- Today’s main news: Prosper closes loan purchase agreement for up to $5B in loans with Consortium of Institutional Investors. Zopa, FC awarded Superbrand status. OnDeck launches Australian broker push.
- Today’s main analysis: Lendix Review.
- Today’s thought-provoking articles: Questions about SoFi’s funding round with Silver Lake. Zopa mulls move into secured lending.
- Prosper closes loan purchase agreement with Consortium of Institutional Investors. GP:” Ths is a landmark deal. The most amount of lending capital any p2p lender ever raised. It validates the space once again. The markee investors also add their credibility to the company and the space. A milestone deal ! And this should be a buy signal for Lending Club and OnDeck stocks most likely.” AT: “This is huge. Institutional investors are taking over.”
- PeerIQ partners with 1010data to offer hosted normalized online lending data. GP:” Partnerships is the best parth to scale fast.”
- Term Sheet – a look at Sofi’s funding round with Silver Lake. GP:” A great analysis of SoFi’s $500mil raise with really good questions. A must read.” AT: “Good questions. I particularly like the bit about SoFi not wanting to be a lead generator for banks.”
- Facts about borrowing specialized MBA loans. AT: “This is not surprising. Lenders want to loan to people with earning potential. MBA students certainly have that.”
- VeriComply completes angel funding round to include MPL vets.
- How neural networks are changing credit scores.
- NAIC extends Morningstar credit ratings, and more.
- Third FinTech Forum to discuss AI, blockchain.
- What’s it like working as a product manager at OnDeck?
- Tony Mitchell recommends SoFi.
- Zopa, Funding Circle awarded Superbrand status. GP:” Well deserved. Their brands have gone beyond the UK many times over.” AT: “Marketplace lending is much more mainstream in the UK than in the U.S. Congratulations.”
- Zopa mulls move into secured lending. GP:” Secured lending is never in fact completely secured. The trap is usually, like with mortgages in 2008 believing it is 100% secure. It is just more secure than unsecured, that’s all. But nice to see Zopa is seeking new market for expansion. Perhaps extending beyond the UK would be another natural step?” AT: “Exansion is good.”
- United States
- Prosper Closes Loan Purchase Agreement for up to $ 5 Billion of Loans with Consortium of Institutional Investors (BusinessWire), Rated: AAA
- PeerIQ Partners with 1010data to Offer Hosted Normalized Online Lending Data (BusinessWire), Rated: AAA
- Term Sheet — Monday, February 27 (Fortune), Rated: AAA
- Facts About Borrowing Specialized MBA Loans (U.S. News), Rated: A
- VeriComply Completes Angel Funding Round: Investors Include Marketplace Lending Industry Vets (Crowdfund Insider), Rated: A
- Explainer: How neural networks are changing credit scores (Tradestreaming), Rated: A
- NAIC Extends Morningstar Credit Ratings, LLC Designation to Include Financial Institutions, Brokers, or Dealers (Yahoo! Finance), Rated: A
- Third FinTech Forum to discuss artificial intelligence and blockchain (Federal Trade Commission), Rated: B
- What’s it like Working as a Product Manager? A PM at OnDeck Takes You through His Day (WayUp), Rated: B
- Tony Mitchell’s Internet Fund Rides The Trump Rally To Beat The Market (Forbes), Rated: B
- United Kingdom
- Zopa and Funding Circle awarded Superbrand status (P2P Finance News), Rated: AAA
- Zopa mulls move into secured lending (P2P Finance News), Rated: AAA
- European Union
- Lendix Review – First Repayment (P2P Banking), Rated: AAA
- Global Peer2peer Insurance Market Report: Profiles of Every Known Peer-to-Peer Platform (GlobeNewswire), Rated: A
- Business lender launches Australian broker push (Australian Broker), Rated: AAA
- How start-ups are revolutionising money (Daily News & Analysis), Rated: B
Prosper Closes Loan Purchase Agreement for up to $ 5 Billion of Loans with Consortium of Institutional Investors (BusinessWire), Rated: AAA
Prosper Marketplace, a leading online consumer lending marketplace, today announced that it has closed a deal with a consortium of institutional investors to purchase up to $5 billion worth of loans through the Prosper platform over the next 24 months. The investors in the consortium are affiliates of each of New Residential Investment Corp., Jefferies Group LLC and Third Point LLC, and an entity of which Soros Fund Management LLC serves as principal investment manager. The consortium will also earn an equity stake in the company based on the amount of loans purchased, further aligning the group with Prosper’s future growth and success. Warehouse financing of up to $1 billion will be provided by a syndicate of lenders including Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley.
