- Today’s main news: Wellesley aims to raise 1.5M BP on Seedrs. China cracks down on P2P lending.
- Today’s main analysis: It doesn’t take much to put nonprime Americans into financial crisis.
- Today’s thought-provoking articles: Why France will steal the UK FinTech crown. Indonesia releases new P2P regulations.
- What it will take to put nonprime Americans into a financial crisis. AT: “Nonprime Americans have become the new middle class. One big expense and 160 million Americans are in financial trouble.”
- What to watch for in MPL in 2017. AT: “I like that Crowdfund Insider split 2016 into three distinct periods for MPL. It makes sense. But 2017 predictions aren’t all that prescient, really.”
- Morningstar corporate credit research highlights. GP:”As far as we can tell not a single change in ratings.”
- Money360 closes $35.6M in December. AT: “Nice achievement.” GP:” Real Estate crowdfunding continues its growth.”
- Wellesley aims to raise 1.5M BP on Seedrs. GP:” I am surprised by the small size of the raise at 1.5M only.” AT: “I’m still not sure what to make of P2P platforms using other crowdfunding platforms to raise capital. It strikes me as on the level of a bank taking out a loan to make new loans.”
- Octopus Choice receives FCA approval. AT: “I’m glad to see the FCA approving new platforms as often as it is, but we’re still waiting on the Big Three.”
- James Hay bans P2P lending.
- InvestCloud acquires Babel.
- Getting to know Kuflink’s Tarlochan Garcha.
- Survival guide to personal loans.
- AlliedCrowds recaps 2016, prioritizes 2017.
- Why France will overtake the UK in FinTech. GP:” The UK attracted 10x more investment, Germany 6x more. There is a serious French talent drain to London and other parts of the world. I am not convinced.” AT: “I certainly think France has the chops to become a FinTech powerhouse, but I don’t see the country overtaking the UK any time soon. Besides, it’a a good come-on for selling BI’s ecosystem report.”
- German fintech platform Raisin channeled 2B Euro in investments.
- Wellington invested $180m in Klarna.
- China cracks down on P2P lending. AT: “Depending on how extensive this crack down is, it could lead to a shift in dominance, but I find that unlikely. It could just be a scare tactic.”
- CreditEase boosts customer experiences with software.
- Indonesia releases new FinTech regulations. GP: ” Indonesia is a large populous rich country. P2P in Indonesia shouldn’t be underestimated.”
- CoAssets launches RE subsidiary.
- RE/MAX Malaysia raises over MYR 300,000 in crowdfunding campaign.
- United States
- UNEXPECTED EXPENSES: IT DOESN’T TAKE MUCH TO PUT NONPRIME AMERICANS INTO FINANCIAL CRISIS (Elevate email), Rated: AAA
- What to Watch For in Marketplace Lending During 2017 (Crowdfund Insider), Rated: A
- Morningstar Corporate Credit Research Highlights (Morningstar Email), Rated: A
- Money360 Closes Record $ 35.6 Million in Loans in December (Yahoo! Finance), Rated: A
- United Kingdom
- Wellesley Aims to Raise £1.5M on Seedrs for Further Expansion (Crowdfund Insider), Rated: AAA
- Advisor Focused P2P Platform Octopus Choice Receives FCA Approval (Crowdfund Insider), Rated: A
- James Hay bans non-standard investment purchases through platform (Money Marketing), Rated: A
- InvestCloud acquires UK fintech Babel for $ 20M (EconoTimes), Rated: A
- Getting to know you: Tarlochan Garcha (Business Matters Magazine), Rated: A
- Survival guide to personal loans (Independent), Rated: B
- AlliedCrowds: Here’s 2016 Recap & 2017 Priorities (Crowdfund Insider), Rated: B
- European Union
- Here’s why France might steal the UK’s fintech crown (Business Insider), Rated: A
- €2 billion has been invested over German fintech platform Raisin (Business Insider), Rated: A
- Entrepreneur behind a $ 180M watch brand quietly invested in Klarna (Business Insider), Rated: A
- China Cracking Down On P2P Lending (PYMNTS.com), Rated: AAA
- CreditEase Boosts Customer Experiences with Verint Customer Engagement Optimization Solutions (BusinessWire), Rated: A
- FSA Support Service Fintech Peer to Peer Lending (Tempo.co), Rated: AAA
- InstaEMI expands to more metro cities (India Times), Rated: B
- Indonesia: New Fintech, P2P Regulations Released (Crowdfund Insider), Rated: AAA
- CoAssets Launches New Real Estate Subsidiary for Full Spectrum of Real Estate Services (Crowdfund Insider), Rated: A
- RE/MAX Malaysia Crowdfunding Campaign Raises Over MYR 300,000 (Crowdfund Insider), Rated: A
UNEXPECTED EXPENSES: IT DOESN’T TAKE MUCH TO PUT NONPRIME AMERICANS INTO FINANCIAL CRISIS (Elevate email), Rated: AAA
Unexpected expenses are more likely to hit nonprime Americans much sooner and harder than their counterparts with prime credit scores, according to research released today by Elevate’s Center for the New Middle Class. For example, the research shows that the 160 million Americans who are nonprime, can only weather an unexpected expense of 31 percent of their monthly income, as opposed to 53 percent for their prime counterparts.
