- Today’s main news: Fannie Mae says SoFi’s home loan refinance program may include other lenders.
- Today’s main analysis: International P2P lending volumes.
- Today’s thought-provoking articles: FT Partners’ CEO FinTech market analysis. Why equity crowdfunding cap should be raised. Bridg offers Bluetooth-enabled mobile payments.
- Interview with Fannie Mae’s Jonathan Lawless. AT: “This is important because Lawless outright says the SoFi program will likely be rolled out to other lenders.”
- FT Partners’ CEO FinTech market analysis. AT: “If you’ve been struggling to keep up with key transactions in the FinTech sector, this is a must-read.”
- Should the equity crowdfunding cap be raised? AT: “Robin Sosnow makes convincing case.”
- U.S. digital payments market expected to reach $4,300B.
- Three tech trends to impact small business lending.
- Will OCC’s new charter go beyond FinTech?
- Alt investment professionals to speak at annual VC conference.
- International P2P lending volumes. AT: “The leader last month was Funding Circle.”
- P2P Banking predictions for 2017.
- Top 10 Baltic FinTech companies. AT: “Interestingly, six out of 10 are based in Latvia. Three of the other four are in Estonia. Several of them are important outside of their home countries.”
- UAE-based Bridg offers Bluetooth-enabled mobile payments. AT: “This is super innovative. It doesn’t surprise me that it comes from this region of the world, and I think Bridg has the potential to be a major player internationally.”
- United States
- New Home Loan Refinance Product May Help Address Student Debt Debacle (MortgageOrb), Rated: AAA
- FT Partners’ CEO Monthly FinTech Market Analysis (FT Partners Email), Rated: AAA
- A Million Bucks Crowdfunding… Not Enough? (Crowdfund Insider), Rated: AAA
- US digital payments market is expected to reach $ 4,300 bn in the future (India Info Line), Rated: A
- Three Tech Trends That Will Impact Small Business Lending (Forbes), Rated: A
- Will OCC’s New Charter Go Beyond Fintech Firms? (National Mortgage News), Rated: A
- 23rd Annual VC & Private Equity Conference Announces Keynote Speakers and Agenda (BusinessWire), Rated: B
- International P2P Lending Volumes December 2016 (P2P-Banking), Rated: AAA
- P2P-Banking’s Lehmann: Predictions for 2017 (Crowdfund Insider), Rated: B
- European Union
- Top 10 Fintech companies in the Baltics (TechBullion), Rated: AAA
- Hong Kong to rank top again this year for global IPOs, PwC predicts (South China Morning Post), Rated: AAA
- Financial authority issues regulation on fintech lending (The Jakarta Post), Rated: AAA
- UAE Tech Duo’s ‘Bridg’ Offers Bluetooth Route To Smarter Mobile Payments (Forbes), Rated: AAA
New Home Loan Refinance Product May Help Address Student Debt Debacle (MortgageOrb), Rated: AAA
Jonathan M. Lawless, vice president of single-family analytics and affordable housing at Fannie Mae, says research shows that borrowers who use home equity to pay down student debt perform well on their mortgages.
Q: How does SoFi’s cash-out refinance program work? What kind of loan-to-value (LTV) mortgages are eligible? Is this offering only for primary residences?
Lawless: This program allows borrowers to refinance their loans and increase their loan amounts to use the additional cash to retire student debt, which typically carries a higher interest rate. This will allow borrowers to increase their balances up to 80% LTV, to keep people from taking on more debt than they can handle, and requires that the property be their primary residence. The mortgage being refinanced does not need to be an existing Fannie loan. The loan – as long as it meets our standards – will become a Fannie loan once it is refinanced.
Q: By some estimates, about $1.4 trillion of student debt is outstanding. How many homeowners could benefit from the cash-out refinance program?
Lawless: SoFi estimates that 8.5 million Americans with or co-signed on student debt also own a home. A large share of those homeowners is likely to have equity to use to pay down student debts.
Q: How did SoFi and Fannie Mae come together to create this novel cash-out refi program for student debt?
Lawless: Fannie Mae has been working on a variety of programs to address the significant burden that student debts have put on achieving homeownership. When we started thinking about how to leverage the close to $8 trillion of home equity today to lessen some of the $1.4 trillion of student debt, we approached SoFi, a new customer of ours, to learn about student debt and refinancing. Through those discussions, we developed this program.
Q: Will this cash-out refinance program be made available by other lenders?
Lawless: Our intention is to make this program available to all lenders, depending on the level of consumer interest and final approvals from our regulator. Our hope is that this will be made widely available early next year.
FT Partners’ CEO Monthly FinTech Market Analysis (FT Partners Email), Rated: AAA
FT Partners regularly publishes profiles on key transactions in the FinTech sector. Please feel free to download these reports below. And if you don’t already, please follow us on Twitter and connect on LinkedIn for more real time updates.
