George Popescu
Allen Taylor