The Center’s latest study explores the impact of unexpected expenses on nonprime Americans, defined as those who have credit scores below 700. Key findings include:
- A bill becomes a crisis for nonprime Americans at $1,400; for prime, it’s $2,900
- Many common expenses such as a vehicle transmission, broken arm, or apartment security deposit are above the $1,400 threshold for nonprime Americans, but below the $2,900 threshold for prime Americans
- Almost half of nonprime Americans have more than three disrupting expense events per year compared to approximately one-quarter of primes
- Nonprime Americans can survive only half as long as prime Americans after a drop in income
- Half of nonprime Americans have an income that fluctuates month-to-month
Additionally, based on geographic location, purchasing power can create large disparities in threshold amounts. For example, local purchasing power adjusted for $100 in Tulsa, OK, acts more like $131 in Kansas City, MO, and a mere $77 in New York, NY.
What to Watch For in Marketplace Lending During 2017 (Crowdfund Insider), Rated: A
While surprises are undoubtedly in store for 2017, indications are that certain trends—the growth of bank partnerships and industry consolidation—will continue and accelerate as some legal certainty is achieved, legal cases which absorbed the industry’s attention in 2016 will be resolved and the focus will shift to Capitol Hill, as marketplace lenders step up lobbying activities given the new administration’s presumed predilection to assist the expansion of credit.
Taking a Look Back at 2016
From the start of the year through mid-May we witnessed what can be described as “rational exuberance” as market participants continued to look optimistically at opportunities, tempered by a recognition that regulatory scrutiny was increasing and demanded careful attention.
The mid-May developments at Lending Club, with the abrupt resignation of its CEO Renaud Laplanche, one of the most prominent figures in the industry who had just a few weeks before regaled the LendIt crowd with a keynote address, marked the start of the second distinct period.
With the end of the summer, the market entered its third phase, as parties again waded back into the water, cautiously optimistic about the outlook. By the end of the year, things had come nearly full-circle, as Lending Club tapped investor demand and completed its first rated securitization of consumer loans.
What’s Ahead for 2017
Increased Bank Partnerships. One theme likely to continue in 2017 is the increasing focus on partnerships between lending platforms and traditional banks.
While the Office of the Comptroller of the Currency’s December announcement to move forward with limited purpose national bank charters for fintech companies represents a measured and beneficial step for the industry, it is relatively unlikely that any final developments occur before the end of 2017.
Further Industry Consolidation. Expect the industry consolidation that started in 2016 to continue and grow in 2017.
Lastly, expect M&A activity in the marketplace arena to accelerate in 2017.
Morningstar Corporate Credit Research Highlights (Morningstar Email), Rated: A
Money360 Closes Record $ 35.6 Million in Loans in December (Yahoo! Finance), Rated: A
Money360, the leading commercial real estate marketplace lending platform, announced today that it closed a record $35.6 million in commercial real estate loans in December 2016 — the result of ongoing growth of the company.
December’s transactions reflect short-term bridge loans for a mix of property types, including retail, office and industrial in California, Florida and Illinois. A total of five properties were financed including a one-story suburban office building in Irvine, California; a three-building industrial complex in Richmond, California; a seven-building anchored retail property in Orlando, Florida; a three-story suburban office building in Palm Harbor, Florida; and a three-story office property in Rosemont, Illinois.
