Tuesday September 11 2018, Daily News Digest

AEP

News Comments Today’s main news: Betterment adds financial advice packages. Funding Circle the fastest growing P2P lender in UK. TransferWise revenue almost doubles. China’s P2P lending problems hit consumer spending. Lending Club CEO says U.S., China need clearer P2P lending regulations. Today’s main analysis: Funding Circle’s IPO, and aggregate excess payment. Today’s thought-provoking articles: How China tech companies are […]

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News Summary

United States

Betterment Introduces Financial Advice Packages (Markets Insider), Rated: AAA

Betterment, the largest, independent online financial advisor, today announced it will be piloting a new line up of financial advice packages, expanding its access to personalized advice from licensed financial experts. This new service furthers Betterment’s commitment to making advice more accessible and personalized.

Varo Money Bank Charter; Funding Circle IPO (PeerIQ), Rated: AAA

Early this week, Funding Circle announced plans to raise £300Mn on the London Stock Exchange through an IPO, valuing the company at up to £1.65 billion. To date, Funding Circle has originated over £5 billion in loans across Europe and the United States. Funding Circle has grown revenue by a 54% CAGR to £63 Mn in the first half of 2018. Funding Circle charges 100bps for servicing and estimates it receives revenue equal to almost 5% of loan value originated.

Source: TransUnion, PeerIQ

Chinese tech giants are dominating North America in VC funding (Markets Insider), Rated: AAA

Chinese companies have outpaced their North American rivals in funding startups for the first time — even as the country’s economy shows signs of slowing down.

In the second quarter, China-based companies recorded $30.9 billion of venture-capital investment, higher than North America’s $27.2 billion, according to data from Goldman Sachs.

What I Learned at LendIt Fintech China 2018 (Lend Academy), Rated: A

Hu Liming from Tencent Financial Cloud talked about the importance of the AI offerings within their cloud computing platform. AI is powering their anti-fraud offerings, their lending process, their collections and customer service efforts. More than 20 of the largest banks and insurance companies in China are using Tencent Financial Cloud for their core services.

Ken Lin of Credit Karma (Lend Academy), Rated: A

In this podcast you will learn:

  • How the work Ken was doing at Prosper led to the founding of Credit Karma.
  • When Ken realized that Credit Karma was going to be a sizable business.
  • The key drivers of adoption early on in their business.
  • How Credit Karma’s business has evolved over time.
  • The different verticals they are in today.
  • How Credit Karma makes money.
  • What it means when Credit Karma says a consumer is pre-qualified for a loan.
  • How exactly they are integrated with the platforms when it comes to credit approvals.
  • How platforms can reduce their customer acquisition cost when they’re working with Credit Karma.
  • What autonomous finance means and why it is critical to the future of personal finance.
  • Why finance is not autonomous today.
  • The story behind their recent acquisition of the mortgage platform Approved.
  • The total number of consumers who have a Credit Karma account today.
  • How Ken thinks about geographic expansion at Credit Karma.
  • Where they are at with IPO plans.
  • What Ken is working on today that he is most excited about.

Places Where Millennials Carry the Most Debt (Markets Insider), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today released its study on the places where millennials carry the most debt. The study found that student loans make up the biggest share of millennial debt, but auto loans are close behind. The study revealed that the typical urban millennial carries significant debt; the average debt balance for millennials living in the 50 biggest U.S. cities is $23,064.

  • Millennials in San AntonioPittsburgh, and Austin, Texas, shoulder the largest debt burdens of the 50 biggest metros, with median non-mortgage debts of $27,122$26,403 and $26,164, respectively.
  • Three California cities — San JoseSacramento and Los Angeles — have the lowest median balances on the list at $18,376$18,691 and $19,299, respectively.

In the top 10 cities, more than half of millennials have outstanding debts totaling $25,000 or more (not including mortgages), and roughly 1 in 4 millennials living in these cities owes more than $50,000.

The 10 Places Where Millennials Carry the Most Debt

(Excluding Mortgages)

Rank

Metro

Median
Balance

1

San Antonio

$27,122

2

Pittsburgh

$26,403

3

Austin, Texas

$26,164

4

Houston

$25,978

5

Jacksonville, Fla.

$25,947

6

Dallas

$25,939

7

Washington

$25,810

8

Virginia Beach, Va.

$25,591

9

Oklahoma City

$25,351

10

Columbus, Ohio

$25,129

Sacramento homebuyers are among the most financially stretched in the nation, study shows (Sacramento Bee), Rated: B

Area buyers took out mortgages in 2017 that were on average 3.2 times larger than their annual income, according to a study by Lending Tree, an online loan marketplace. The national average is 2.56.

That ranks Sacramento 10th nationally among the country’s 50 largest metro areas.

Six California cities are in the national top 10, a sign that Golden State residents are stretching more to buy a home than those living elsewhere.

LendingTree is the secret success story of fintech (TechCrunch), Rated: A

For all of the excitement centered around fintech over the past half-decade, most venture-backed fintech companies struggle to acclimate to public markets. LendingClub and OnDeck have plummeted since their late 2014 IPOs after several years of darling status in the private markets. GreenSky, which went public in May of this year, has been unable to return to its IPO price. Square is the exception to the rule.

Sometimes we overlook the companies that hail from the era that precedes the current wave of fintech fascination, a vertical which has accumulated over $100 billion in global investment capital since 2010.

