Thursday January 18 2018, Daily News Digest

mobile banking user growth

News Comments Today’s main news: Marcus passes the $2B loan origination mark. Varo Money secures $45M in Round B. Funding Circle’s fund announces Citibank deal. Qudian enters budget auto financing. PeerStreet intros 30-day notes. Today’s main analysis: Investing in Mintos’ secondary market. Today’s thought-provoking articles: Mobile banking is more important than ever. Credit score changes would force banks to help […]

mobile banking user growth

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United States

Goldman Sachs’ Online Lending Platform Marcus Has Originated Over $ 2 Billion in Loans, Deposits Rise to Over $ 5 Billion (Crowdfund Insider), Rated: AAA

Meeting a prediction from this past June set by Goldman Sachs CEO Lloyd Blankfein, online lending platform Marcus topped $2 billion in loan originations. Additionally, Marcus reported online deposits of over $5 billion. Deposits and consumer lending have now been combined under a single brand, thus, in reality, creating a challenger bank for the future.

Overall, Goldman Sachs (NYSE:GS) reported net revenues of $32.07 billion and net earnings of $4.29 billion for the year ended December 31, 2017.

Diluted earnings per common share were $9.01 compared with $16.29 for the year ended December 31, 2016. Goldman reported a Q4 loss of $5.51 per share. The results were impacted by a tax related expense of $4.4 billion. Without this expense, Goldman said earnings per share would have been $5.68.

Varo Money Closes $ 45M Series B Financing Round (Varo Money Email), Rated: AAA

Mobile banking is more important than ever (Business Insider), Rated: AAA

As we’ve seen for the past few quarters, mobile banking is continuing to rise, but the rate of growth is decelerating as offerings mature.

  • JPMorgan Chase 

    How a 23-year-old Max Levchin got Peter Thiel to invest in PayPal in under 24 hours (Business Insider), Rated: A

    Levchin told Shontell, “I saw [Thiel’s] name on the pinboard, wandered into a class that was taught by him, which turned out to be more like seminar with six people in the room. So it was a very small group of people. One: I couldn’t sleep because it would be obvious, but two, he was actually pretty interesting. So I stayed awake and chatted him up afterwards.”

    That turned out to be a good move. Here’s Levchin:

    “In the inimitable Peter Thiel fashion, we basically spend about 20 minutes talking after his lecture, and he said, ‘Well, what are you doing in Silicon Valley?’ I said, ‘I just got here two weeks ago. Probably gonna start a company.’ He said, ‘Oh, great. We should meet for breakfast.’

    “We met the next day. He said, ‘All right, so what companies are you thinking of starting?’ I had two ideas that I was concurrently thinking about. I described No. 1., No. 2. He said, ‘No. 1 is better; you should do that.’ ‘OK.’ ‘I’d like to invest.’ It was less than 24 hours later. Peter was a committed investor in my new project.”

    Credit score changes would saddle banks with risk to help nonbanks (American Banker), Rated: AAA

    Recently, the Federal Housing Finance Agency has been evaluating whether to allow originators that sell loans to Fannie Mae and Freddie Mac to use something other than the currently mandated FICO model. Specifically, the FHFA is evaluating whether originators can also use the VantageScore model offered by a company owned by the three credit bureaus — Equifax, Experian and TransUnion.

    VantageScore contends that its model will provide credit scores on more than 30 million additional consumers and make 7.6 million of these scores eligible for a loan sold to Fannie or Freddie because of the model’s supposed ability to more accurately assess blemished and dormant credit histories and accommodate thin credit files that most often effect younger consumers. VantageScore also argues that, since the model consolidates data from all three credit bureaus, it eliminates scoring differences caused by data discrepancies. The result, the company maintains, will be expanded home ownership, a more vibrant housing market, more consistent underwriting and faster economic growth.

    The major proponents of the alternative credit scoring model are large nonbank originators and credit reporting firms — companies that make their living from the quantity of loans they originate, not the quality. Their business models shield them from ongoing credit risk and require ever-increasing volumes to achieve scale economies. In short, nonbank originators generally don’t eat their own cooking — either in the form of loans or in the form of securities backed by the loans they originate. Therefore, they have everything to gain from this FHFA change, and very little to lose.

    PeerStreet Announces New Investment Product “30-Day Notes” (Crowdfund Insider), Rated: AAA

    On Wednesday, PeerStreet announced the launch of its new investment product, 30-Day Note, to provide increased liquidity for accredited investors at 30-day terms. According to the online lender, the 30-Day Notes product was launched quietly in October as a pilot program, is now offered monthly.

    Axial Members Surpass $ 25 Billion in Closed Middle Market Deals (Axial Email), Rated: A

    Axial, the deal network for the middle market, today announced its members have closed more than $25 billion in deals on 2,000-plus M&A and growth capital transactions since Axial’s launch in 2010. To facilitate these closed transactions, Axial arranged more than 2.1 million private member-to-member deal connections. Nearly one-third (650) of the total transactions closed in 2017.

    In 2017, the revenues of businesses that privately transacted using the Axial deal network ranged from $2.9 million to $610 million, with EBITDA ranging from negative $19 million to $223 million. Top sectors of deal flow activity include Business Services, SaaS, Healthcare IT, Distribution & Logistics, and Manufacturing. Notably, 24% of all growth capital transactions attempted in 2017 were in the Technology sector, more than doubling year-over-year from 10% in 2016.

    Worthy Peer Capital Receives SEC Qualification for 5% Money Market Alternative (Worthy Financial Email), Rated: A

    Worthy Financial, Inc., a modern personal finance company that delivers alternative investment products and digital savings solutions to a wide-range of retail investors, is pleased to announce that its subsidiary Worthy Peer Capital, Inc. has been qualified by the U.S. Securities and Exchange Commission (SEC), under Regulation A+, to bring a new liquid peer-debt product to the entire investing ecosystem.

    The new Worthy Bond offers all investors – including non-accredited investors – a 5% fixed return. Although the bonds have a 36 month term, they can be cashed in at any time for those with imminent liquidity needs, thereby serving more as an alternative to traditional money market products. Bonds may be purchased at .

    Democrats Add Momentum to G.O.P. Push to Loosen Banking Rules (The New York Times), Rated: A

    But unlike the $1.5 trillion tax overhaul, which passed along party lines, the effort to loosen the post-crisis rules is somewhat bipartisan. A group of Senate Democrats has joined Republicans to support legislation that would mark the first major revision of the 2010 Dodd-Frank Act, a signature accomplishment of President Barack Obama that has been deemed “a disaster” by President Trump.

    The bill would allow hundreds of smaller banks to avoid certain elements of federal oversight, including stress tests, which measure a bank’s ability to withstand a severe economic downturn. Under current law, banks with assets of $50 billion or more are considered “systemically important financial institutions” and therefore governed by stricter rules. The bill would raise that threshold to institutions with assets of $250 billion or more, leaving fewer than 10 big banks in the United States subject to the stricter oversight.

    Banks with assets of $50 billion to $100 billion would be immediately freed from those requirements. Financial institutions with $100 billion to $250 billion in assets, such as BB&T and American Express, would no longer be subject to tougher rules after 18 months, although the Federal Reserve would retain the authority to periodically conduct stress tests on those firms.

     

    The One Big Reason It’s So Hard to Refinance Your Student Loans (Money), Rated: A

    More than half of borrowers who applied for refinancing in 2017 were turned down, according on a report released Wednesday by LendEDU, a student loan marketplace that tracked 32,000 applications to eight refinance companies.

    Using data from users of the LendEDU marketplace, the report found that 58% of 2017 refinance applicants were ultimately rejected. And those who passed muster had very high FICO credit scores—the average approved applicant had a score of 764. Nationally, the average credit scoreis 700 out of 850; anything above 720 qualifies as excellent.

    Refinancing companies are currently advertising fixed interest rates that start at about 3.5%. Yet the average on refinanced loans in 2017 was 5.56%, LendEDU found.

    Source: Money

    Bill Gates made these 15 predictions in 1999 — and it’s scary how accurate he was (Business Insider), Rated: A

    Gates’ prediction: “People will carry around small devices that allow them to constantly stay in touch and do electronic business from wherever they are. They will be able to check the news, see flights they have booked, get information from financial markets, and do just about anything else on these devices.”

    No. 3: Instant payments and financing online 

    Gates’ prediction: “Automated price comparison services will be developed, allowing people to see prices across multiple websites, making it effortless to find the cheapest product for all industries.”

    The Top Ten Fintech Predictions for 2018 (Crowdfund Insider), Rated: A

    10. Resurgence of Peer to Peer Lending and the Emergence of A New Asset Class

    We’ve seen coin-backed lending such as Salt Lending. There will be many more platforms that will attempt to solve solvency and liquidity issues with lending in fiat currency backed by coins.

    9. Alternative Internet

    The cost of a simple PayPal transaction might go up dramatically because it was routed through Comcast’s fiber. You may have to pay an additional $3.99 a month for an “Online Banking” package if you want to do online banking…

    8. Banks will rule again

    Most of the online platforms (payments or lending) plus secondary markets are at the mercy of banks. Without a bank charter, you are simply limited on growth.

    6. Baby Boomer Financial, Inc.

    The youngest baby boomers are approaching retirement age. The baby boomer generation is about 75 million people (on par with Millennials) in the US and represents a vast amount of wealth in this country. They want to transact, invest, bank and most importantly transfer their wealth in a responsible way. I predict that there will be Fintech startups specifically addressing the needs of this generation of folks.

    4. Mass Adoption of Zero Latency Payment Clearance/Credit.

    Over the past few decades, we went from a cash society and in-person / in-branch interviews to “same-day” ACH (direct deposit) and next day loan funding. I predict that in 2018, we will see instant credit approval and funding.