December’s loans were for terms of between one and two years, and all were collateralized with a first-lien positions on the properties. They include:
- Irvine, California: $5.4 Million to Refinance an Office Property Currently Being Re-entitled for Multifamily Development: Money360 provided a 12-month, $5.4 million bridge loan to the owner of a one-story, suburban office building to pay off two maturing loans, taxes and to provide cash out to afford the borrower sufficient time to continue processing land entitlements for a 45-unit condominium project planned on the site. The borrower brought in equity of $548,000 to close with a loan-to-value of 75 percent.
- Richmond, California: $5.7 Million to Purchase a Three-Building Industrial Complex: Money360 provided a $5.7 million 24-month bridge loan to allow the borrower to purchase Adel Park, consisting of three contiguous industrial buildings containing a total of 159,156 square feet. The borrower was processing an SBA loan, but due to a hard closing date, opted for the bridge loan to consummate the purchase.
- Orlando, Florida: $9.53 Million to Refinance a Seven-Building Anchored Retail Property: Money360 provided $9.53 million in bridge financing to pay off two current maturing loans and to finance tenant improvements and leasing commissions associated with re-tenanting the anchor space. The first-lien mortgage loan has a term of 24 months, with a loan-to-value ratio of 73.9 percent.
- Palm Harbor, Florida: $2.5 Million to Refinance a Three-Story Office Building: Money360 provided a $2.5 million bridge loan to pay off a maturing CMBS loan for the three-story Palm Harbor office building in Palm Harbor, Florida. The first mortgage loan is for a term of 24 months with a loan-to-value ratio of 71.43 percent. The subject property is 84.6 percent occupied and professionally managed.
- Rosemont, Illinois: $12.5 Million to Refinance a Suburban Office Property: Money360 provided a $12.5 million bridge loan for a single-tenant, suburban property in Rosemont, Illinois, allowing the borrower to pay off a maturing loan and buy out existing partners. The 24-month loan is secured by 71,132 square foot property, broken down as 60,207 square feet of office space and 10,925 square feet of warehouse space.
Wellesley Aims to Raise £1.5M on Seedrs for Further Expansion (Crowdfund Insider), Rated: AAA
Peer to peer lending platform Wellesley has been crowdfunding on Seedrs for almost a month to raise £1.5M (approximately $1.82M). The campaign is currently restricted to Wellesley customers so it is hard to track.
Wellesley, like many other young firms, needs additional capital to continue operations.
Wellesley told P2P Banking that the platform’s campaign on Seedrs stands out because over 15,000 people have already invested in the company, the firm has a social issue of building Britain, and the company has been running for three years while remaining less speculative than other startups in this space.
Advisor Focused P2P Platform Octopus Choice Receives FCA Approval (Crowdfund Insider), Rated: A
Peer to peer lending platform Octopus Choice has received full authorisation from the Financial Conduct Authority. Octopus Choice is part of Octopus Investments. The company said the FCA approval was a first for an advisor focused P2P platform.
Octopus Choice was launched in April 2016, to coincide with the FCA’s decision to broaden the scope of advisers’ permissions to include P2P lending. The company now claims to be one of the fastest growing P2P platforms having facilitated approximately £45 million in loans for 75 deals since launch.
James Hay bans non-standard investment purchases through platform (Money Marketing), Rated: A
From today, new customers will no longer be able to buy non-standard investments through James Hay’s platform except for in SSASs.
James Hay lists the following investments as non-standard: intellectual property, land banking, overseas commercial property, peer-to-peer lending, unconnected loans, carbon credits, storage pods, UK unquoted shares, overseas unquoted shares, unquoted loan notes and bonds, second-hand endowment policies, and fractional property investments.
Gold bullion will no longer be treated as a non-standard investment in James Hay products, however, and will still be allowed for new investments.
InvestCloud acquires UK fintech Babel for $ 20M (EconoTimes), Rated: A
Californian fintech firm InvestCloud has announced a strategic acquisition of London fintech company Babel Systems for $20 million in a deal.
The strategic acquisition connects InvestCloud’s digital platform with Babel’s trading and accounting capabilities in a move to provide a unique solution for fintech companies. InvestCloud will carry on supporting clients using other accounting solutions and also serve as an open supplier to the market, the release stated.
The client base of Babel includes the market leader in Robo-Advice ‘Nutmeg’ and other progressive Wealth Managers and Family Offices. The fintech company is the modern trade and accounting firm that addresses the needs of a regulated and international marketplace. The modular Babel’s solution is API based and enables the company to be integrated with any client platform.