PeerStreet Expands Real Estate Investing Options with Shorter-Term Notes (Business Wire), Rated: A

PeerStreet, an award-winning platform for investing in real estate backed loans, today announced the addition of a new investment option, Cash Offer Loans. Cash Offer Loans are a new investment option that provides PeerStreet investors with a shorter duration than typical bridge loans.

Baltimore financial technology start-up gets $ 33 million investment (The Baltimore Sun), Rated: A

Facet Wealth, a Baltimore-based financial services startup, has attracted a $33 million investment led by a New York-based venture capital firm.

Finitive Facilitates $ 50 Million Warehouse Line Of Credit For Bungalow (PR Newswire), Rated: B

Finitive (www.finitive.com), a financial technology platform providing institutional investors with direct access to alternative lending investments, announced today the closing of a $50 million senior secured warehouse credit facility for Bungalow (bungalow.com). This transaction was the first of its kind in the co-living sector.

4 Interesting Investment Strategies With Good Yields (Influencive), Rated: A

4. Peer-to-Peer Lending

Lending clubs have revolutionized how small businesses get money and act as a third party between individuals who want to lend money and people who need it. You can think of it as a peer-to-peer lending system that’s normally backed up and insured. You could get around 7% with one of these investments.

United Kingdom

Funding Circle remains fastest growing P2P firm (P2P Finance News), Rated: AAAA

FUNDING Circle has retained its place as the fastest growing peer-to-peer lending firm in the latest Sunday Times Hiscox Tech Track 100.

Fellow ‘big three’ P2P platform Zopa also featured in the list, which was published on Sunday. However, the smallest member of the ‘big three’, RateSetter, has dropped out of the annual league table.

Funding Circle confirms more details of IPO (P2p Finance News), Rated: A

FUNDING Circle has unveiled more details of its plan to raise £300m through a listing on the London Stock Exchange’s main market in October.

The peer-to-peer lending platform said retail investors will be able to apply for shares via intermediaries such as Hargreaves Lansdown, AJ Bell Youinvest and The Share Centre, with a minimum application size of £1,000.

Funding Circle plans October listing in British ‘fintech’ first (Channel News Asia), Rated: B

Funding Circle will test investor demand for British peer-to-peer lenders in a listing scheduled for October and expected to value it at more than 1.5 billion pounds (US$1.94 billion).

Capitalising on high-street banks’ retreat from lending to that sector since the financial crisis, it has facilitated more than 5 billion pounds in loans to more than 50,000 companies across Britain, the United States, Germany and the Netherlands.

Fintech start-up TransferWise reports second year of profit, revenue almost doubles (CNBC), Rated: AAA

TransferWise, one of Europe’s largest financial technology (fintech) start-ups, said Monday it was profitable for the second year in a row.

The London-headquartered money transfer firm reported an annual post-tax net profit of £6.2 million ($8 million) for the fiscal year ending March 2018.

Annual revenue nearly doubled to £117 million during the period, from £66 million the previous year, TransferWise said. Operating profit came in at £9.5 million following a loss of £519,000 last year.

101 Fintech Disrupters (BusinessCloud), Rated: AAA

See the full list.

The unique side of Crypto Lending and why it could be the option to reduce risk (London Loves Business), Rated: AAA

Crypto lending or digital asset backed loan is comparatively a new concept used in earning profits without much effort. It revolves around the concept of shorting. Perhaps, you do not understand how shorting works, do not worry because all you need to know is that you are lending fund to others who are making short trades. In exchange for the funds, you get an interest rate that goes from 5% to 50% each year.

OakNorth just landed a $ 2.3 billion valuation (Business Insider), Rated: A

ACORN OakNorth, a UK-based alt lender focused on small- and medium-sized businesses (SMBs) and property financing, has secured a £78 million ($100 million) funding round from the EDBI of Singapore, NIBC Bank, Clermont Group, and Coltrane Asset Management. OakNorth’s loans have helped create 8,500 homes in the UK and 8,000 jobs.

Wonga payday loans collapse shows extent of UK poverty (World Socialist Web Site), Rated: A

The UK payday loan industry grew rapidly from 2008-2012, coinciding with the global financial crash and the pauperisation of millions of people in the UK. The numbers of loans issued in this period were 10.2 million per year, with a value of £2.8 billion.

Wonga’s posted pre-tax profit losses in 2016 of nearly £65 million, after recording huge profits just a few years before.

In its 2014 review of the payday loans industry, the FCA found that the average income of a payday lender was £16,500 a year, far below the UK’s median wage of £26,500 at that time.

The CMA found most recipients (52 percent) of payday loans have experienced financial problems in the recent past, with 38 percent of all customers having a bad core/credit rating and 10 percent of customers having had a bailiff or debt collector visit to their home. Over half (53 percent) use payday loans to pay for living expenses, food, utility bills—with 7 percent having to use these loans to pay for general shopping such as clothes and household items.

Crowd2Fund publishes loanbook and performance data (P2P Finance News), Rated: A

CROWD2FUND is publishing its loanbook for the first time and has analysed the data to forecast investor returns more accurately.

Detailed information on loans, including late repayments and defaults, will now be available to read online, as well as rates offered to borrowers and investors’ returns.

The House Crowd launches development finance offering (Development Finance Today), Rated: A

Borrowers can apply for funding ranging from £500,000-£5m over a maximum loan term of 24 months, with interest rates starting from 8% per annum and both arrangement and exit fees at 2%.