    3.  Social Networks Venture Into Credit.

    I am making another prediction that Facebook or Snapchat will venture into extending credit.

    2. Vertical Integration.

    WeWork will get into the Working Capital lending business. And dare I say Indeed, Monster, and LinkedIn, will start lending money based on your resume and activities within your professional connections?!

    BlackRock makes impact a necessity for companies (ImpactAlpha), Rated: A

    Larry Fink flips social impact from a luxury to a necessity for every company. The chief executive of BlackRock, the world’s largest asset manager with $6 trillion under management, served notice on corporate CEOs their companies “must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” Fink made his point as clearly as possible: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

    Would a bank payday loan be any safer? (Daily Journal of Commerce), Rated: A

    Thanks to a recent regulatory change, it now may be possible for banks to offer small, short-term loans that could be a lot less dangerous for borrowers. Whether banks will actually do so remains to be seen.

    Standard Chartered creates fintech investment unit (Fintech Futures), Rated: B

    Standard Chartered has established a new business unit, SC Ventures, to invest in fintechs and other start-ups.

    Christopher Blake Joins Cross River Bank Loan Team (Long Island Press), Rated: B

    Veteran loan officer Christopher Blake joined Cross River Bank, where he’ll serve clients in Long Island, Queens and Brooklyn in the lender’s Commercial and Multi-Family Real Estate division, the company announced Tuesday.

    Freefly has teamed up with three fantastic financing partners (Freefly), Rated: B

    AFFIRM FINANCING

    Ideal for individuals looking to finance their Freefly purchases.

    SCL EQUIPMENT FINANCE

    A flexible lender designed for U.S. business, sole proprietors, and independent contractors.

    GLOBAL FINANCE

    A creative lender with options for businesses in the U.S. and many countries across the globe.

    United Kingdom

    Funding Circle’s fund unveils Citibank deal (P2P Finance News), Rated: AAA

    FUNDING Circle’s listed fund has inked a deal with Citibank, whereby the financial institution indirectly channels £50m to small businesses through the peer-to-peer lending platform.

    The transaction was announced by the Funding Circle SME Income Fund (FCIF) on Wednesday.

    Under a rather complicated structured finance deal, Citibank’s London branch will advance a senior, floating rate loan of £50m through two Irish special purpose vehicles. The facility matures in December 2026.

    Funding Circle SME Income Fund Limited (London South East), Rated: A

    The Board is pleased to announce that the Company has entered into a formal agreement with Citibank, N.A. London Branch (“Citibank London”) to establish a funding transaction to make loans to ?UK small businesses through the Funding Circle platform?. The transaction will serve to support the Company’s target dividend yield of 6-7% per annum.

    Under the terms of the agreement Citibank London will provide �50 million of funding into the transaction, by entering into a senior, floating rate loan. The Company will contribute a portfolio of existing UK small business loans at par, and in return shall receive ?approximately �50 million of cash to be deployed in accordance with its investment policy, and junior notes.

    Fintech firms struggling to get a foothold with established lenders (The Irish Times), Rated: A

    Banks and other financial institutions remain extremely wary of working with fintech firms, particularly in Ireland where few are willing to give start-ups the endorsement they need to help secure business elsewhere.

    Andrew Patrick White, founder and chief executive of FundApps, a regtech firm that provides compliance and regulation monitoring services to asset managers and hedge funds, said many financial institutions were afraid of fintech solutions because of a fear that they would be used to replace staff.

    “Your grandmother probably has more sophisticated apps on her iPad than many banks have inhouse,” Mr White added.

    Your morning briefing (PaymentsSource), Rated: A

    ‘All-in-one’ cards get another shotCurve has debuted a card in the U.K. that allows consumers to switch a card used to fund a payment after they have left the store. Through the card’s “back in time” feature, card preferences can be changed for up to two weeks, a system the company is selling as a financial management tool. Curve, which is being offered for free with a $60 premium option with more rewards, works like a regular card and is usable anyplace that accepts Mastercard. While all-in-one cards have struggled to gain traction over the years, more than 100,000 people signed up during the card’s testing phase and spent more than $120 million, according to a release.

    OnePlus’ fraud hit: Electronic equipment company OnePlus became the latest to get hit with card fraud, with consumers reporting unauthorized transactions and the company disabling credit card payments but still allowing PayPal transactions. The company is doing a complete audit of its systems and is looking for alternative payment options.

    When we asked, which, if any, Isas have you used over the 2017/18 tax year, nearly a third (32%) said they’d only used a Stocks and Shares Isa.

    This was followed by nearly a quarter (24%) who’ve only used a Cash Isa, and 17% who use a mixture of different Isas.

    This decline in Cash Isa savings is likely to be attributed to poor cash savings rates and the introduction of the personal savings allowance in April 2017.

    Interestingly, Innovative Finance Isas – used for peer-to-peer lending – don’t appear to have taken off, with just 3% of those who voted in our poll only using this savings vehicle.

    Source: Moneywise

    Name Change for Funding Knight as GLI Finance Updates to Sancus Funding (Crowdfund Insider), Rated: B

    As part of an ongoing strategic update, GLI Finance has renamed peer to peer lending platform FundingKnight to Sancus Funding Limited with immediate effect. GLI Finance, an AIM listed company, has also transferred ownership to Sancus BMS Group Limited.

    China

    Qudian is Moving into Budget Auto Financing (CapitalWatch), Rated: AAA

    The newly listed peer-to-peer lending company in China, Qudian (NYSE: QD), has moved into auto-purchase financing, a new business initiative called “Dabai Auto,” according to the company.

    Launched in late November 2017, Dabai Auto is currently targeting Qudian’s existing high quality users, who have been approved with credit lines, but have not actively transacted in small cash installments. The company also announced that it plans to spend around RMB 100 million ($15.5 million) to promote Dabai Auto through online and offline channels. The offline channels would include Qudian user engagement and delivery centers that are located in the shopping districts of over 100 cities across China.

    HNA-owned P2P lending platform doing business normally, executive says (Global Times), Rated: A

    Payments of investment products on jbh.com, an online peer-to-peer (P2P) platform owned by HNA Group, remain normal and there have not been any capital losses since the platform was set up three years ago, an executive of the company said on Wednesday.

    Payments for all maturing investment products on jbh.com are being made as normal, sina.com.cn reported Wednesday, citing Xia Aobi, president of jbh.com.

    International

    Funding Circle and Lufax: Two High Profile IPOs for 2018 (Lend Academy), Rated: AAA

    Neither IPO is a surprise as both companies have indicated their intentions before. But we now have a clearer indication on the timing. First off the rank will likely be Lufax. The South China Morning Post reported that Lufax is planning to do their IPO in Hong Kong in April at a possible valuation of US$60 billion. This would be more than three times the valuation of their previous funding round in 2016.

    The Funding Circle news actually broke just before the New Year with this article from Sky News. They reported that the company was preparing to hire advisors in the first steps towards an IPO. They are supposedly going to interview investment bankers this quarter with a possible listing in London in late fall which would put us in the latter part of the third quarter.

    A successful Funding Circle IPO, one where the valuation rises after it goes public will be very good for the marketplace lending industry in both the UK and the US. We have had little good news here in the last couple of years when it comes to the public markets and I would very much like to see a success story here.

    Investing on the Mintos Secondary Market – Hint One (P2P-Banking), Rated: AAA

    On the Mintos p2p lending marketplace the majority of investors invest on the primary market into loans, either manually or via autoinvest. But for the 29% of investors that do invest on the secondary market picking loans presents them with a huge choice of about 125,000 offers (no typo, really 125K loan parts on offer!).

    Source: P2P-Banking

    For the shown loans there is a very high probability that they will miss the payment and therefore run an additional 60 days until they are repaid under the buyback guarantee. If that happens the remaining actual loan duration would be 62 or 63 days and the impact of the 0.1% discount on the YTM would be much smaller. The resulting YTM would be somewhere around 11 to 13%. So they would not be a good buy and there are much better offers on the secondary market.

    Source: P2P-Banking

    With two weeks remaining the effective YTM for a buyer is not 36% but rather around 12%. Again there are offers with better YTMs on the secondary market.

    Chinese tech groups undermine banks’ dominance of finance (Financial Times), Rated: AAA

    The recent refusal by US regulators to sign off on Ant Financial’s $1.2bn acquisition of Dallas-based money transfer firm MoneyGram International does not signal the end of the Alibaba-affiliated payments group’s US financial ambitions.

    On one level, the scuppered deal suggests that Chinese companies, whether state-owned or otherwise, will have an ever harder time winning approval for US acquisitions. The move also confirms that the Americans now believe that the definition of national security — their basis for scrutinising overseas deals — embraces anything related to information and data.

    But Ant Financial’s attempted US play also shows how much technology is undermining the dominance of traditional global titans, especially in the financial sphere. It is especially noteworthy that many of the upstart challengers to banks and other legacy companies increasingly either have a Chinese face or Chinese capital behind them. That, in turn, underscores how some Chinese players have leapfrogged into prominence across the world.

    Blockchain is revolutionizing the loan industry – a look at Valorem… (Global Crypto Press), Rated: A

    Smart contracts are providing the solution to the trust issues that are usually the main concerns in the micro loan industry.  Whether it be student loans, cars, or any other kind of micro lending – blockchain technology provides what’s needed to move away from the banks, and towards a peer to peer lending model.

    Volerem Foundation is building the infrastructure to facilitate exactly this.