Getting to know you: Tarlochan Garcha (Business Matters Magazine), Rated: A
Kuflink Ltd is our entry into the peer-to-peer world. This business is about to go live and compliments Kuflink Bridging, as it will be facilitating lenders and borrowers on UK property.
The conclusion of those findings was clear and this complemented Kuflink Bridging. Whilst the peer-to-peer sector is highly regulated, the barriers to entry are very high and this appeals to us given our knowledge of the industry, niche offering and desire to build a successful business. Just nine months later, we are ready to launch our unique peer-to-peer lending platform.
Survival guide to personal loans (Independent), Rated: B
When we asked Moneysupermarket.com what the best buy deals were on personal loans from £1,000 – £1,999, £2,000 – £2,999, and £3,000 – £4,999 – enough for a modest car purchase or an affordable kitchen, the cheapest deal each time was from Zopa, the original peer-to-peer lender.
The advent of peer-to-peer lending has revolutionised the loan market by cutting out middle men and matching up savers looking for a better than average deal with would-be borrows hoping the beat the high street loan rates. When peer-to-peer (also known as P2P) started out it wasn’t regulated in the way as the banks and customers were initially nervous about both lending and borrowing. That’s all changed, with Uk registered P2P lenders falling under the same policing as traditional banks by the Financial Conduct Authority (FCA). From April 2017 they’ll also have to have at least a £50,000 cash buffer to bail out their customers if one side of the deal fails for some reason.
AlliedCrowds: Here’s 2016 Recap & 2017 Priorities (Crowdfund Insider), Rated: B
AlliedCrowds’ 2016 highlights include:
- Building its database, the Capital Finder: Offers information for crowdfunding, VCs, angel networks, impact investors, and public/semi-public firms.
Consulting Service Expansion: AlliedCrowd invested more time in running a number of consulting projects for developing organizations and private sector firm.
Created Ecuador’s First Crowdfunding Platform: Known as GreenCrowds.
AlliedCrowds’ 2017 priorities will be to finalize Capital Finder, publish a new alternative report, and appoint a new MD for its debt platform.
Here’s why France might steal the UK’s fintech crown (Business Insider), Rated: A
The UK’s fintech sector overwhelmingly supported remaining in the EU in the runup to June’s referendum.
Now, as Brexit looms closer, France sees an opportunity to lure these concerned fintechs to its own shores by promoting advantages it believes the UK will lose following its exit, according to a report by Europlace, a French lobbying group, and Axelle Lemaire, France’s digital minister.
Here are the reasons why France might prove attractive to UK fintechs, according to Lemaire and Europlace:
- Fintech-friendly regulation.
- Privileges for tech entrepreneurs. Lemaire says that 180 foreign entrepreneurs have applied for and were granted France’s “Tech Ticket” package.
- A healthy investment climate.
- According to Lemaire, while investment in UK fintech dropped recently, it increased in France by 71% from January to September 2016. However, it’s worth noting that even though UK investment has slowed, none of the top 10 European fintech deals in Q3 2016 were made in France. Germany pulled ahead of France in this respect, with deals reaching a volume of $77 million, according to KPMG.
- Tax benefits.
€2 billion has been invested over German fintech platform Raisin (Business Insider), Rated: A
German fintech Raisin has passed €2 billion (£1.7 billion, $2.1 billion) of investment over its platform three years after launching.
Raisin announced in a press release on Tuesday that it had passed the milestone, just three months after announcing €1.7 billion had been invested over its platform. The fintech said the money comes from 60,00 customers, up from 50,000 in September.
Entrepreneur behind a $ 180M watch brand quietly invested in Klarna (Business Insider), Rated: A
Filip Tysander, the founder of the Daniel Wellington watch brand, quietly bought millions of pounds worth of shares in payments startup Klarna, according to Swedish tech site Breakit.
Klarna has raised over $290 million (£238 million) and is worth $2.25 billion (£1.85 billion), making it one of Sweden’s few billion dollar tech companies.
China Cracking Down On P2P Lending (PYMNTS.com), Rated: AAA
The first nationwide crackdown on P2P lending in China is underway — and expected to eliminate many of the 2,400 or so leading platforms in the nation.
The crackdown comes following a series of multi-billion dollar scams in the Chinese P2P lending space, as well as governance issues in U.S. segment leader LendingClub. Chinese regulatory authorities have officially released new guidelines and sent inspection teams to companies to make sure said guidelines are being following. Those that do not comply by August of this year will be shut down.