China/Hong Kong

Implosion of China’s P2P Lending Boom Hits Consumer Spending (Wolf Street), Rated: AAA

The Chinese government legalized peer-to-peer lending platforms in 2015. P2P sites attract money from individual investors – mostly savers – by offering them extraordinarily high yields. They lend this money at high interest rates to borrowers who have trouble getting loans elsewhere – classic subprime. By the end of 2017, there were over 8,000 P2P platforms, according to the People’s Bank of China, with over 50 million registered users. By the end of June, in a little over two years, the industry had gone from zero to $190 billion in outstanding loans.

In May, new vehicle sales still surged 7.9% from a year ago. Through the first five months of the year, sales were up 5.1%. But in June, the year-over-year sales increase eased to 2.3%. And in July, sales actually fell 5.3% year-over-year.

That 5.3% decline in July was a big, sudden, and unexpected swing from the 7.9% surge in May.

Mother Hangs Herself After Becoming a Victim of China’s P2P Crash (The Epoch Times), Rated: A

Around 4 a.m. on Sept. 7, construction workers in Jinhua, a city in eastern China’s Zhejiang Province, found the body of a woman hanging from a tree in a park. She was Wang Qian, a 31-year-old single mother who had lost her savings in China’s recent peer-to-peer (P2P) lending crash.

Wang worked as an individual seller on Taobao, a Chinese shopping site similar to eBay. She lost about 260,000 yuan ($37,990). She had invested her money in P2P platform PPMiao, which collapsed on Aug. 6. She lost about 260,000 yuan ($38,000).

9F, fintech company with 63 million mainland Chinese users, eyes Hong Kong virtual banking licence (SCMP), Rated: B

Mainland Chinese financial technology company 9F Group has teamed up with local and international firms to apply for a virtual banking licence in Hong Kong.

European Union

The Hottest Fintech, Insurtech Startups in Berlin (Inside Bitcoins), Rated: AAA

Launched in 2013, N26 is a German neo-bank and one of the fastest growing banks in Europe. It serves more than 1 million customers, both businesses and individuals, across 17 European markets, and intends to enter the UK market in 2018 and the US market in 2019.

Smava is a loan portal that aims to make personal loans transparent, fair and affordable for consumers. Based on digital processes, Smava provides a market overview of 70 loan offers from 25 banks. As of January 2018, Smava had originated over US$3 billion in loans through its platform since inception.

Raisin is a fintech startup providing savings and investments marketplaces across Europe. The company operates several localized platforms for the German, French, Spanish, and Austrian markets, and more. These allow savers to shop and compare rates European-wide. In February, it launched a dedicated UK site, enabling savers to access deposit accounts in GBP, and another platform dedicated to the Dutch market in August.

SolarisBank is a platform with a full banking license which enables companies to offer their own financial products. Through APIs, partners gain access to SolarisBank’s modular services including payments and e-money, lending, digital banking as well as services provided by integrated third party providers.

Launched in 2014, CrossLend is a B2B marketplace lending platform that specializes in flexible refinancing via a capital market structure. CrossLend also offers cross-border credit intermediation through cooperation with a partner bank. The company aims to facilitate the borrowing, investing, and trading of money across the globe.

Founded in 2016, Billie offers a fully automated invoice financing platform that aims to “revolutionize small business financing.” Based on big data analytics, fully digitalized processes and a highly scalable state of the art tech platform, the company offers a simple and fast way for small businesses to access capital.

Real Estate Platform Zinsbaustein Receives Additionaly Investment from Sontowski & Partner Group (Crowdfund Insider), Rated: B

Real estate crowdfunding platform zinsbaustein.de has received additional backing from the Sontowski & Partner Group.

Zinsbaustein founding group FinLeap has sold its stake in the firm and is now focusing on building the recently introduced “B2B2X Fintech” platform.

International

Lending Club CEO: US’s and China’s P2P lending need clearer regulation and communication (TechNode), Rated: AAA

The idea became popular when it was first proposed around a decade ago. The then fast-growing sector fostered a series of unicorns. US P2P pioneer Lending Club was valued at $5.4 billion in its 2014 IPO and its peer Prosper was valued by private investors as worth $1.9 billion in its prime. Although a few years later than its foreign counterparts, Chinese P2P platforms have grown rapidly with leaders in the sector such as Hexindai who has gone public, and the likes of Lufax and Dianrong poised for an IPO.

Australia/New Zealand

Non-banks emerge as traditional banks retreat (NZ Adviser), Rated: AAA

The peer-to-peer lending space is gobbling up market share in mortgages as banks appear to be lending less to homebuyers, says one P2P mortgage lender.

Non-bank Southern Cross Partners is growing 20% year-on-year as the banks retreat from funding house, and sector demand grows, Southern Cross Partners chief executive officer Luke Jackson said.

Southern Cross enjoys strong year (Good Returns), Rated: A

The company’s total value of loans under arrangement  grew 24.8% in the year to date, as growth in investor funds rose 19.9%.

In a city that needs 13,000 houses a year to keep up – but only 7,000 are being built annually – lack of funding will only make the housing crisis worse.”

Asia

The Chinese P2P crisis and what Southeast Asia can learn from it (KrAsia), Rated: AAA

Merely three years ago, peer to peer (P2P) lending in China was hailed as the banks of tomorrow and the harbinger of financial innovation. Powered by technology and ever burgeoning rounds of funding and valuation, P2P lending was set to disrupt financing the world’s 2nd largest economy dominated by state owned (or sponsored) banks. The new elites in jeans and T-shirts would show the suited up old guard how finance is supposed to work. Here came the new finance, Silicon Valley style – with Chinese characteristics.