Prosper has maintained positive momentum since the second half of 2016, with monthly loan originations growing steadily since July. In addition, the Prosper loan portfolio is delivering solid returns to its institutional and individual investors, with an estimated net return of 7.86%1 for January 2017. Prosper continues to diversify its investor base, and is focused on bringing new banks and other institutional investors onto the platform.
Financial Technology Partners (FT Partners) served as strategic advisor to Prosper Marketplace and its Board of Directors on this transaction. DV01 will be the loan data agent to the consortium.
PeerIQ Partners with 1010data to Offer Hosted Normalized Online Lending Data (BusinessWire), Rated: AAA
PeerIQ, a leading provider of data and analytics to the online lending sector, today announced a new data partnership with 1010data, offering the only integrated cloud platform that combines self-service data management and analytics at scale with ready-to-use data. The two companies will provide investors with turnkey access to the highest quality loan-level data from online lending platforms. This will simultaneously increase research productivity and reduce costs associated with analyzing whole-loans and securities. Leveraging PeerIQ’s universal data models and lender-specific data cleaning processes, the partnership also broadens 1010data’s ability to provide its customers with access to loan-level data in another consumer credit capital markets sector.
Those with authorized access to PeerIQ data can now integrate that data into their full set of workflows on the 1010data Insights Platform, including the ability to:
- Make ad-hoc, time-series analysis simple and fast using 1010data’s extensive built-in analytical function library
- Quickly develop, modify, share and automate pre-defined reports; easily run queries and create interactive dashboard applications with 1010data QuickApps
- Output results into Microsoft Excel and/or build Excel-based applications using the 1010data Excel add-in
- Combine and analyze PeerIQ data with complementary data sources, such as consumer credit and other econometric data which are already available on the 1010data platform
Term Sheet — Monday, February 27 (Fortune), Rated: AAA
Unicorn watch: SoFi, a San Francisco online lending startup, raised $500 million in new funding led by Silver Lake with participation from existing investor SoftBank Group, and GPI Capital, confirming a Wall Street Journal report from earlier this month. The round reportedly values SoFi at $4.3 billion, up from the company’s last valuation of $3.2 billion. SoFi CEO Mike Cangey would not confirm the valuation, but said $4.3 billion was “in the right zip code.” A couple of notes:
1.Why does it need $500 million? SoFi raised $1 billion from SoftBank Group in September 2015, and it has been “off and on” profitable for the past few years. This money isn’t going toward its actual loans. SoFi currently has 250,000 members and originates $1 billion in credit per month.
2. It’s an ambitious plan.
3. “At least one” of the big banks have tried to acquire SoFi, but the company isn’t interested in selling. But Cagney does not want to be a lead generation tool for a bank.
4. Why Silver Lake? The buyout firm has looked at several of SoFi’s past funding rounds, but it was too small for Silver Lake to invest—until now. The firm presents SoFi with a unique benefit: Silver Lake’s limited partners are taking an active role, and some large sovereign wealth fund LPs are buying up some of SoFi’s loans.
Facts About Borrowing Specialized MBA Loans (U.S. News), Rated: A
The current fixed rate for graduate PLUS loans for the 2016-2017 school year is 6.31 percent compared with 6.01 percent for a 10-year fixed-rate loan at New York-based CommonBond – a 30 percentage point difference. CommonBond’s fixed rate is just one rate, and it’s available to MBA students who are enrolled at certain b-schools.
Experts say lenders feel more comfortable lending to in-school MBA students compared with other graduates because of their future earning potential.
Citizens Bank currently offers fixed rates as low as 5.1 percent on a 10-year $10,000 loan to business students – that’s much lower than the lowest rate the financial institution offers graduate students who are not enrolled in a graduate law, medical or business program.
Chicago-based Discover Student Loans offers a Discover MBA Loan product to b-school students. Current variable rates on a 20-year $10,000 start at 3.74 percent with the lowest fixed rate available at 6.24 percent. But the company offers a 0.25 interest-rate deduction for enrolling in automatic payments.
VeriComply Completes Angel Funding Round: Investors Include Marketplace Lending Industry Vets (Crowdfund Insider), Rated: A
VeriComply, a company that automates the verification of marketplace loans for the secondary market, announced on Monday it completed its latest Angels funding round. Investors in the funding round included Jon Barlow, founder of Eaglewood Capital and John Maute, co-founder of Helios AMC and Situs Holdings, a global real estate diligence firm, and board member of Money360, a CRE marketplace lending platform.