    India

    Govt should think of new ways to boost sectors like P2P lending: LenDenClub (India Info Online), Rated: A

    Additionally, we also expect the government should think of new ways to boost sectors like P2P lending. Eg.- Enable tax exemption for the lenders on P2P lending platforms, under section 80C. This will result in raising the trust bar and credibility, leading to more and more people investing in such platforms. It will also bring in a good enough capital infusion in the P2P lending space.

    Introducing Syndicates for India (Angel.co), Rated: A

    Today, we are announcing Syndicates for India, a new way for investors in India to invest alongside experienced angels and VC funds that invest in India’s vibrant tech ecosystem.

    To date, over 1,800 startups have raised more than $700M through Syndicates on the AngelList platform, receiving more than $6B in follow-on funding.

    APAC

    Gov’t urged to increase ceiling for individual investment in P2P lenders (Yonhap News Agency), Rated: AAA

    A business lobby of peer to peer (P2P) finance firms said Thursday it has asked financial regulators to raise the annual ceiling on individual investment in P2P lenders.

    The Korea P2P Finance Association has asked the Financial Services Commission (FSC) to increase the limit to 100 million won (US$93,632) per year from the current 10 million won, an association official said.

    ZorroSign Among Top 25 FinTech Companies (PR Newswire), Rated: B

    ZorroSign, Inc., today announced the company has been recognized among the top 25 FinTech companies in Asia-Pacific (APAC) by CIO Outlook. The honor spotlights organizations that are fundamentally disrupting the way companies in the global finance sector do business. ZorroSign offers unique secure eSignature, end-to-end Digital Transaction Management, and post-execution fraud protection solution. With security being on top of mind for financial services providers, ZorroSign Document 4n6 (Forensics) Token technology offers a major advantage to its customers.

    Authors:

    George Popescu
    Allen Taylor

Tuesday September 26 2017, Daily News Digest

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News Comments Today’s main news: SoFi’s CTO leaving the company. World Business Lenders buys BizFi assets. Zopa improves loan sale processing times. Fintech startups, banks face off on new European payments rules, data access. Klarna wins international ANDY award. Today’s main analysis: How MoneyTap is tackling the unbanked problem in India. Today’s thought-provoking articles: Fundrise, Wealthfront spar over real […]

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United States

SoFi’s chief technology officer to step down (Daily Mail), Rated: AAA

June Ou, chief technology officer of online lender Social Finance Inc and wife of its former CEO Mike Cagney, plans to leave the company, according to a source familiar with the situation.

The exact date of her departure from SoFi, has yet to be decided, according to the source. Ou did not immediately respond to requests for comment.

Ou, who joined SoFi in 2012 and is also the company’s vice president of engineering, is the latest senior executive to depart the embattled financial technology firm.

A pair of investing startups are in a public spat about the future of real-estate investing (Business Insider), Rated: AAA

It all started when Andy Rachleff, the CEO of Wealthfront, a California-based roboadviser with nearly $8 billion under management, went after the business model of Fundrise, a Washington DC-based real-estate crowdfunding company. , Rachleff said professionals who run managed real-estate funds fare poorly compared with low-cost index-tracking ETFs, such as Vanguard REIT Index Fund.

Fundrise’s CEO Benjamin Miller says this is a misrepresentation of how Fundrise works. “Amateur investors” on the platform aren’t picking individual projects, but rather strategies managed by the company.

“We operate like a Blackstone, but we democratize it and lower costs,” Miller told Business Insider.

Miller points to the recent initial public offering of Invitation Homes (INVH) to illustrate how expensive the public markets can be. INVH priced 215% higher in the public markets than in the private markets, according to data from Google Finance.

Source: Business Insider

Bizfi Survives, Thanks to World Business Lenders Asset Purchase Deal (deBanked), Rated: AAA

The Bizfi marketplace is slated to live on, according to Stephen Sheinbaum who joined World Business Lenders (WBL) as a managing director in July. On Wednesday, WBL purchased several assets from Bizfi including the brand, the marketplace, the Next Level Funding renewal book, and other related pieces of the company, he says. Sheinbaum founded Bizfi (then Merchant Cash and Capital) in 2005.

WBL, a Jersey City-headquartered small business lender will also be a lender on the platform.

The Tech Revolution Has Arrived For Alternative Lending (Bisnow), Rated: A

The growth of alternative sources of capital has opened a door for online and marketplace lenders, combining the availability and flexibility of capital with speed and transparency.

“Upward of $100B in loans are coming due and there is a gap,” Money360 President Gary Bechtel said. “The banks, life insurance companies, agency lenders, can only provide so much capital, and this is the void that nonbank lenders like Money360 are filling. And many of these firms have a technology component to them.”

Marketplace lending has become a popular alternative for student loans, credit card and small-business debt, but the commercial real estate industry has yet to fully participate. For Bechtel, it is a missed opportunity.

Money360 lifts those constraints. Because it does not have the same balance sheet requirements and regulations as traditional lenders, borrowers seeking financing for any asset class can apply for a loan on the platform. The platform offers loans between $1M and $20M on both bridge and permanent loans, with competitive terms and features similar to traditional lenders. Bridge loans are interest-only, and like banks, permanent loans utilize 25- to 30-year amortization schedules.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Although yield-starved sophisticated investors have been increasingly allocating more and more of their capital to alternative asset classes such as real estate and private company debt, most retail investors are still unaware that modern technology and a new regulatory regime allows them to access these products online in very small aggregates.

Acting Comptroller of the Currency Keith Noreika Addresses Online Lending & Fintech Innovation (Crowdfund Insider), Rated: A

Speaking at the Online Lending Policy Summit in Washington, DC, Acting Comptroller of the Currency Keith Noreika discussed the online lending industry and his perspective on responsible innovation. Noreika told the conference participants;

“I see the growth of online lending and marketplace lenders as the natural evolution of banking itself. Your industry demonstrates a certain entrepreneurial spirit to seize economic opportunity that begins with your new idea. The idea may be leveraging the lending power of groups or using new data to assess creditworthiness. Or, the idea may be a way to make decisions faster or to give consumers more control of their financial lives.”

Noting that US marketplace lenders have originated about $40 billion in consumer and small business loans in the past ten years, Noreika said that online lending represents a substantial portion of all consumer unsecured credit in the US.  Some prognosticators expect that online lending will top $1 trillion by 2020.

What’s Hot and What’s Not in U.S. Fintech (Finovate), Rated: A

Here are the rules– we shouted out a list of 20 fintech trends and our cocktail-fueled audience shouted their opinion on whether the trend is hot or not*.

The hottest

  • Regtech
    I was fairly surprised to hear the audience react so strongly to this trend, since the U.S. is lagging in regtech startups and adoption.

What’s hot

  • AI  As we close out 2017, players in the fintech sector seem to be in all out hype mode on the subject.
  • Open Banking  Though the U.S. doesn’t have any pending open banking regulation, folks still seemed quite optimistic about this trend.
  • Mobile account opening  Certainly a necessity for mobile-centric onboarding, mobile account opening has been around for awhile. It seems to have received new life with many enabling technology developments and IoT device launches throughout the years.
  • Challenger banks  With the lack of challenger bank launches in the U.S. (that is, compared to the U.K.), it was surprising to see the group cheer on challenger banks so vociferously. Perhaps a sign that more challenger banks are coming to the U.S.?
  • Insurtech – The audience seemed to heavily favor this trend over others, despite the relative lack of insurtechs in the U.S.

Not hot

  • Chatbots
  • Roboadvisory
  • ICO’s
  • Alternative credit scoring
  • Voice banking
  • Mobile wallets
  • Biometric authentication
  • Alternative lending

Payday lender operators forced to forgive $ 12M in loans (New York Post), Rated: A

New York on Monday announced a settlement with two payday lender operators — barring them from working in the state and forcing them to forgive roughly 20,000 loans worth roughly $12 million.

While payday lending is illegal in New York, state residents can fall prey to the predatory loans through out-of-state lenders trolling online.

Vullo called out E-Finance for making “unlawful misrepresentations” to New Yorkers when requesting payments and negotiating payment agreements.

TAR, headed by Jeremy Schaffer, and E-Finance, headed by Joshua Mitchem, according to court papers, will pay a $45,000 penalty plus as much as $15,000 to cover the cost of sending notices to consumers whose loans were forgiven.

After ending payday lending, group looks for alternatives (Argus Leader), Rated: A

South Dakotans for Responsible Lending will hold a meeting Thursday aimed at creating a nonprofit to help South Dakotans get small-dollar loans without taking on debt.

The effort comes months after South Dakota voters opted to cap interest rates on payday lenders, crippling the industry in the state.

The grant and donation-funded Minneapolis group helps participants pay back loans over a 12-month period with no fees or interest. Since 2015, the group has helped 131 loan participants refinance $90,072 and save $355,042 in interest.

Sara Nelson-Pallmeyer, the group’s executive director, said South Dakota voters have already taken a significant step in reducing payday loan debt by eliminating the industry. In its place, banks and credit unions should look to offer additional loans, she said.

The Great “Sexism in FinTech” Debate (FintekNews), Rated: A

Although I would never diminish it or deny its existence, I just don’t see sexism as an escalating problem in FinTech – or anywhere in the developed world for that matter. In fact, what I see trending is the exact opposite.

Extraordinary women in FinTech are all around us. I read about them every single day – not only in leading industry rags like FintekNews, Bankless Times and Crowdfund Insider, but also in long-established financial periodicals. In fact, FintekNews, which is published by Cindy Taylor, an accomplished FinTech visionary in her own right, devotes an entire section just to 

Breaking Banks: How men can support women in fintech (American Banker), Rated: A

Brett King is back on the show, talking about diversity in fintech with Anouska Streets, head of engineering at Finkit, a unit of digital banking software company Monitise, which was recently bought by Fiserv; and Colleen Wilson, founder and CEO of consulting firm Collaborate Chicago.