Fair was its blossom; and wretched is its downfall. By June 2018, the Chinese financial information provider 01Cajing reported only 1504 functioning P2P platforms, down from over 3000 in the heydays. The change in fortune is as swift as it is bizarre. Is this an omen of darker times to come for South East Asian marketplace lending? Before this question can be addressed, it is necessary to disentangle how the crisis precipitated in China, and the confluences of forces behind the calamity.

Peer-to-peer lenders plan to self-regulate (Korea JoongAng Daily), Rated: A

On Monday, the Preparatory Committee of the Digital Finance Association announced a series of self-imposed regulations that it plans to apply to all member companies when the association kicks off later this year.

Lendit, 8percent and Popfunding, the three P2P firms in the preparatory committee, left the older Korea P2P Finance Association in May along with other firms due to disagreements over its management direction.

Authors:

George Popescu
Allen Taylor

Thursday July 27 2017, Daily News Digest

fintech adoption millennials

News Comments Today’s main news: Betterment expands financial advice to all users. Lendio originates $500M in business loans. UK fintech funding jumps 37%. Linked Finance secures more than 1M Euro for Waterford businesses. Fintech adoption in Canada doubles in 18 months. Today’s main analysis: Marketing fintech solutions to millennials. Today’s thought-provoking articles: The SEC investigative report that will put […]

fintech adoption millennials

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United States

United Kingdom

China

European Union

International

Australia

India

Asia

Middle East

Africa

Canada

News Summary

United States

After raising $ 70M, Betterment expands financial advice to all users (TechCrunch), Rated: AAA

On the heels of announcing a fresh $70 million in funding led by Swedish investment firm Kinnevik AB, Betterment is launching a new messaging feature that will allow users to ask questions and get answers from its team of financial advisors.

With its new messaging product, Betterment is offering up personalized financial advice to a larger portion of its user base — that is, anyone with an account. Customers can send secure messages through the Betterment app to ask for financial advice and get a response within one business day from one of the company’s experts.

Lendio Surpasses $ 500 Million in Business Loans Originated Through Its Online Marketplace (PR Newswire), Rated: AAA

Lendio, the nation’s leading marketplace for small business loans, today announced that it has helped facilitate more than $500 million in financing to over 21,000 small businesses across the U.S. Lendio helps fuel the American Dream through its marketplace of over 75 small business lenders in all 50 states and parts of Canada. The growth milestone comes after a 141 percent increase in loans originated through the Lendio platform in the last fiscal year.

Small business lending indices show that small business borrowing is at its highest level in nearly a year. According to Thomson Reuters/PayNet, business owners are investing to meet customer demand, which is driving the economy. Data from Lendio’s platform is telling a similar story, and it’s not just businesses on the nation’s coastlines that are thriving. A heat map of Lendio’s top states for small business loans, based on loan volume, shows small business growth is booming in America’s heartland, the southern states and beyond.

The average loan size among Lendio’s small business customers is $26,873. The top five industries funded on Lendio’s marketplace include construction, restaurants, retail, healthcare, and manufacturing. Lendio also helps small businesses get loans fast, with 70 percent of businesses getting funding within five days of submitting an application.

MARKETING FINTECH SOLUTIONS TO MILLENNIALS (Envisionit), Rated: A

One of the key factors that set millennials apart from other generations is their adaptation of technology into their everyday lives. They are hyper-connected: disproportionately drawn to mobile and wearable devices for their day-to-day needs; far more likely to make purchases on them instead of computers or in person; and constant users of social media.

Source: Pew Research Center, Social Media Survey, April 2016

Not only are millennials more likely than Gen X’ers and Baby Boomers to use fintech products now, they are expected to use them even more in the future.

  • 68% say that in 5 years, the way we access our money will be totally different
  • 70% say that in 5 years, the way we pay for things will be totally different
  • 73% would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal or Square than from their own nationwide bank
  • 33% believe they won’t need a bank at all in 5 years
Source: EY, EY Fintech Adoption Index, 2016

Although awareness and lead generation campaigns can still be effective, millennials also look for reviews, comments, and other content that will help them trust the brand.

  • 33% say they read blogs before making a purchase
  • 62% say that if a brand engages with them on a social network, they are more likely to become a loyal customer
Source: Google/Millward Brown Digital, B2B Path to Purchase Study, 2014

Here is the SEC Investigative Report on ICOs that Will Squelch Emerging ICO Market (Crowdfund Insider), Rated: AAA

The Securities and Exchange Commission (SEC) issued an investigate report on the fast growing Initial Coin Offering (ICO) market that will squelch the ICO market, at least in the US. This investigation compelled the SEC to determine that DAO Tokens represented securities as defined under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Get the full report now.

The New Breed of Small Business Lenders: Amazon, Paypal and Square (Lend Academy), Rated: A

If asked where to get a small business loan most people would state their local banks or even some of the bigger traditional banks. Those aware of the online lending space may mention the likes of KabbageOnDeckFunding Circle or maybe even some of the new online initiatives of big banks like Wells Fargo’s FastFlex product. However there is another, often overlooked segment of small business lenders and they are names you have heard of: AmazonPaypal and Square.

Since Amazon is a marketplace for sellers they have an incredible amount of data on the cash flow of businesses that operate on the platform. They also have a significant pool of borrowers, resulting in virtually no customer acquisition costs.

Not only can Amazon select the borrowers they want to lend to but lending also helps grow the sales on Amazon.com. Pajitnov initially borrowed $1,000 dollars but eventually borrowed $19,000 to buy out a competitor.