Explainer: How neural networks are changing credit scores (Tradestreaming), Rated: A
A credit score has a major impact on a person’s life. It’s the key to getting a car loan, a house or an apartment. The traditional way scores are calculated is a method called logistic regression, which means assigning a value to a number of factors in your financial life (for example, payment history, number of credit accounts, length of credit history) and weighing them.
But credit bureaus are now looking into other ways to determine an individual’s credit history beyond the result of a static formula. They’ve integrated machine-learning into credit scoring methods to get a more balanced picture of someone’s likelihood of defaulting on a debt. But it’s more complex that that — we break down the method.
Artificial neural networks mimic the way the human brain works, so a non-human has the ability to think through the data and assess patterns.
“A neural network more closely mimics the way humans think and reason, whereas linear models are more dogmatic — you’re imposing structure on data as opposed to letting the data talk to you,” said Eric VonDohlen, chief analytics officer at the online lender Elevate, in an interview with American Banker.
NAIC Extends Morningstar Credit Ratings, LLC Designation to Include Financial Institutions, Brokers, or Dealers (Yahoo! Finance), Rated: A
The National Association of Insurance Commissioners (NAIC) has extended Morningstar Credit Ratings, LLC’s designation on its NAIC Credit Rating Provider list to include financial institutions, brokers, or dealers as well as corporate issuers, as of Feb. 22, 2017. Morningstar Credit Ratings’ designation previously covered commercial mortgage-backed securities (CMBS), residential mortgage-backed securities (RMBS), and asset-backed securities (ABS). Morningstar Credit Ratings, LLC is a subsidiary of Morningstar, Inc. (MORN) and a nationally recognized statistical rating organization (NRSRO).
Morningstar Credit Ratings offers ratings and analytical services for CMBS, RMBS, single-family rental securities, ABS, and corporate issuers and financial institutions. Since late 2009, Morningstar Credit Ratings has rated more than 300 structured finance transactions representing approximately $188 billion of securities issuance across various types of CMBS, RMBS, and ABS. Information about Morningstar Credit Ratings’ offerings as well as all of its NRSRO credit ratings, methodologies, and research are available to issuers and investors at http://morningstarcreditratings.com.
For more information about the NAIC’s use of credit ratings, please visit www.naic.org.
Third FinTech Forum to discuss artificial intelligence and blockchain (Federal Trade Commission), Rated: B
Artificial intelligence and blockchain. If those terms relate to your company’s work, you might want to mark March 9, 2017, on your calendar.
The first panel of the half-day forum focuses on the benefits and risks to consumers as artificial intelligence is adapted to financial services.
The third FinTech Forum will take place in the Banatao Auditorium, 310 Sutardja Dai Hall, on the campus of the University of California, Berkeley. Registration opens at 8:00 PT and the event convenes at 9:00.
What’s it like Working as a Product Manager? A PM at OnDeck Takes You through His Day (WayUp), Rated: B
We got to talk to Kennan Murphy-Sierra, 2014 grad from Stanford who now works an Associate Product Manager for OnDeck®, the leader in online lending for small business.
What does an Associate Product Manager in your role at OnDeck do?
Kennan Murphy-Sierra: I am responsible for the user experience of our sales agents and small business owners during our financing application process.
Can you take us through what you did at your job yesterday from the second you walked in the office until the moment you left? What key responsibilities do you tackle on a daily basis?
KMS: It went something like this:
- Impromptu breakfast catch up with the data [team] to talk about testing a project.
- Daily standup with tech team (we map out the latest updates in our software development progress).
- Syncing with a product manager in DC about requirements for a project that will enter development soon.
- Meeting with tech and sales leaders to nail down requirements for a 2017 initiative.
- Sizing a new core system feature with tech leads to determine expected timeline and headcount.
- Double-checking some wording with our legal team and then giving the green-light on a release.
- Taking a break for a blind 12-chocolate tasting contest between our tech team and the website tech team – we won!
Tony Mitchell’s Internet Fund Rides The Trump Rally To Beat The Market (Forbes), Rated: B
Kam: You also recommended Lending Club last year, are you sticking with that stock also?
Mitchell: I am, and I think that the $500 million that SoFi (Social Finance Inc.) is about to raise shows the belief in online lending.
SoFi is a direct competitor of Lending Club and is only about 10% behind Lending Club in the amount of loans that it funded in 2016.
Lending Club has set the standard, and they have made it much easier than going to a bank for a loan. Lending Club was trading at $5.06 back in June when that article came out and has risen to over $6.50 since then, although it has pulled back somewhat now.