* SquareTrade Sells to Allstate for $1.4 billion (FT Partners advised)
* CardinalCommerce Sells to Visa (FT Partners advised)
* Heartland Payment Systems Sells to Global Payments for $4.5 billion (FT Partners advised)
* Guidewire Acquires ISCS for $160 million
* SANNE has Agreed to Acquire IFS for $127 million
* GreenSky Raises $50 million in Minority Financing from Fifth Third (FT Partners advised)
* Nav Raises $25 million in Series B Minority Financing Led by Experian (FT Partners advised)
* Opendoor Secures $210 million in Series D Financing
* BlueVine Raises $49 million in Series D Financing
* Lemonade Raises $34 million in Series B Financing Led by General Catalyst Partners
Download the FT Partners CEO Monthly FinTech Market Analysis for January 2017 here.
A Million Bucks Crowdfunding… Not Enough? (Crowdfund Insider), Rated: AAA
Many entrepreneurs quickly point out, the $1 million cap under Regulation Crowdfunding (Reg CF) is limiting. $1 million may not provide sufficient capital to scale, especially after offering expenses and portal fees are deducted at closing. No longer can equity crowdfunding be written off so quickly. Building a fundraising strategy that incorporates equity crowdfunding AND traditional methods of fundraising is not only possible but being successfully implemented by savvy startups today.
Regulation Crowdfunding provides for a maximum annual amount that can be raised of $1 million. Regulation D does not contain the same maximum offering restrictions. In fact, under Regulation D, Rule 506, an unlimited amount of funds can be raised from accredited investors.
2017 may prove to be an especially promising year for the startup community. A legislative fix addressing many of the shortcomings of the JOBS Act, called the Fix Crowdfunding Act(HR 4855) is on its own path through Capitol Hill.
In its original form, the Fix Crowdfunding Act sponsored by Representative Patrick T. McHenry, included an amendment to permit issuers relying on Regulation Crowdfunding to increase their maximum offering amount under the exemption from $1 million to $5 million.
This amendment would tremendously serve startups and small businesses seeking seed, bridge and Series financing. Those issuers seeking more than $5 million in financing per year could still choose to conduct multiple offerings in reliance on alternative exemptions as discussed above.
US digital payments market is expected to reach $ 4,300 bn in the future (India Info Line), Rated: A
Technological developments such as data analytics, social networks and increased penetration of the smartphone have led to the emergence of newer models such as marketplace lending, people based marketing, equity crowdfunding, peer-to-peer lending and several others.
Apple Pay, Android Pay, Samsung Pay and PayPal wallet were the most used mobile wallets by customers for making online and in-store payments in the US. Dwolla, Venmo and Chase QuickPay were the pioneers in the space of P2P money transfers.
Digital payment segment was by far the most revenue generating segment that saw maximum customer interest and participation. The segment was majorly driven by the overwhelming sales of e-commerce market in the country.
The digital commerce market includes all the transactions made for online purchase of goods or services in the country through payment gateways. The market is the largest segment of the digital payment market in the US because of the heightened transactions for e-commerce in the country which have grown due to highly developed internet ecosystem and high internet penetration.
P2P money transfers have been on a rise especially amongst the teens and young working class, with the major transfers happening between friends, family of co-workers.
Three Tech Trends That Will Impact Small Business Lending (Forbes), Rated: A
Banks and FinTech companies are using technological advances to improve access to capital, which is the lifeblood for small business growth.
AI is causing a transformation in small business lending by improving credit assessment, financial product development, and loan decision-making.
For instance, FinTech companies are partnering with online accounting software platforms, and that the data collected is used to target business owners in need of financing. Thus, Artificial Intelligence enables lenders to offer ever more personalized unsecured business loans.
While marketplace lending currently accounts a relatively small percentage of the small business loan transactions today, technological innovations are forging partnerships between banks and marketplace lenders that could never have been seen a few years ago.
Convergence is on the uptick and this will continue into 2017.
Serving The Underserved
Banks are being encouraged fund minority business owners and ventures in economically disadvantaged areas. Meanwhile, marketplace lenders are in the forefront of providing capital to entrepreneurs and communities where their small business financing needs are not being met.
The National Federation of Independent Businesses’ November index of small business optimism climbed from 94.9 to 98.4 its sharpest surge since 2009.
Will OCC’s New Charter Go Beyond Fintech Firms? (National Mortgage News), Rated: A
The Office of the Comptroller of the Currency’s decision to offer a special-purpose charter for fintech firms may entice more players than expected, including mortgage lenders and even some payday lending shops.
In the leadup to the charter’s release last month, most had expected it to focus on marketplace lenders and others with a more technologically oriented business model. But the wording of the charter is broader, potentially allowing other nonbank players a way to enjoy the benefits of federal preemption and avoid state by state registration.