Square is able to efficiently underwrite small businesses and have repayment be based on sales. Square’s average loan size is just $6,000. According to Square’s Q1 2017 earnings release Square Capital facilitated over 40,000 business loans totaling $251 million in the first quarter of 2017, up 64% year over year. The company is reportedly looking to lend to consumers as well.

Digital or doomed? What credit unions need to be top of wallet (Credit Union Journal), Rated: A

Outstanding service on its own isn’t enough for credit unions to get top-of-wallet status with members.

This past quarter, Clark noted, Venmo processed $6.8 billion in total payment volume, double the amount from the same quarter one year prior. These companies are not just processing payments, he said, they are capturing information that can be used to improve the customer experience and build brand loyalty.

Clark pointed to online personal finance company SoFi, which, by leveraging digital, has turned the concept of “scale” on its head. The company has funded $19 billion in loans to 300,000 members, and has resulted in $1.45 billion in member savings.

Clark said credit union management must focus on delivering via digital channels, because payments are now the leading indicator of PFI status, and offering speed, agility and a frictionless experience are critical to growing PFI.

How Real Estate Investing Is Spurring Millennial Home Ownership (Forbes), Rated: A

Millennials are the largest group of home buyers for the fourth consecutive year, according to the National Association of Realtors 2017 Home Buyers and Sellers Generational Trends Report. Nearly 40% of home buyers were under 36 years old.

But most importantly, in a joint Real Estate Investment Survey with Harris Interactive, RealtyShares found that 55% of millennials are enthusiastic about home ownership as an investment, and over half would invest in property other than their primary residence.

In fact, 70% of all Americans think investing in real estate is more difficult than investing in other asset classes. Few are aware of the options towards home ownership, such as borrowing from retirement, real estate crowdfunding or house hacking.

Not surprisingly, millennials believe technology makes the real estate investment process easier.

Realtor.com analyzed the top 10 cities where millennials want to live and (of the 60 largest U.S. cities) found the top were: Salt Lake City, Miami, Orlando, Seattle, Houston, Los Angeles, Buffalo, Albany, San Francisco, and San Jose. Millennials also want homes over 2,375 sq. ft. on average and nearly half surveyed in the March 2016 National Association of Home Builders study said they wanted at least four bedrooms, an outdoor space (deck, patio and front porch), shower and tub in the master bath and hardwood floors on the main level of the home.

CFTC Grants First Authorization to LedgerX to Operate as Clearing House for Digital Currency Derivatives (Crowdfund Insider), Rated: A

LedgerX, has received regulatory approval from the US Commodities and Futures Trading Commission (CFTC) to operate as a clearing platform for derivatives in contracts clearing in digital currencies such as Bitcoin.

This fund offers a more diversified way to dip your toes into alternative waters (The Globe and Mail), Rated: A

So-called “alternative investments” have long been the preserve of pension funds and well-heeled accredited investors, providing access to non-traditional asset classes such as private equity, infrastructure, hedge funds, emerging-market debt and limited partnerships.

Enter mutual-fund giant Mackenzie Financial Corp., which of late has been scooping up $30-million a month in a mutual fund designed to complement an old-fashioned balanced fund and the usual 60/40 asset mix. The Mackenzie Diversified Alternative Fund (“MDAF,” Series A and Series F) has a standard minimum investment of $500, in reach of any investor with a financial adviser. Launched two years ago, it has $350-million in assets, says Allan Seychuk, Mackenzie’s senior investment director of asset allocation.

Household Credit and Local Economic Uncertainty (USC Lusk), Rated: A

This paper investigates the impact of uncertainty on consumer credit outcomes. Individual-level data on credit-card balances and mortgages reveal strong borrower-specific heterogeneity in response to changes in an equity-based measure of county-level economic uncertainty. Low-risk borrowers reduce their credit-card balances and use of mortgage credit in response to increased localized uncertainty, while lenders expand the availability of credit to these borrowers. The opposite is obtained for high-risk borrowers. The economic magnitudes are especially large during the recent financial crisis. This evidence suggests that localized uncertainty about economic conditions might independently affect aggregate economic activity through consumer credit markets.

Source: Household Credit and Local Economic Uncertainty (USC Lusk)

Read the full white paper here.

Why Enova’s tech recruiters look beyond the languages on your resume (Built in Chicago), Rated: A

An early adopter of the Ruby on Rails framework, Enova is one of the city’s biggest Rails shops. But for developers looking to get a job with the online lender, prior Ruby experience is by no means a prerequisite. Enova hires for aptitude and personality, rather than resume bullet points.

What is the most interesting technological challenge to making that happen?

Caprio: Scale. Each year, we process as many loans as a small bank does — but we do it with orders of magnitude fewer people. The only way you can do that is with technology, analytics and massive amounts of efficiencies.

We also have to navigate a globally regulated environment. Each country has different rules and regulations. Some of our teams interact with five different regulating bodies in three different countries. It’s not easy to keep all of those in balance while still having upward of 60 software releases a week.

And then you need to adapt when those rules and regulations change.

Caprio: Recently, the laws in one state changed in a way that required a custom product. We were able to segment it, size it, spec it out and build it in about five weeks. You can’t even get a loan from a bank in four weeks, so the fact that we could actually create a completely new lending product in that time is a testament to what we’re capable of.

Why do you think other companies don’t offer opportunities like that?

Caprio: Our interview process is probably only 30 percent technical, and the rest is behavioral, problem solving and cultural add. We want to see what kind of partner you’re going to be, and what kind of co-worker you’re going to be.

Lahari Manam, technology manager: We also have something called fellowships. If someone has an exciting idea that requires more than a few days for research and prototyping, they can apply for a fellowship to work on it for three or four weeks instead of doing their normal day-to-day work.