Women in Banking: The Most Powerful in 2017 (American Banker), Rated: B

The Most Powerful Women in Banking

1. Cathy Bessant, Bank of America
2. Marianne Lake, JPMorgan Chase
3. Ellen Alemany, CIT Group
4. Nandita Bakhshi, Bank of the West
5. Diane Reyes, HSBC

16. Hannah Grove, State Street

23. Teresa Tanner, Fifth Third Bancorp

The Women to Watch

1. Mary Mack, Wells Fargo
2. Thasunda Duckett, JPMorgan Chase
3. Heather Cox, USAA
4. Yolande Piazza, Citigroup
5. Ellen Patterson, TD Bank

19. Jane Russell, TD Bank

Andy Hinrichs of AutoGravity (Lend Academy), Rated: A

Our next guest on the Lend Academy Podcast is the CEO and co-founder of AutoGravity, Andy Hinrichs. After spending two decades in auto finance Andy decided he wanted to do something to finally bring the car buying experience into the 21st century. He started AutoGravity less than two years ago but they are already seeing great traction.

First Associates Broadens Service Offerings to Offer Additional Client Support (Benzinga), Rated: B

First Associates Loan Servicing announced a new lineup of loan support and lending solutions today to better serve the expanding needs of their industry–leading clients.

New solutions include:

Primary Loan Servicing

  • Reduced delinquencies & defaults
  • Low-risk, cost-effective
  • Omnichannel communication to maximize reach
  • Top-notch investor, credit bureau & regulatory reporting
  • Secure fund flow & control

Capital Markets Support
Backup servicing, Contract Verification, Borrowing Base Calculation or Validation, Custodial Services & Treasury Services (Collateral & Payment Agent)

Pre-Funding Support
To help ensure loans are properly originated and funded: Applications by Phone, Customer Service Call Support, Borrower Verification Calls & Document Verification

Post-Funding Support
Customer Service Call Support, Multi-channel Collections Support & Borrower Verification Calls

Futurist Jack Uldrich to Speak on the Future of Wealth Management and Banking in Four Cities in Four Days (Life Pulse Health), Rated: B

Starting tomorrow, acclaimed financial futurist and best-selling author Jack Uldrich will begin a series of four separate presentations on the future of finance in four consecutive days. His first presentation will be for leaders with Atlantic Trust in Denver, Colorado, followed by presentations in Chicago, Washington D.C., and ending in Toronto on Sept. 29th.

Uldrich is a prolific speaker on future trends in wealth management, finance, and banking, speaking to dozens of finance groups globally each year, including some of the biggest names in these industries.

United Kingdom

Zopa improves loan sale processing times (P2P Finance News), Rated: AAA

ZOPA investors are now able to sell their loans within a few days on the secondary market, after the peer-to-peer lender made improvements to speed up processing times.

Earlier this month, Zopa promised a “large change” to address investor concerns about the time it is taking to sell loans.

UK peer-to-peer lending is about to face its toughest test since the sector was born (Business Insider), Rated: AAA

GLI Finance, a listed investment company that backs fintech businesses, on Monday wrote down the value of its investments in eight peer-to-peer lending platforms by £12.6 million to £28.9 million, citing “concerns over the collectability of some platform loans.”

The disclosure came after concerns were raised above fast-growing peer-to-peer lender Lendy Finance over the weekend.

Meanwhile, Zopa, the UK’s oldest peer-to-peer lender, last month wrote to investors telling them to expect higher-than-forecast losses as a result of deteriorating credit conditions. And peer-to-peer platform Wellesley & Co. last year raised £2.5 million to “absorb impairment losses that would otherwise have been passed on to peer-to-peer investors.”

The backdrop to all these disclosures is a surge in unsecured consumer borrowing and rising inflation in 2017, factors which are combining to fuel fears people may be unable to pay back all they have borrowed. Unsecured consumer borrowing hit £202 billion in July, the highest level since 2008. Meanwhile, inflation is running at 2.9%, well above wage growth.

Can’t afford to buy a property? You can now borrow your deposit (The Sun), Rated: A

Property Pact aims to help those who are struggling to get together a deposit for their first home.

To apply for a loan with Property Pact, you must meet the following:

  • Have a good or excellent credit rating
  • An annual salary of £30,000 or more
  • No County Court Judgements (CCJs) against you
  • Have at at least one year of continuous employment with the same employer
  • Must be employed in a profession or managerial role or a key job leading to a professional qualification or managerial role.

To register your profile on the site, you’ll need to pay £150.

Investors can then browse your profile and decide if they want to lend the money to you.

If an investor then agrees to lend, you’ll pay a 5 per cent arrangement fee – on a loan of £30,000 that would be £1,500.

The loan will be repaid at a rate of 5.5 per cent above base rate – so currently 5.75 per cent.

Britain’s first Small Business Commissioner is needed now more than ever (SME Web), Rated: A

With this in mind, let’s look at the three main challenges that the Small Business Commissioner will need to address in the coming year:

  1. Late payments: Time and time again we are reminded of the late payments crisis damaging small businesses, who are owed a collective £26.3 billion. Research from the FSB shows that poor payment practices are on the rise, causing 50,000 business deaths each year.
  2. Funding: SMEs bring a combined turnover of £1.8 trillion to the UK economy and we must encourage people to follow their dream of running their own business. In addition, some will need educating about using alternative finance methods, such as P2P lending, invoice financing and crowd funding.
  3. Rising costs
China

A Missing Piece in China’s Economy: Consumer Credit Ratings (WSJ), Rated: AAA

The world’s second-largest economy doesn’t have a widely accepted system to gauge creditworthiness among a fast-expanding middle class with growing paychecks, a hunger for consumer products and little or no credit history.

Chinese household debt is growing rapidly, outpacing broad credit growth every year since 2013 and reaching 38 trillion yuan ($5.7 trillion) by the end of the second quarter of this year. But household debt remains relatively low by global standards, at about 44% of gross domestic product, and the absence of a widely used standard of creditworthiness is keeping consumer borrowing from growing even faster, hampering access to credit for some 500 million potential borrowers.

China’s central bank has sought for nearly three years to put in place an answer to the FICO credit-scoring system predominant in the U.S., created in 1989 by data firm Fair Isaac Corp.

Technology giants Ant Financial Services Group and Tencent Holdings Ltd., along with several smaller companies, are developing competing credit-rating systems. Tencent began testing its system in August, two years after Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd. , launched its Sesame Credit personal scores.

But none of these projects has emerged as a single standard that’s widely used and trusted by lenders nationwide.

Paving the way?

Regulators in March set up a new clearinghouse, Wanglian, to centralize the processing of online payments.

Meanwhile, Ant’s Sesame Credit has a head start on its competition. Launched in 2015, Sesame derives a person’s credit score—which the individual can view on Ant’s popular Alipay payment platform—by mining data on the consumer’s e-commerce activity and other online behavior. Higher ratings confer perks such as waived deposits at some hotels and faster security screening at Beijing’s airport.

There are small credit bureaus in major cities including Beijing and Shanghai, but they have never gained traction and often lack access to borrowers’ financial data. Such bureaus reach only a third of Chinese borrowers, compared with 90% of borrowers in the U.S. reached by credit bureaus there, according to consulting firm Oliver Wyman.

Source: The Wall Street Journal

Hong Kong ‘falling behind’ in race to build up automated financial adviser platforms (South China Morning Post), Rated: A

Operators of automated, algorithm-driven financial planning services, or so-called robo-advisers, in Hong Kong need to significantly step up their game if they are to compete with Chinese and US institutions, according to Freeman Tsang, head of China and Hong Kong for asset management firm Legg Mason.

Only a few securities brokerages have entered Hong Kong’s robo-advisory market, which unlike the one in the US, lacks an open, computer interface that allows access to investors’ portfolios across different companies to develop an overall view of their financial status.

Such a foundation is vital for robo-advisers to be able to offer more customisable financial advice and support transactions across different investment tools and firms.

European Union

Fintech startups and banks face off on new rules over European payments and data access (Tech.eu), Rated: AAA

A large group of over 70 European fintech companies are warning that new EU rules on payments processing could unfairly pit them against large banks and decimate the industry if they are passed into law.

The rules are part of the European Union’s Payment Services Directive (PSD) and would ban the practice of “screen scraping,” a common practice used by fintech companies to “scrape” display data from one application (like an online banking service) and display it on their own.

In their manifesto, the 71 fintech firms argue that the ban on scraping is unreasonable and a backdoor method for traditional banks to claw back control as the Fintech revolution threatens to upend their business models.

Revised payment services directive

The European Union’s Payment Services Directive (PSD), originally passed in 2007, built a single market for cashless payments in Europe, making cross-border payments as easy and efficient for European consumers and businesses as domestic transfers.

Most importantly, the revised PSD (also known as PSD2) mandated that banks loosen their grip over customer account data and allow third parties to be able to access it with customers’ permission.

Klarna “Smoooth” Ad Campaign Wins International ANDY Award from Ad Club of New York (PR Newswire), Rated: AAA

Klarna, a global payments provider, has been honored with an International ANDY Award by the ADVERTISING Club of New York for its 2016 “Smoooth” campaign that illustrates how ‘smoooth’ payments can be for consumers and online merchants using its platform.

The award was presented at the 14th annual “Stars of Madison Avenue” luncheon.

The AD Club’s International ANDY Awards jury chose this year’s six honorees for making an impact on marketing, commerce, culture and social responsibility through brave and creative advertising and marketing campaigns.

Klarna’s “Smoooth” campaign kicked off with a series of critically acclaimed ad spots. Samples of the campaign are available here and here.