The new regulations will block lenders from guaranteeing principal or interest on loans they facilitate as well as cap the size of loans for individuals at Rmb1m and at Rmb5m for companies. Lenders going forward will also be required to use custodian banks — which the vast, vast majority do not.
CreditEase Boosts Customer Experiences with Verint Customer Engagement Optimization Solutions (BusinessWire), Rated: A
Verint® Systems Inc. (Nasdaq: VRNT) today announced that CreditEase—a leading FinTech company in China, specializing in small business and consumer lending as well as wealth management for high net worth and mass affluent investors—is leveraging Verint Speech Analytics™, along with Call Recording™ and Quality Management™, to support the transformation of its customer engagement platform.
Since implementing the Verint software solutions, CreditEase has experienced improvements in operational performance and reports an increase in the use of digital channels through omnichannel service strategies. The ability to assess larger data samples, focus on important interactions, gain customer intelligence and target coaching to employees also has helped the organization enhance service delivery and the customer experience.
CreditEase also reports that it has saved operating costs of 45 percent on an annual basis by reducing print and mailed financial statements as customers have migrated to the use of digital channels and self-service e-statements. Its quality assurance initiatives also have yielded benefits in terms of generating an additional 30 percent savings by helping personnel become even more effective in their roles. The organization’s customer satisfaction ratings also have increased, in part due to a sharp reduction (by 80 percent) in billing-related complaints.
FSA Support Service Fintech Peer to Peer Lending (Tempo.co), Rated: AAA
the Financial Services Authority (FSA) shows its commitment to support the development of technology-based financial services orfinancial technology (fintech) in Indonesia.
Deputy Commissioner Strategy Management IA FSA, Imansyah said that regulation provides an opportunity for offenders fintech in Indonesia in order to grow.
Faith added the FSA will set up a special website page to facilitate it. The process of setting up a website to ready access would require at least six months after the regulation is published.
InstaEMI expands to more metro cities (India Times), Rated: B
Hyderabad-based financial services platform InstaEMI today announced its plans to expand its presence in metro cities across the country including New Delhi, Mumbai, Pune and Kolkata.
While peer-to-peer lending is another area of their focus, marginal size of the business constitutes of big ticket investments.
Indonesia: New Fintech, P2P Regulations Released (Crowdfund Insider), Rated: AAA
- Registration – P2P lending (pinjam meminjam) startups must register and obtain their business license before operating.
- Foreign ownership – Foreign businesses have to find a local partner because foreign ownership is limited to 85 percent of a company, and they can only act as lenders.
- Minimum capital requirements – A company must have access to a little over $260,000 in order to carry out its business. It must have at least approximately $74,000 in capital by the time it registers, and it must also have at least approximately $188,000 to obtain its operating license.
- Interest rate provision – There is no limit on the interest rate, but loans cannot exceed $150,000.
- Consumer protection – Fintech firms must only “advise” lenders and borrowers of its selected interest rates, which take “into account fairness and developments in the economy”. They must also use escrow and virtual accounts in order to prevent operators from directly accessing the capital flowing between the lenders and borrowers.
CoAssets Launches New Real Estate Subsidiary for Full Spectrum of Real Estate Services (Crowdfund Insider), Rated: A
“As a crowdfunding platform, user protection is one of our key focus. We are now looking at crowdfunding deals that are backed by assets as a way to protect our users amidst economic uncertainty. Given this move towards secured crowdfunding and our market position as a real estate crowdfunding platform, having a real estate agency fits in well into our overall business strategy,” said Getty Goh, CEO of CoAssets.
CoAssets also shared that all deal listed on the crowdfunding platform undergo a proprietary risk assesment model labeled CoAssets Risk Assessment Model or CRAM. This process was said to be developed with the assistance of one of the top auditing firms. The CRAM score is used to help decide whether crowdfunding or other forms of financing could be offered to companies that are looking for funding.
RE/MAX Malaysia Crowdfunding Campaign Raises Over MYR 300,000 (Crowdfund Insider), Rated: A
Kellerhhof International Sdn Bhd led RE/MAX Malaysia‘s equity crowdfunding campaign over the past month to aim to raise MYR 200,000 (approximately $45,000). The campaign on CrowdPlus.asia finished yesterday and resulted in RE/MAX Malaysia successfully surpassing its minimum goal, raising MYR 322,888 (approximately $72,000).
Yesterday our Equity Crowdfunding was closed. An amazing 161% funded, what gives us great appreciation.