Zopa and Funding Circle awarded Superbrand status (P2P Finance News), Rated: AAA
ZOPA and Funding Circle have been named as some of the top household names in the UK on the annual Superbrands list for 2017.
Compiled by the Centre for Brand Analysis, the Superbrands list is split into business and consumer categories with more than 1,500 companies scored on their quality, reliability and distinction.
The business list is judged by marketing experts and entrepreneurs, while the public decide on the consumer section.
Seven firms were named on the business superbrands list within a joint peer-to-peer and crowdfunding category, which was topped by Kickstarter.
P2P lender Wellesley also made the list, alongside crowdfunding platforms Seedrs, Crowdcube and Crowdfunder.
Zopa mulls move into secured lending (P2P Finance News), Rated: AAA
ZOPA is looking to expand into the secured auto finance space, where it sees an opportunity to grow its borrower base.
The peer-to-peer lending platform, which usually specialises in unsecured consumer loans, said it sees strong potential in the secured car finance sector as there are healthy levels of demand but typically a poor customer experience.
Tapping into that unmet demand from secured borrowers could help Zopa match an influx of money from yield-hungry investors.
Lendix Review – First Repayment (P2P Banking), Rated: AAA
Lendix is a p2p lending marketplace offering loans to SMEs in France and Spain (read earlier articles on Lendix). It is one of the larger players in continental Europe.
While the minimum bid on loans is just 20 EUR, the minimum amount for deposits and withdrawals is 100 EUR. Investors can deposit either via bank transfer or via credit card (limited amount). Depositing via credit card is a nice feature which is rarely offered by p2p lending services. I like it because I can react within a minute to new loan announcement emails.
Lendix loans carry interest rates from 4 to 9.9% and are for loan terms between 3 and 84 months.
So far Lendix has done a very good job in vetting borrower applications. The default rate to date is low – only 0.11%. However the marketplace is young and growing and I expect the default rate to rise with time.
Right now I have invested 640 EUR in 8 Lendix loans. I would have invested more, but I found the dealflow to be rather sparse in January and February. My average interest rate is 5.9%. This month I received my first repayment rate. Experiences of more seasoned investors report that repayments are usually on-time.
Global Peer2peer Insurance Market Report: Profiles of Every Known Peer-to-Peer Platform (GlobeNewswire), Rated: A
Research and Markets has announced the addition of the “Peer2peer Insurance” report to their offering.
The insurance ecosystem is undergoing transformation and innovation like never before, and what we have seen is only the beginning. From distribution to pricing, product development to underwriting claims servicing to compliance – no part of the insurance value chain is safe from change.
Insurance companies will need to work hard to transform their core operations to become agile and low cost and customer centric. Some will meet a Blockbuster/Kodak type fate by failing to transform properly. Those that succeed in their transformation will have both scale and agility and will thrive. FinTech is a spectrum of technology innovations and start -ups that demonstrate disruptive potential in applications, processes, products, or business models in the financial industry.
The sharing economy is developing peer-to-peer insurance. Peer to peer lending was laughed at by bankers- now they scramble to offer loans and buy loan books. Will insurers and brokers regret ignoring peer-to-peer insurance? Some platforms are built to work with insurers and re-insurers, but others have built them out of the mix. There are over 40 platforms globally and others on the way. Lemonade has just launched in New York to be the first peer to peer insurer in the USA.
Peer to peer insurance is a new form of technology driven by a social insurance model. Some platforms are well thought out, others are by techie dreamers with no understanding of regulation, law or insurance.
Business lender launches Australian broker push (Australian Broker), Rated: AAA
Small business lender OnDeck has announced the launch of a new broker product and will be in discussion with local brokers over the next couple of months.
“We realise that over 70% of small businesses in Australia like to access capital through an intermediary like a broker so this is very important for us.”
How start-ups are revolutionising money (Daily News & Analysis), Rated: B
FlexiLoans, a technology-based online financing platform, solves the funding problems of SMEs and help them in accessing quick, flexible and adequate funds for growing their businesses.
Another firm, vPhrase, is an artificial intelligence-based data analytics platform that helps businesses make their reports easier to comprehend. vPhrase’s patent-pending platform, Phrazor, analyses data, derives insights and then communicates those insights, in multiple languages.
FinMitra, a goal-based financial advisory and management services firm, helps individuals set financial goals, discover their risk profiles, and find the best investment portfolios in terms of mutual funds and fixed deposits.
Another start-up, S2Pay, enables corporations and financial institutes to leverage technology to create seamless payment processes, enhancing value-chain economics and providing superior end-consumer experience.