Europe’s top venture capital investors by country (Banking Technology), Rated: A

 

At the top of the list, High-Tech Grunderfonds has made nearly 200 deals to 150+ German companies since 2012, making it the top investor in European tech VC by a long shot. Notable recent deals include a $3.4 million seed round to POSpulse (shopper intelligence platform) and participation in a $2 million seed round to MoBerries (HR and workforce management company). Since 2012, German tech companies have seen more than 1,600 deals worth over $10 billion.

The UK has seen the highest number of deals and total funding deployed to tech companies, at more than 3,200 deals worth nearly $20 billion since 2012, according to CB Insights.

Top investors in European tech by country (as of 30 August 2017), according to CB Insights:

  • Austria – SpeedInvest
  • Belgium – PMV
  • Cyprus – SingulariTeam
  • Czech Republic – Credo Ventures
  • Denmark – SEED Capital
  • Estonia – SmartCap
  • Finland – Lifeline Ventures
  • France – Alven Capital
  • Germany – High-Tech Grunderfonds
  • Greece – PJ Tech Catalyst
  • Iceland – Frumtak Ventures
  • Ireland – AIB Seed Capital Fund
  • Italy – LVenture Group
  • Latvia – Imprimatur Capital
  • Lithuania – Practica Capital
  • Luxembourg – Mangrove Capital Partners
  • Netherlands – Newion Investments
  • Norway – Investinor
  • Poland – SpeedUp Venture Capital Group
  • Portugal – Portugal Ventures
  • Romania – GECAD Group
  • Slovakia – Neulogy Ventures
  • Spain – Caixa Capital Risc
  • Sweden – Almi Invest
  • Switzerland – Swisscom Ventures
  • Turkey – Aslanoba Capital
  • UK – LocalGlobe

 

New10 open for business! (ABN-AMRO), Rated: B

Starting today, SMEs looking for a loan online can go to New10, an initiative of ABN AMRO. New10 lets them know within 15 minutes whether they qualify for a loan and under what terms and conditions. New10 meets the needs of this group of SMEs that want to take out a loan entirely online.

New10 provides loans ranging between EUR 20,000 and EUR 1 million.

India

Consumer Lending Startup MoneyTap Is Shooting For The Stars (Inc42), Rated: AAA

Ensnared by the allure of entrepreneurship, Bala ventured into the promising world of fintech with MoneyTap, a consumer lending startup that was launched last September.

Touted as India’s first app-based credit line, the fintech startup is working to democratise credit in a country where 19% of the total population is still unbanked.

“The reason we started MoneyTap was that we wanted to solve the problem of consumer credit. Clearly, India is very credit starved. Less than 1% of Indian consumers have access to any form of unsecured credit from a bank or any financial institution. Most people, whether it’s from middle class or lower middle class, need credit, but they have to use informal methods,” explains Bala.

Based on his interactions, he concluded that there are four main reasons behind this pervasive inadequacy of consumer credit in the country:

  1. Historical baggage/legacy
  2. Lack of data
  3. High overhead in small-ticket loans
  4. Finally, the emergence of a new class of demanding consumers

Between 2003 and 2007, a number of banks in India were issuing loans without doing any detailed checked. At the time, there was no credit bureaus or Aadhaar. Even PAN was not widely used. When the subprime crisis hit in 2008, all these banks got burned. In the period prior to that, around 24 Mn credit cards were sanctioned in India, of which nearly 10 Mn crashed.

In a country with a population of over 1.31 Bn, only 220 Mn people have PAN cards. Other forms of KYC (know your customer), including voter ID, Aadhaar and ration cards are not considered as the sole identity proof, especially when it comes to financial activities. Credit information companies (CIC) – such as TransUnion Credit Information Bureau Ltd. (CIBIL), Experian India and Equifax India – still do not have records of a large section of the country’s banked populace.

As per Bala Parthasarathy, the cost of evaluating and issuing a credit line/loan/credit card for a bank is extremely high and thus they prefer to give big-ticket loans to few people rather than small ticket loans for a large group of people. The average loan ticket size in this country is between $4,629 – $7,715 (INR 3 Lakh-INR 5 Lakh).

If you think of India as a pyramid in terms of the net worth of people, all these banks focus on only around 12 to 15 Mn customers at the top of the pyramid because they are capable of applying for a loan worth $4,629 to $7,715. The problem, according to him, arises when someone wants a $463 (INR 30,000) loan because the overhead, in this case, is too high for the bank to make any profit.

The consumer lending startup claims to currently cater to customers with monthly income ranging between $308-$1,080 (INR 20,000-INR 70,000).

On the MoneyTap platform, consumers can borrow anywhere between $46-$7,715 (INR 3,000 to INR 5 Lakh) with an option to choose the repayment duration from as little as two months up to three years.

At present, MoneyTap charges a one-time setup and origination fee of $7.7 (INR 499) plus tax.

Source: Inc42
APAC

Fintech experts to discuss the future of finance in Phnom Penh (Southeast Asia Globe), Rated: AAA

Inspire Asean is back on 29 September at Sofitel Phnom Penh Phokeethra for an afternoon of presentations, exchanges and networking. One of our larger events, this edition will have six engaging presentations from top Fintech startups, infrastructure providers and international banks to discuss digital wallets, big data, blockchain technology, cryptocurrencies and alternative lending models.

The speaker lineup includes:

  • Brad Jones, chief executive officer of Wave Money in Myanmar and previously CEO of Wing in Cambodia.
  • Hong Samarkkeenich, regional sales director at Lenddo, is responsible for bringing the company’s technology to new and underserved market segments in Indochina.
  • Sim Chankiriroth is the founder and CEO of BanhJi, a free and localized online accounting software, built for Asean MSMEs.
  • Vincent Ling, deputy general manager of UnionPay International SEA, is responsible for regional brand and communications as well as the Core Products portfolio.
  • Steve Miller is the founder of CryptoAsia, a growing Bitcoin startup based in Phnom Penh.
  • Tomas Pokorny is the CEO of PiPay, a Cambodia-based fintech company that combines payment and lifestyle (social) application solutions.

Big Data, a Key Factor in Decision-Making (FiNews), Rated: A

A survey conducted by Deloitte showed that the respondents feel that analytics will become more important to their organizations in the next three years and that its greatest benefit is a key factor in making better decisions, and Singaporean companies are picking up on this.

This trend is great news for the local data analytics sector. In Singapore, the industry is expected to contribute at least $1 billion to the economy this year alone according to the Economic Development Board.

However, being in the service industry, these firms often lack significant physical collateral and assets, leaving them unable to turn to banks and similar financial institutions for financing. This results in cash flow issues that could limit the growth of these companies, if not hamstring them completely.

How Can Data Analytics Persevere?

  • P2P Financing
  • Equity Crowdfunding
  • Receivables Financing

10 Fast Growing Fintechs in Philippines (Fintech News), Rated: A

Acudeen

 

Acudeen is an organization opens its business to small and medium enterprises (SMEs) looking to boost cash flows, thereby answering an unsolved business need.

Ayannah

Ayannah is a leading provider of digital financial services to the world’s emerging middle class, most of whom are migrants or unbanked coming from the base of the pyramid.

BloomSolutions

Bloom makes money smarter by combining modern technologies like cryptocurrency with traditional infrastructure such as SWIFT and SMS.

Lendr

Lendr is an end-to-end loans origination and loans management platform that you can access via your desktop or mobile device.

LoanSolutions.ph

Loansolutions provides loans via our network of partner banks and lending companies.

Mynt

Mynt is a leader in mobile financial services focused on accelerating financial inclusion through mobile money, micro-loans, and technology.

PawnHero

PawnHero now lets you pawn online, anytime and anywhere.

PayMaya

PayMaya Philippines, Inc. (formerly Smart eMoney, Inc.) is the pioneer in mobile money and payments, having established brands such as PayMaya, the first prepaid online payment app that enables the financially underserved to pay online without a credit card; PayMaya Business, the company’s system solutions provider that allows businesses to receive online and card payments anytime, anywhere; Smart Money, the world’s first e-wallet linked to a mobile phone; and Smart Padala, the leading remittance network in the Philippines with over 15,000 agents across the country.

Ripple Supports Singapore’s Fintech Hub Aspirations With New Office (Ripple), Rated: B

Singapore has publicly stated ambitions to be the world’s leading fintech and innovation hub. It is also one of the biggest and busiest global trade centers with many large, multinational companies basing their regional treasury offices in the country. For these reasons, and to support our rapidly-growing customer base across Asia-Pacific markets – including Standard Chartered, a Ripple investor, member of the RippleNet Advisory Board, and early adopter of blockchain technology to power payments – we are excited to announce we have opened a new office in Singapore.

Africa

Riby aims to transform the way over 20 million West Africans use co-operatives (Techpoint), Rated: AAA

Mr. Lanre used to be hesitant about loaning his colleagues at work money, having suffered from bad debts. Luckily for him, his organisation launched a co-operative scheme to manage employees’ finance. Among other things, the co-operative allows anyone with an urgent financial need to easily request and get assistance.

It is estimated that 63% of Kenyans derive their livelihoods from co-operatives, while in New Zealand, 22% of the gross domestic product (GDP) is generated by co-operative enterprise. And while 50% of sugar-cane planters are grouped into co-operatives in Mauritius, the co-operative movement in Columbia accounts for as much as 697,006 jobs in the country.

Nonetheless, as CEO of a financial management service platform, Salami Abolore reveals that over a million co-operative bodies exist in Nigeria.

He says this with confidence because his company, Riby, helps co-operatives and their members remotely control both their finance and financial operations.

Riby happens to provide the technology that helps Mr Lanre’s company to manage their (employee) co-operative scheme.