Some attorneys are even hearing interest in the charter from payday lenders. Though it might be a long shot for them to obtain the OCC’s blessing, observers say that the agency might at some point prefer to handle these companies through direct supervision.
23rd Annual VC & Private Equity Conference Announces Keynote Speakers and Agenda (BusinessWire), Rated: B
Conference panels will comprise a wide variety of leading alternative investment professionals, including general partners, limited partners, intermediaries, and industry consultants, among others. To view the full schedule of speakers and events, and to register to attend, please visit: http://thevcpeconference.com/.
International P2P Lending Volumes December 2016 (P2P-Banking), Rated: AAA
The following table lists the loan originations of p2p lending marketplaces in December. The total volume for the reported marketplaces adds up to 414 million Euro.
P2P-Banking’s Lehmann: Predictions for 2017 (Crowdfund Insider), Rated: B
“2017 will be a boom year for the UK P2P lending sector as it will be the first year which fully benefits from the newly introduced IF ISAs. On the continent origination volumes will continue to grow and several new marketplaces will launch. For the marketplaces it remains a challenge to attract enough creditworthy borrowers to match the investor demand. New VC activity in the sector will be slowing, possibly made up partly by bank engagements in the companies. The year may also offer some cues how fintech companies can profitably incorporate blockchain/bitcoins in alternative lending use cases – though on a small scale in absolute numbers.”
Top 10 Fintech companies in the Baltics (TechBullion), Rated: AAA
In the recent years Baltic States have become a lot more active in Fintech sector and the most rapidly growing areas are lending, payments and insurance. Thanks to the local Peer-to-Peer lending companies, the Baltic region has also undergone an uprising in alternative loan segment. According to the research performed by KPMG, in 2016 Latvia alone broke into the top 3 countries by the size of alternative lending volume with the third largest volume of funded loans archived in Q1-Q3 2016.
BitFury is currently operating in the US, Iceland, United Kingdom, Netherlands, Georgia and Hong Kong.
Since 2009 Bondora has been consistently delivering double-digit returns to over 14,000 investors on the platform.
Factury is Latvian-founded blockchain solution supporting secondary market trading of bank loans, smart invoice payment and settlement.
Launched in Latvia, Mintos is a peer-to-peer marketplace where investors can invest in loans originated by non-bank lenders.
Founded in 2013 in Latvia, Monea is a P2P micro payment application providing money transfers via phonebook contacts from bank account into the receiver’s bank account.
TransferGo is a global money transfer company that supports migrant workers to send money back to their relatives without paying unnecessary bank fees.
Twino is a privately-owned marketplace lender, operating across 10 countries with headquarters in Riga, Latvia.
Hong Kong to rank top again this year for global IPOs, PwC predicts (South China Morning Post), Rated: AAA
Hong Kong will continue to rank top globally for initial public offerings in 2017, with 130 companies raising up to HK$220 billion, according to accounting firm PwC.
The estimate, published on Tuesday, is 13 per cent higher than last year’s total and would represent a turnaround after 2016 saw funds raised from IPO plunge 26 per cent from the previous year. Despite the drop, Hong Kong retained the No.1 spot for a second consecutive year.
PwC is also positive about IPOs in the A-shares markets in Shanghai and Shenzhen. It expects the two bourses to raise a combined 220 billion to 250 billion yuan in 2017, up 51 per cent to 66 per cent from HK$167.8 billion last year, which was low because China had suspended IPOs for some months.
Financial authority issues regulation on fintech lending (The Jakarta Post), Rated: AAA
The Financial Services Authority (OJK) has finally issued a regulation on financial technology (Fintech) firms that run peer-to-peer (P2P) lending businesses.
The regulation, POJK No. 77/2016, requires a fintech company to have Rp 1 billion (US$74,239) capital when it registers its business with the OJK and for this to rise to Rp 2.5 billion when it applies for a business license.
The figures are lower than the respective Rp 2 billion and Rp 5 billion stated in the draft regulation.
The regulation also does not strictly regulate maximum interest rates on loans. It only states that a fintech firm can advise its investors and customers of an interest rate by “taking into account fairness and national economic development”.
UAE Tech Duo’s ‘Bridg’ Offers Bluetooth Route To Smarter Mobile Payments (Forbes), Rated: AAA
Pursuing a little off the beaten path, Moussa Beidas and Nadim Jarudi, co-founders of Bridg, have created an app that allows smartphone-to-smartphone payments using bluetooth, and only requires one of the devices to be online.
Surprisingly, the UAE has the highest per capita mobile phone penetration (estimated at 80.6 % of the population) but many in lower income bracket don’t use the device for mobile payments.
For customers, the app operates like a wallet, with all the expendable cash in their smartphones. Money is transferred into the Bridg app from a traditional savings or checking account. The money is then transferred via bluetooth to a participating vendor.
Bridg uses tokenization, a process where sensitive data elements are replaced with a non-sensitive equivalent.