Banks may have new foe in cellphone companies (American Banker), Rated: A

Banks have increasingly turned to cellphone devices in helping them to reach customers. But cellphone companies may soon be trying to offer financial services of their own.

In recent years, the country’s largest cellphone carriers have begun to experiment with new financing options for smartphones and other devices.

Easy to raise 28 million US dollars C round financing IDG capital growth fund leader (01Caijing), Rated: A

July 26 news, the domestic mobilization platform was easy to raise in early 2017 to complete the 28 million US dollars C round of financing, the current round of investment for IDG Capital’s growth fund leader, Tencent, IDG, Germany with capital, fellow capital Old shareholders with the vote.

Up to now, easy chip has a total of about $ 65 million financing. The company’s existing investors include Tencent, IDG Capital, Germany with capital, fellow capital, IDG capital growth fund.

Using Peer-to-Peer Lending As A Method For Startup Growth (Forbes), Rated: B

Typically, you can’t borrow more than $35,000, but for many small businesses or startups, that amount (or less) is just the infusion of cash they need.

Some of the immediate benefits of a P2P loan is that no collateral is required. Lower interest rates tend to be available, depending on your credit score, loan amount and loan term, because the peer-to-peer lenders operate with low overhead. You can repay the loan early and not have to contend with any prepayment penalties. Since it is an online lending environment, you’ll also enjoy faster approval and no paperwork except for a few online forms and a digital signature.

First, think about your current credit score to see if you qualify. These P2P lenders are not just giving out loans and want to see how fiscally responsible you are with loans. If you have a low credit score, you may have to work on improving it before this option becomes available.

United Kingdom

UK fintech funding jumps 37% led by Funding Circle, Zopa, Monzo (AltFi), Rated: AAA

The United Kingdom attracted £432m ($564m) of new venture capital investment in the first six months of 2017 representing an uptick of 37 per cent compared to the same period in 2016, according to research from Innovate Finance.

Alternative lending, challenger banks and wealth management  were the top three investment verticals for UK fintech investments with notably large cash raises from Atom Bank, Funding Circle and Monzo.

UK fintech investment smashes pre-Brexit levels so far this year (Independent), Rated: AAA

UK-based fintech startups pulled in $564m (£433m) of venture capital investment in the first six months of the year, more than half of which came from outside Britain.

The latest figures paint a promising picture, with investment up almost 50 per cent on the second half of last year in the aftermath of the Brexit vote.

That still lags 2015, when a record $676m was invested in the first half of the year and over $1.3bn for the entire year. But from July 1 to July 23, the sector has already raised another $155m.

Funding Circle Teams Up With Just Eat to Offer Discounted Business Loans to Takeaway Restaurants (Crowdfund Insider), Rated: A

Peer-to-peer lender Funding Circle has reportedly joined forces with UK-based Just Eat to provide takeaway restaurants with discounted business loans. Funding Circle will now offer nearly 30,000 restaurants that use Just Eat the discounted loans. The takeaway businesses will now be able to borrow up to £60,000 from the online lender.

Salamanca Group Completes Series A Funding for P2P Lender Proplend (Crowdfund Insider), Rated: A

Salamanca Group, a London-based Merchant Bank, announced on Wednesday it recently completed a Series A funding round for peer-to-peer lending platform, Proplend. The company states it facilitated the fundraising through its proprietary network and has also acquired a stake in the online lender.

Identifying the risks of crowdfunding (City A.M.), Rated: A

With the market recently hitting £10bn, crowdfunding is no longer a small fish in the big finance pond. But as the sector expands, it’s also becoming more complex.

In equity crowdfunding, for example, you may buy a small stake in an exciting new business, investing early in the hope of making maybe 10 times your money. The majority of new businesses will fail, so investors should create a broad portfolio on the assumption that over time a few big successes outweigh the failures.

In contrast, lending to more established businesses may not have the potential to make tenfold returns, but consequently the risk of losing your capital is typically lower. This is perhaps why 97 per cent of the £10bn crowdfunding market is in debt-based alternative finance.

Lending Works offers bonus of up to £200 to new and existing investors (P2P Finance News), Rated: B

LENDING Works is offering cash bonuses of up to £200 to new and existing investors for a limited time period.

The peer-to-peer consumer lender said that from Monday 24 July, investors will receive a £50 bonus for every £5,000 they invest. The offer expires on Sunday 20 August, meaning that customers could potentially earn up to £200, if they invest at least £5,000 in each of the four weeks.

Fintech startup Cleo secures £2 million in new round of funding (Tech.eu), Rated: A

Financial management app Cleo has raised £2 million led by Local Globe’s Robin Klein with participation from Atomico CEO Niklas Zennström and Albion founder Jason Goodman.

Launched in January, Cleo uses AI to monitor your bank accounts and manage your money. According to the company, it’s currently managing £400 million in assets where it handles user queries about balances, spending, savings, and bills. Insights are delivered through Facebook Messenger. Its key demographic is under-30s.

‘Leeds has phenomenal potential to become fintech hub’ (Yorkshire Post), Rated: B

YORKSHIRE has phenomenal potential to become a hub for financial technology – or fintech – companies because it is starting to attract fast-growing firms that have moved from London, according to a leading entrepreneur.

Daniel Rajkumar, the owner of investUP, which is based in the Leeds Digital Hub, believes that the region’s traditional financial services sector can join forces with technology firms to secure jobs and investment.