The Riby peer-to-peer lending module allows companies to run internal co-operatives within their fold. A case in point is a savings rotation mechanism that auto-debits employees and credits whoever is due to receive money for the month. For both modules, Riby charges a per-user fee of ₦200 upfront, amounting to ₦2000 per annum and ₦500 on a quarterly basis.

The agent management platform, Riby’s third module, is another exciting proposition that raises an innocent suspicion as to whether Riby is taking the competition to the commercial banks. This is apparent in their overall quest to include everyone in the system.

About 40% of Nigerians are yet to register with any financial institution in the country, according to the Central Bank of Nigeria. Statistics from the Nigeria Inter-Bank Settlement System (NIBSS) further show that there are only about 40 million registered bank accounts across the country. These accounts are enrolled by just 20.8 million customers, some having more than one account. It is therefore apparent that co-operatives can be used to reach the unbanked.

Fintech startup MaTontine wins Seedstars Senegal (Disrupt-Africa), Rated: A

Fintech startup MaTontine was named winner of the Senegal round of the global Seedstars World competition over the weekend, earning the chance to represent the country at the global final in Switzerland next year to compete for up to US$1 million in equity investment.

MaTontine emerged the overall winner for its solution that provides access to small loans and related financial services like microinsurance by digitising traditional savings circles.

Authors:

George Popescu
Allen Taylor

Tuesday July 18 2017, Daily News Digest

fintech adoption

News Comments Today’s main news: Laplanche shares vision for Online Lending 2.0 at Lang Di Fintech. Elevate named a great place to work (again). FinLeap raises 39M Euro. Crunchbase-like database launches in Singapore. Today’s main analysis: Ant Financial poised for more growth. Fintech use reaching mass adoption among digital consumers. Today’s thought-provoking articles: OCC vs. New York DFS.  Ant Financial […]

fintech adoption

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

News Summary

United States

Elevate Named Great Place to Work by Independent Analysts for Second Year in a Row (4-Traders), Rated: AAA

Elevate was recently certified as a great workplace by the independent analysts at Great Place to Work®. Elevate earned this credential based on ratings provided by its employees in anonymous surveys. A summary of these ratings can be found at 

“According to our study, 87 percent of Elevate employees say it is a great workplace,” says Sarah Lewis-Kulin, Vice President of Great Place to Work Certification & List Production.

79% of Elevate employees completed a survey, resulting in a 90 percent confidence level and a margin of error of ± 2.04.

Ex-LendingClub CEO Laplanche sees new Upgrade venture growing loan volumes (Yahoo! News), Rated: AAA

Online lender Upgrade, launched by former LendingCLub Corp CEO Renaud Laplanche in April, expects to grow its loan volumes and add new asset managers to its roster of buyers in coming months, Laplanche said in an interview on Monday.

Upgrade has been testing its credit quality and risk management systems, compliance framework and other operations, as well as building up its infrastructure to deal with rising volumes before ramping up the service, Laplanche added. The company has signed up six asset managers who are already buying or plan to buy loans originated by the company, including Jefferies LLC and an unnamed Hong Kong firm, he said.

OCC vs. New York DFS: Battle for the Future of FinTech (Bloomberg BNA), Rated: AAA

In the rapidly developing world of financial technology it often is unclear who has the legal authority to regulate the activities of newly created companies. Many of these companies do not neatly fit into any established regulatory scheme. However, answering the question of who will be creating the regulatory rules for FinTech companies is important both for regulators and the FinTech companies themselves.

State Regulators Want to Regulate FinTech

Over the past several years, state regulators have been staking out positions as leading regulators of FinTech companies.

During this same period, federal regulators have announced the intention to assert control over the regulation of FinTech companies.

The OCC indicated that its authority to grant FinTech Charters to nonbank FinTech companies stems from 12 C.F.R. § 5.20(e)(1), which states that the agency may grant such charters to institutions that conduct “at least one of the following three core banking functions: receiving depositions, paying checks, or lending money.”

The Lawsuit

The DFS did not limit itself to criticizing the proposed FinTech Charters. On May 12, 2017, the DFS filed a lawsuit against the OCC in the District Court for the Southern District of New York, alleging that the OCC’s proposed FinTech Charters exceeded the agency’s statutory authority under the National Banking Act and violated the Tenth Amendment. Based on these claims, the DFS sought declaratory and injunctive relief that would declare the proposed FinTech Charters to be unlawful and prohibit the OCC from creating or issuing these charters in the absence of express authorization from Congress.

Third, even if the OCC prevails and begins granting FinTech Charters, state agencies such as the DFS will still attempt to regulate FinTech companies. This could lead to future disputes over the nature and scope of the federal preemption of state regulations, which will add to the confusion over which regulations apply to which FinTech companies.

As a result of these issues, FinTech companies have little idea what the future regulatory terrain will look like. This uncertainty makes it difficult for companies to predict the future regulatory cost of business decisions they would like to make today.

Worthy Financial Announces the Closing of Its Seed Financing Round (BusinessWire), Rated: A

Worthy, a digital investment app that redefines how Americans access investment products, diversify their portfolios and save for retirement, announced the successful closing of its seed financing round. The funds will be used for the full-scale roll-out of the Worthy mobile app, and will enable Worthy to expand its growing user base as well as to broaden the array of investment product options it offers retail investors.

Worthy provides users with the unprecedented ability to spend their way to retirement by investing retail round-ups into high-yielding fixed interest bonds, the proceeds of which fund growing businesses. In doing so, anyone has the capability to build a nest egg, enhance portfolio returns, mitigate risk, and generate both social as well as financial returns. Worthy investors grow their portfolios while simultaneously supporting American entrepreneurs.

Stash, now valued at $ 240 million, lets anyone start investing in the stock market with just $ 5 (Business Insider), Rated: A

Krieg and Robinson realized then that they had an opportunity to help.

They founded Stash, an app that lets you build a portfolio and start investing with only $5, plus it teaches you the ins and outs of the stock market.

Krieg and Robinson realized then that they had an opportunity to help.

The company launched in October 2015 and just closed on a $40 million Series C led by Coatue Management. That brings Stash’s total funding to $78 million and values the New York-based startup at $240 million, according to a person familiar with the company.

Stash makes money by charging a subscription fee of $1 per month for accounts with less than $5,000. When an account has more than $5,000, Stash charges a fee of 0.25% fee.

Stash now has about 850,000 customers nationwide.

Why Robo-Analysts, Not Robo-Advisors, Will Transform Investing (The Financial Revolutionist), Rated: A

Robo-advisors and robo-analysts are both important to enabling wealth management firms to cut costs without sacrificing quality of advice, but the importance of a robo-analyst to enhance the quality of investment advice shouldn’t be underestimated.

Today, many of the tasks performed by robo-advisors are low value-added services such as determining and communicating asset allocation strategies (e.g., 60% equities, 30% fixed income and 10% cash). In fact, these services are so low value-added that advisors cannot make money doing them unless they are bundled with higher value-added services.The value proposition of a robo-analyst is very different.

Specifically, by shining an analytical light in the dark corners of financial filings, robo-analyst technology can identify many critical data points overlooked by most research analysts today. No longer must investors rely on the headlines or management-manipulated earnings. With new technologies, investors can receive a much fuller, more comprehensive analysis of financial filings, company profits and valuation so as to make better informed decisions than ever before. As a result, robo-analyst tech raises the analytical bar universally, enabling investors to transcend the short-sighted and high turnover trading mentality that, in the long run, does more damage to investors than good.

Bankers Worry About Jobs Lost to Automation (Newsmax), Rated: A

A quarter of banking’s “front line” professionals are worried about losing their jobs to robots and artificial intelligence-boosted mobile apps, according to a LinkedIn survey.

In the poll of 1,012 pros from financial technology, investment banking, retail and corporate banking, financial and hedge fund management, accounting, insurance, and private equity, 25 percent said they are concerned automation will impact their job security – with 34 percent of retail bankers saying it is a significant concern for them.

The survey also found 42 percent of financial services pros think financial technology is a “direct threat” to traditional financial services, compared with 13 percent of professionals who work in traditional financial services, and 18 percent of all the financial professionals.

Matthew Wong of CB Insights on Insurtech (Lend Academy), Rated: A

In today’s episode of the Lend Academy podcast we have Matthew Wong of CB Insights. He has been following innovation in the insurtech space for some time and his weekly insurtech newsletter has a subscriber base of more than 18,000 people.

In this podcast you will learn:

  • Matt’s background and how he first became involved in insurtech.
  • What CB Insights does.
  • The headwinds facing insurance industry incumbents today.
  • Why millennials are not buying insurance as much as other generations.
  • Why insurtech is hot right now when it comes to VC investments.
  • Some of the most interesting companies in the insurtech space right now.
  • Why it will probably take a long time for these startups to get to scale.
  • Why Matt likes Zhong An Insurance, the first and largest online insurer in China.
  • How the incumbent insurance companies have been reacting to this surge in startup activity.
  • Why Munich Re is one of the most interesting incumbents.
  • Matt’s view on what SoFi is doing partnering with a life insurance company.
  • The endgame for many of the insurtech startups.

Solar Loans Are A Risky Investment But Not Unlike Other ABS (ValueWalk), Rated: A

Solar loans are on the rise as the industry undergoes a transition and credit investors consider whether these asset-backed securities are worth the risk. In some ways, they’re similar to other types of collateral, and credit investors are already used to dealing with the types of risk they pose. However, analysts at Moody’s warn that they’re one of the riskiest securitization asset classes.

The reason solar loans are so new is because until now, the residential solar market has been dominated by third-party ownership of solar panel systems via power-purchase agreements and leases. GTM Research projected late last year that 2017 will be the year direct ownership of residential solar panels retakes its position as the top solar financing model.

The firm projected that 55% of the U.S. residential solar capacity that’s installed this year will be bought by customers who either pay in cash or take out a loan to finance their systems.

Jefferies gives IBM Watson a Wall Street reality check (TechCrunch), Rated: A

IBM’s Watson unit is receiving heat today in the form of a scathing equity research report from Jefferies’ James Kisner. The group believes that IBM’s investment into Watson will struggle to return value to shareholders.

The narrative isn’t the product of any single malfunction, but rather the result of overhyped marketing, deficiencies in operating with deep learning and GPUs and intensive data preparation demands.

If job postings are any indication, IBM is not keeping pace with other technology companies in hiring machine learning developers.

Cascade Fintech Signs 3-Year Contract for AU10TIX ID Authentication & Onboarding Automation (WVAlways.com), Rated: A

US prepaid card and P2P payment services provider Cascade Financial Technology Corp has signed a 3-year contract to power customer onboarding and KYC with 2nd generation ID authentication and onboarding automation. AU10TIX Secure Customer onboarding (SCO) cloud service that already powers major players across financial services markets, is known not only to increase KYC robustness and fraud protection but also improve customer conversion success chances and operating efficiency.

The future of Millennial banking (Marketing-Interactive), Rated: A

In the last ten years, the fundamental assumption that financial institutions are the only avenue to financial transactions is being called to question, especially by Millennials, who are by far the most entrepreneurial generation.

In a disruptive world, what does the future of banking and finance look like? How can and should financial institutions adapt to remain relevant, or even lead in this era of change?

  • Seamless, efficient and fast

Payments are perhaps the most basic and prevalent interaction with finance for the masses, yet for the longest time, payments to businesses saw minimal innovation. P2P transfers were never a focus for banks since it was a zero commission business. This was a pain-point to Millennials, who are used to sending everything from photos to documents electronically – having to withdraw physical cash or obtaining account details to securely transfer money for lunch is considered old fashioned!

  • Flexibility and access to funds

Traditional unsecured loans might require a strong financial history or proof of steady income stream, which would be unlikely if the individual were not taking a salaried job. Cash advances on credit cards would usually incur overly high interests costs.

This creates opportunities for peer to peer (P2P) lending marketplaces such as Prosper and Lending Club, platforms which create alternative ways to access cash loans while providing alternative yields on deposits.

  • Information access

Websites such as MoneySmart, DirectAsia, GoBear and Milelion position themselves as third-party and an unbiased advisor of investment products and policies. They perform the heavy lifting of trawling through multiple sites to aggregate and analyse information, empowering consumers to make informed purchases in the shortest time.

  • The reversal to brand love

The answer lies in placing the consumer in the centre of their businesses and asking the right questions constantly to redefine scope of value-add. It is an iterative journey, and worthwhile to include consumers as co-creators in product design and transformation.

Wela, the World’s First Financial Advice App Pairing Artificial Intelligence with Real Advisors, Available for Android Devices (Marketwired), Rated: B

Wela, a personal finance app that pairs artificial intelligence (AI) and human advisors, announces today it is available for download on Android devices in addition to iOS. Wela pairs real financial advisors with AI through the personification of its digital advising algorithm, Benjamin. The first true digital advisor, Benjamin utilizes AI to track users’ daily, weekly and monthly spending habits and provides personalized advice based on their financial needs and goals. Unlike other free consumer finance apps, Wela also offers access to real financial advisors via phone, video chat or in-person at no additional cost.

The Android app contains the full functionality of the iOS version and employs the same innovative features that allow users to track all their financial accounts in one place. Wela protects user privacy by leveraging bank-level security, as well as 256-bit SSL encryption and two forms of secure authentication. Capable of aggregating data from more than 13,000 financial institutions, Benjamin pulls linked account information to run a complete analysis, helping users take steps toward financial wellness based on three main pillars: creating an emergency reserve, paying off debt and implementing an investment strategy. In addition to Benjamin’s foundational metrics, the algorithm delivers custom insights on demand, helping users stay on track to reach their short- and long-term goals.

Three Leading Lawyers Take the Helm of Manatt’s Financial Services Group (BusinessWire), Rated: B

Manatt, Phelps & Phillips, LLP, today announced new co-chairs of the firm’s industry-leading financial services group, with the appointment of Richard Gottlieb, Brian Korn and Donna Wilson.

Gottlieb is a partner in the firm’s Chicago office, Korn is based in Manhattan, and Wilson practices in Manatt’s Los Angeles office.

United Kingdom

MarketInvoice Stands at £1.34 Cumulative Invoices Funded (Crowdfund Insider), Rated: AAA

This past February, MarketInvoice shared it had funded invoices over £1.1 billion since platform launch in 2011. The online lender said it expects to top the £2 billion in invoices funded by the end of the year.

In Q2 of 2017, MarketInvoice announced that it had funded invoices from UK businesses worth £161.9 million. Compare this amount to the £103 million funded in Q2 of 2016 and the platform is generating some serious momentum.

In the first quarter of 2017, MarketInvoice generated £130 million in invoice finance.

RateSetter’s new chairman heralds benefits of provision fund (P2P Finance News), Rated: AAA

RATESETTER’S new non-executive chairman Paul Manduca (pictured) has heralded the peer-to-peer lender’s “simplicity”, citing its provision fund as an example, on his first day in his new role.

The asset management veteran said that financial innovation can sometimes result in overly-complex products that investors cannot understand, which is “complacent and out of step with what customers want”.

Activist investor increases stake in Ranger Direct Lending fund (AltFi), Rated: A

The LIM Asia Special Situations Master Fund has increased its stake in the £243m Ranger Direct Lending fund, following the portfolio’s move to a double-digit discount.

The Hong-Kong based fund had already invested in the closed-ended portfolio, which invests in a host of online lending platforms, owning less than 4 per cent. Last week it increased its holding to 5.48 per cent (on the 7th July).

Assetz Capital Continues UK P2P Expansion with Scotland Appointment (Crowdfund Insider), Rated: A

Assetz Capital is continuing its strategy of establishing a local presence across the UK with the appointment of Ian Craig as Regional Relationship Director to help manage operations in Scotland. The appointment comes as Assetz Capital says growth in Scotland continues with a target of £50 million in lending (subject to two upcoming completions). Assetz Capital says it is well on its way to becoming the second largest alternative finance lender in Scotland.

Craig will be responsible for helping local Scottish businesses acquire finance through the peer-to-peer platform and ensure borrowing with Assetz Capital runs seamlessly.

P2P lenders helped British Business Bank fund £717m of SME loans last year (P2P Finance news), Rated: A

PEER-TO-PEER lenders were among the delivery partners helping the British Business Bank (BBB) fund £717m of loans to small businesses last year, the firm’s annual report revealed.

The state-backed institution, which has channelled funds through P2P platforms such as RateSetter, Funding Circle and MarketInvoice, facilitated 94 per cent of its finance through banks outside of the ‘big four’ last year, up from 90 per cent in 2015 and 79 per cent in 2014.

The BBB has a key performance indicator of having more than 75 per cent of its finance facilitated through providers other than the four largest banks over five years, so it has already surpassed that aim.

China

Renaud Laplanche Shares His Vision for Online Lending 2.0 at Lang Di Fintech (Lend Academy), Rated: AAA

In his first public appearance in over a year Renaud Laplanche, the CEO of Upgrade, gave a presentation this past weekend at Lang Di Fintech, LendIt’s annual Chinese conference, in Shanghai. Titled Online Lending 2.0 he laid out his vision for where he thinks the online lending industry is going next.

He talked about how one of the big innovations in Online Lending 1.0 was the introduction of more data into the underwriting process. Ten years ago, which marked the beginning of Online Lending 1.0, this new data allowed more accurate underwriting of consumers. But in Online Lending 2.0 this has expanded dramatically with not just more data but new and better tools available to analyze this data.

The two key data points that are being added in Online Lending 2.0 are location data and free cash flow analysis. We need to adjust underwriting to take into account location because a consumer in New York City has a much higher than average cost of living while a consumer in Greenville, SC has a much lower than average cost of living for example. This is why Debt-to-Income (DTI) is less important than free cash flow today.

Alibaba Affiliate Ant Financial: World’s Largest Fintech Poised For More Growth (Seeking Alpha), Rated: AAA

Ant Financial, Alibaba’s (NYSE:BABA) financial affiliate, is the largest fintech in the world, and leads the pack of the world’s largest fintech unicorns, the top four of which are from China, the largest fintech market in the world: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion) (NASDAQ:JD), and Qufenqi (US$5.9 billion).

Alipay

Payments make up the biggest portion of fintech in China and this is expected to be the same going forward.

Mobile phones function as mobile wallets for about 425 million Chinese, or 65% of all mobile users. This is the highest penetration rate in the world. At 38 trillion yuan (US$ 5.5 trillion) last year according to data from iResearch, China is the world’s largest mobile payments market and is over 50 times bigger than the American market where mobile payments reached US$112 billion.

China’s e-commerce market is expected to continue its upward climb. Online sales represented 16.4% of China’s total retail sales in the first half of 2016 and this is expected to climb to 21.7% by 2020 which should benefit Alipaygoing forward.

Wealth Management

Wealth management is the largest area of fintech after payments.

There are about 325 million Chinese investors in Yu’e Bao, a number almost as big as the population of the United States and the fund has more assets than the rest of the top 10 Chinese peers combined.

The majority of Yu’e Bao users are millennials under the age of 30 and about 99.7% of its investors are individuals, according to its annual report, rather than companies or financial intermediaries as is usually the case at other Chinese money-market funds.