The peer-to- peer lending industry is growing at a rate of around 30 per cent a year.

Mr Rajkumar believes there is great scope to grow the region’s fintech sector, and initiatives like the Leeds Digital Hub are helping to promote collaboration.

Prodigy Finance Takes MBA From McKinsey In India To The UK’s Top-Ranked Business School (Business Because), Rated: B

Close to postponing her enrollment, Vinni was introduced to alternative student loans provider Prodigy Finance, a financial technology – fintech – company, founded by MBAs, for MBAs.

While banks are reluctant to lend internationally, Prodigy Finance’s borderless, peer-to-peer lending model gives international MBA and master’s students – from 150 countries worldwide – access to the loans they need to study abroad.

China

Moderate Regulation Necessary for ICO Projects: PBoC Advisor (Cryptocoins News), Rated: AAA

A senior aide and advisor to China’s central bank has called for the regulation of ICO (initial coin offering) projects while urging investors to show caution.

In an interview with prominent Chinese financial publication Yicai, Sheng Songcheng – a counselor to the People’s Bank of China (PBoC), claimed moderate regulation was necessary for ICOs.

Sheng believes the government should warn investors of the risks whilst ensuring that regulatory moves don’t trample on innovation.

European Union

Irish P2P Lender Linked Finance Secures More Than €1 Million for Waterford-Based Businesses (Crowdfund Insider), Rated: AAA

Irish peer-to-peer lending platform Linked Finance has successfully secured more than €1 million for Waterford-based businesses. According to the Muster Express, over 30 businesses in Waterford have raised funds through the lending platform to facilitate their business growth.

Zinsbaustein Crowdfunds Real Estate Project in Munich (Crowdfund Insider), Rated: A

Zinsbaustein is partnering with well-known development group Demos Wohnbau GmbH, a company with 50 years of expertise in Munich and the surrounding area. The investment crowdfunding platform is giving investors the opportunity to participate in a subordinated loan with as little as €500 at an interest rate of 5.25% per year. The project includes 95 apartments and associated parking spaces. Reportedly, 40% of the apartments have already been sold are have been reserved.

NEW REPORT: Shutting Down PSD2’s New Security Threat (PYMNTS), Rated: A

The July PYMNTS Digital Identity Tracker™, powered by Socure, features news on how security technology providers are using new technology, including biometrics and two-factor authentication, to protect customer data and comply with new regulations surrounding data security.

In fact, according to one recent study, 60 percent of transactions conducted by the start of the next decade will be authenticated and completed using biometric technology.

International

TECHNOLOGICAL LEAPFROGGING: WHY RICH COUNTRIES LAG BEHIND IN FINTECH ADOPTION (Meshed Society), Rated: AAA

The results of a study recently published by the consulting firm EY revealed that China and India have the highest adoption of FinTech services among its online population out of 20 countries. 69 percent of China’s and 52 percent of India’s digitally active citizens have used at least 2 FinTech services over the past 6 months.

In many developed countries on the other hand, where people have over many years learned to associate the Internet with the PC, smartphones still often are being considered a secondary device for many digital tasks; a device that people use only when they are not near a PC. This narrative has naturally been accepted even by the commercial players, which prevented a dynamic advancement of FinTech services similar to the the one which, for example, can be witnessed in China right now.

Source: Meshed Society

Global VC fintech investment attracts $ 6.5 Billion in H1 2017 (Finextra), Rated: AAA

Global VC investment for FinTech in H1 2017 attracted $6.5 billion of VC investment with 787 deals, a 45% decrease year on year, according to statistics compiled through Pitchbook by Innovate Finance, the not-for-profit membership association for global FinTech.

The US attracted the most investment both in deal value, which topped $3.3 billion, and deal volume, with 357 investments in total. Overall, the US experienced a 7.7% increase on H1 2016 deal value, but an 18.5% decrease in deal volume. Last year this quarter, the US secured 438 deals.

The top three global FinTech deals came from the US and China, with American firm SoFi raising the largest round globally at $453 million.

Atom Bank ($102 million), Funding Circle ($101 million), Zopa ($41 million), Monzo ($27 million) and Currency Cloud ($25 million) led the top 5 top UK deals. Collectively the firms attracted $296 million in funding.

Australia

Anna Bligh on open bank data (Innovation AUS), Rated: A

Speaking at the National Press Club on Wednesday afternoon, the former Queensland premier described the various technological changes that the banking sector is facing, singling out open data as the biggest on the horizon that will benefit consumers.

An open banking regime would force banks to share product and customer data with their customers and other third parties with consent.

Ms Bligh said Australian banks would welcome this new open data regime if a focus is placed on security and data safety.

India

How CoinTribe is eyeing disbursal of Rs 600 Cr to small businesses by 2019 (Your Story), Rated: AAA

Conceived in May 2015, their enterprise, CoinTribe, is a loan marketplace focused sharply on Micro-Small Medium Enterprises (MSMEs). The model facilitates not just loan or lead generation for banks, but also assesses a customer’s credit risk through proprietary underwriting engines and provides suitable suggestions.

The startup looks at mainly providing standardised business loans. The company’s website does mention personal loans, but that’s not a focus area.

Including all costs of operations, predictive NPAs (non-performing assets) and margins, CoinTribe gives unsecured business loans at interest rates ranging from 16 to 21 percent. But the average interest rate by portfolio is 19 percent.

Money Laundering And A $ 7.6 Bn Scam: A Grim Look At The Dark Side Of P2P Lending (Inc42), Rated: AAA

News of Ezubao bilking 900,000 investors out of more than $7.6 Bn surfaced soon afterwards. What followed was a country-wide hysteria as part of what is now considered the largest financial scam in Chinese as well as global history.