Credit scoring

Data from the World Bank’s Global Findex study revealed that the bank account ownership rate among individuals aged 15 and older is quite high in China (79% in 2014) yet credit usage is relatively low at 14% in 2014.

The People’s Bank of China covers credit profiles for just about 25% (around 350 million) of China’s 1.3 billion population and shares this data only with selected banks. This absence of reliable credit scoring is partly the reason individuals and small enterprises experience difficulty obtaining a loan from China’s state-controlled banking system which tends to favor large corporates and state-owned enterprises.

Lending

Credit data from the system will also be used to support lending activities at Ant Financial’s MYbank, an internet-only bank which provides loans to SMEs. Set up in mid-2015, the bank will extend loans up to US$800,000 as well as smaller loans that state banks usually don’t pay much attention to.

China has just 8.1 commercial bank branches and 55 ATMs per 100,000 people. This compares with US and Canada which have 28.2 branches and 222 ATMs per 100,000 people and in Europe where there are 28 branches and 81 ATMS per 100,000 people.

PBOC calls upon fintech firms to help fund system to monitor online transactions (SCMP), Rated: A

China’s central bank has urged financial technology (fintech) companies to help pay for a government-controlled monitoring system to watch over financial transactions on the internet.

Sun Guofeng, director general of the People’s Bank of China’s research institute, said the fast-growing fintech businesses have ratcheted up pressure on authorities to invest heavily in regulatory technology, or regtech, but he pointed out that it would be unfair to cover the costs by using taxpayers’ money.

Merger and acquisition may be the future trend for P2P lending sector (Xing Ping She), Rated: A

Recently, Dianrong announced that the company has purchased Quark Finance, Quark Credit Workshop and its related branches and teams. Before that, the merger has been spread for a long time. The merger seems indicate a direction for P2P lending platforms: small platforms might be realise the compliance requirements by being merged, and big platforms also could expand and increase their market share through the acquisition. Thus, mergers and acquisitions might become the next new wave of the P2P lending industry in China.

PwC: Fintech Survey China 2017 (Crowdfund Insider), Rated: A

There are three main areas of finance that are poised to be irreversibly changed, according to PwC. Consumer banking, investment & wealth management and transfers & payments are becoming pretty much all digital and data driven.

Some high level bullet points on China and Fintech include:

  • 68% of financial institutions expect to increase Fintech partnerships in the next three to five years
  • 85% believe mobile apps are the fastest growing customer channel
  • 71% regard price wars as one of the challenges of Fintech
  • Personal loans are at the top of the list for moving to Fintech over the next 5 years

Download the full report here.

European Union

German fintech factory FinLeap raises EUR39 million (Finextra), Rated: AAA

FinLeap, the startup platform behind Germany’s solarisBank, has secured EUR39 million in equity capital to support its ongoing fintech incubation programme.
Having launched twelve fintech ventures so far – including bank account switching platform FinReach, digital debt management outfit Pair Finance, insurance broker Clark, and Germany’s solarisBank – FinLeap is already active in ten European countries.

Regulating FinTech: the Way Forward (Fexco), Rated: A

On Friday 14th July Brian hosted an event at the European Parliament offices in Dublin entitled ‘Regulating FinTech: the Way Forward’. Speakers at the event were the Minister for Financial Services Michael D’Arcy TD, Neil Ryan, COO Quaternion Risk Management; Derek Butler, CEO Grid Finance; Camille Blackburn, Central Bank of Ireland, and Ruth McCarthy, Director of the FinTech and Payments Association of Ireland and CEO of FEXCO Corporate Payments.

The panel discussed regulatory responses to FinTech services at EU and domestic level, as well as examining opportunities within the FinTech ecosystem in Ireland.

Strong networks, good government supports and the presence of major innovators are enabling Ireland to stay at the cutting edge, and these factors will help Ireland to achieve its IFS2020 target for job creation in financial services.

Bricknode: Reporting To fFnancial Regulators With The XBLR Format Creates Confusion (Mondovisione), Rated: A

Financial institutions of various types are required to conduct periodic reporting to local regulators, like the Swedish Financial Inspection and EU-authorities like the European Banking Authority. Following the financial crisis of 2007/2008 numerous resolutions were past to increase regulations of the participants in financial markets. These initiatives are now being implemented regularly. Both MiFID II and MiFIR are scheduled to be implemented as of January 2018 with extensive reporting requirements and scarce information of how this should be implemented practically. During 2017, financial institutions and FinTech companies were impacted by EU-reporting in practice. One example is the reporting file format called XBLR were a lot of confusion exists.

International

Fintech Use Reaching ‘Mass Adoption’ Among Digital Consumers (The Financial Brand), Rated: AAA

Findings from the EY Fintech Adoption Index 2017, published by EY, indicate that fintech firms are approaching mass adoption among digitally active consumers. Leveraging digital technology, combined with personalized solutions, fintech firms are differentiating the customer banking experience. Simplicity, clean design, personalization, real-time insights and transparency are the defining components of these new solutions.

The four key themes that emerged from the 2017 EY Fintech Adoption Index were:

  1. Fintech services have reached mass adoption in most global markets
  2. New services and players are driving increased adoption
  3. Fintech users prefer digital channels and technologies
  4. Fintech adoption will continue to gain momentum

According to the EY report, some of the primary strategies used by fintech firms to gain traction include:

  • Offering a service for free or at a much lower cost that traditionally had a cost associated
  • Solve a problem an existing customer base
  • Provide an entirely new service
  • Create word-of-mouth advocates
  • Build a strong brand identity
  • Leverage highly targeted marketing

The most dramatic variance between fintech users and non-users is the ways consumers prefer to manage their lives. According to EY, “64% of FinTech users prefer managing their lives through digital channels, compared to 38% of non-FinTech users. FinTech users are also more likely to be users of non-fintech digital platforms, such as on-demand services (digital taxis, online food, etc.) and the sharing economy (bike and housing rentals).”

India

Alt Lending platform OxyLoans plans to raise Rs 200 cr debt (MoneyControl), Rated: AAA

The city-based alternative lending platform, OxyLoans, today said it is planning to raise a debt of Rs 200 crore to meet the requirements of borrowers.

He said they have over 240 asset-backed applications from borrowers, and expressed hope to complete the process (raising debt of Rs 200 crore) within six months.

Thatavarti further said that OxyLoans, which has set a loan disbursal target of Rs 156 crore in three years, has facilitated loans to the tune of Rs 64 crore in the last nine months.

This startup is an end-to-end digital platform for lenders and borrowers – TachyLoans (KnowStartup), Rated: A

TachyLoans is an online lending marketplace catering to both Individuals & Small and Medium Enterprises (SMEs). Their platform is based on Peer-to-Peer lending paradigm that uses the proprietary credit decision model designed with some of the best and innovative practices in the financial industry using the cutting edge technologies like Artificial Intelligence & Machine Learning and is built through state of the art technology.

Founded by Brahma, TachyLoans is based out of Bangalore and was established in the year 2016. Brahma brings to the table more than 20 years experience and expertise in Retail Banking, Sales, Marketing and Operations.

When airlines don’t have parachutes, why should P2P lending platforms have LPF? (India Times), Rated: A

The regulations will lay out the corporate structure that each of the platforms would need to follow and most importantly the DOS and Don’ts related to dealing with lenders and borrowers. However, of late, there has been an interesting trend of platforms coming up with a lender protection fund. What does it do? In case a lender loses the money he has extended to a borrower as a loan, the lender protection fund is expected to cover the losses for the investor. On the face of it, it sounds like a good idea, but if you dig deeper, there are several issues.

The flyer is aware of the risk, but he trusts the plane. You have a life vest under your seat for an emergency landing on water, but you do not have an escape pod that can be activated if a flight is about to crash. Similarly, the lender on a P2P site should be able to trust that the lending platform has built a system that can help Lender earn higher returns by mitigating risk. While a P2P platform cannot shirk its responsibilities when it comes to investor protection, having a fund to mitigate losses is not the answer. Proper systemic safeguards and strong ethics should alone suffice.

Launching LPF would in some ways signal that a platform does not have confidence in its own credit evaluation and risk-mitigation system.

Paytm invests in Mobiquest (e27), Rated: B

India’s leading digital payments and m-commerce company Paytm has made an investment in loyalty app developer Mobiquest. The funding amount was not disclosed.

Asia

Fintech non-profit launches database for financial technology startups in Singapore (Tech in Asia), Rated: AAA

The Singapore Fintech Association (SFA) announced today it has created an online directory for fintech companies based in the city-state. The database contains a short description of each company and information about its founding team, funding status, and business model.

Currently listing around 300 startups, the database is free to use and data is maintained by the companies themselves. The directory looks similar to Crunchbase and Tech in Asia’s own startup database, but it’s exclusive to fintech.

The SFA built the directory in collaboration with US data company Let’s Talk Payments and its Medici platform, which provides information and resources about the fintech industry.

South Korean FinTech Firms To Offer International Money Transfer Services (ETH News), Rated: A

According to The Korea Heraldofficials at South Korea’s Financial Supervisory Service (FSS) announced last week that they expect approximately 40 FinTech firms to provide international money transfer services starting August 15.

Per Yonhap News Agency, South Korea’s international money transfer market currently totals approximately 10 trillion won ($8.7 billion). Opening the market to FinTech firms will encourage competition and drive down costs to consumers since the companies can offer money transfer services at much lower prices than traditional banks.

Single transfers via FinTech firms will be capped at $3,000, and individual annual limits will be set at $20,000. For FinTech firms to qualify for the FSS permit, they must possess 2 billion won ($1.77 million) and a debt-equity ratiobelow 200 percent.

Authors:

George Popescu
Allen Taylor