As per reports by The New York Times, more than 95% of Ezubao’s investment products turned out to be fake.

In April 2016, reports surfaced that Lending Club’s then-CEO Renaud Laplanchemade alterations in loan application documents in order to hasten the transaction process. Laplanche eventually stepped down amidst reports of employee embezzlement, scam and conflict of interest. Following the controversy, Lending Club, which was once valued at $8 Bn, saw a markdown to around $1.7 Bn.

To thwart competition, many companies tend to project lower delinquency rates than the actual numbers. Between 2007 and 2008, for instance, Prosper reported a loss rate of 26.1%. According to third-party verification, however, the company’s default rate during that period was actually around 36.1%.

In the UK, Quakle ceased operations in 2011, as a result of a near-100% default rate.

Known for lending money to individuals with a less-than-stellar credit score, Estonia-based Bondora reportedly has a loan default rate of more than 70%.

All the above factors bring us to the general lack of transparency that continues to plague the P2P lending market, more than 10 years after the world’s first peer-to-peer lending platform Zopa cropped up in the UK.

During the financial crisis of 2007-08, subprime lending was often supported by very little verifiable documentation and credit checks. The originators of the subprime mortgages served only intermediaries that, like the P2P lending platforms, did not have any “skin in the game”. Lenders, on the other hand, had to rely on third-party credit ratings and assessment that were at times unreliable. The lack of transparency was actually one of the major contributing factors behind the housing market scam in 2008.

The average ticket size of peer-to-peer investments in India ranges between $2,330 (INR 1.5 Lakhs) and $3,107 (INR 2 Lakhs). Since interest rates are not fixed, they can be below 10% but, at times, can also reach 30%-40%.

According to a report by Reuters, unsecured personal loans currently constitute 4% of all loans in India. In March 2016 alone, $47.4 Bn (INR 2,96,800 Cr) was issued as personal loans to the country’s 1.31 Bn population.

FinTech Firms Alibaba and Paytm in Talks over India’s Leading Online Grocer (Cryptocoin News), Rated: A

Asia

China, India deals lift Asian venture capital fintech financing to US$ 2.7b (SCMP), Rated: AAA

That was up from US$1.6 billion generated across 55 transactions in the same period last year, and marked the highest number of fintech deal activity in Asia for the past five quarters, according to a new report from venture capital research firm CB Insights.

Overall funding raised by venture capital-backed fintech start-ups in Asia last year hit a record US$5.4 billion across 165 transactions, compared with US$4.8 billion over 162 transactions in 2015.

The region’s latest quarterly fintech tally surpassed the US$2 billion raised in North America and about US$500 million in Europe during the same period. The global total was US$5.2 billion over 251 deals.

Asia’s top-ranked fintech deal, however, was the US$1.4 billion investment made in May by Japanese telecommunications and internet conglomerate SoftBank Group Corp for a minority stake in One97 Communications, the parent of Indian digital payments giant Paytm.

That was followed by the US$292 million Series D, or fourth round, fundraising by mainland peer-to-peer lending platform operator Tuandaiwang in the same month.

From Porn Filter to Credit Rater (Forbes), Rated: A

Remark has managed to collect data from almost every social media site on Earth: 1.3 billion active user profiles, 10 billion images, 15 billion posts and 50 billion comments are gathered from Tencent, Alibaba, Facebook, Twitter and others. Remark’s intelligence platform, KanKan, was assembled to analyze data and build facial-recognition algorithms to help live-streaming companies filter out pornography.

Now the New York-born Tao, 40, has decided that credit rating in China has a more stimulating future.

The company, with $59 million in revenues in 2016, claims to have signed up one of China’s largest banks for KanKan.

Middle East

Islamic crowdfunding: Spotlight on real estate (Gulf Times), Rated: A

MercyCrowd offers for the first time to the people in Qatar opportunities for international real estate purchases through crowdfunding. Not only that, the platform puts an emphasis on socially responsible investments, which means it offers international premium property to as many people as possible and not just the wealthy upper bracket, and also obeys ethical financing and actively promotes donations.

Via its platform, people can either become investors in lettable real estate with minimum investments as little as £50 and projected returns of between 4% and 10% annually plus a potential capital appreciation when the property is sold, or sponsors looking to fund their property through crowdfunding.

Africa

Uganda on the Fintech curve (IT News Africa), Rated: AAA

Fintech today has many variations, one of the most widespread being payments in the form of mobile payments, mobile wallets and payment apps. In Uganda, “mobile money” is the most ubiquitous of these.

Another category is investment management through the use of robo-advisors (machine learning and artificial intelligence) for wealth and retirement planning. We see Fintech in fundraising through equity and non-equity crowd funding platforms for access to private and alternative investment opportunities and online lending platforms. Fintech is also making its presence felt in deposits and lending, especially peer-to-peer or marketplace lending. Digital currencies such as Bitcoin have emerged and are growing in significance and popularity.

Fintech is an intersection of finance and technology and, in Uganda’s case, there is lack of clarity as to the main regulator. Should Fintech be regulated as Finance or as Technology?

Canada

FinTech adoption rate more than doubles in 18 months (Insurance-Journal), Rated: AAA

Canada’s FinTech adoption rate has more than doubled in the past 18 months, going from 8 per cent to 18 per cent since 2015, says EY’s 2017 Fintech Adoption Index released July 25.

 

Authors:

George Popescu
Allen Taylor