Daily News Digest Featured News

Wednesday March 8 2017, Daily News Digest

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United States

United Kingdom

China

MENA

Asia

News Summary

 

United States

Prosper CEO’s Ron Suber’s Keynote Address at LendIt (YouTube), Rated: AAA

 

 

Corporate credit spreads tighten following Trump’s address to Congress (Morningstar), Rated: AAA

While the markets pulled back slightly in the latter half of the week, risk assets remained near their highs after a significant boost Wednesday following President Donald Trump’s address to Congress. The average spread of the Morningstar Corporate Bond Index, our proxy for the investment-grade bond market, tightened 5 basis points to +118 last week. In the high-yield market, the credit spread of the Bank of America Merrill Lynch High Yield Master Index tightened 24 basis points to +360.

morningstar

Comptroller Curry hits back at critics of fintech charter plans (Finextra), Rated: AAA

In a speech to the LendIT conference in New York, Curry offered a stout defence to charges laid by banking trade bodies and state regulators over its plans.

“To be clear, the National Bank Act does give the OCC the legal authority to grant national bank charters to companies engaged in the business of banking,” Curry told the conference. “That authority includes granting charters to companies that limit their business models to certain aspects of banking, and it is not circumscribed just because a company delivers banking services in new ways with innovative technology.”

Kabbage nabs $ 500M for small business loans (TechCrunch), Rated: A

Kabbage, a billion-dollar startup that combines machine learning algorithms, data from public profiles on the internet and other factors to rate and then loan people money for their small businesses, is today announcing another big step up in its ambitions. The company has secured over $500 million in fixed-rate, asset-backed notes, money that it will use to expand the amount, payback terms and size of loans it makes to SMBs over the next three years. To date, Kabbage has loaned over $2.7 billion to SMBs since being founded in 2009.

Kabbage said the securitization was oversubscribed.

As part of this closing, Kabbage is forming a new subsidiary,Kabbage Asset Securitization, to issue the notes in four classes. Kabbage said that the senior class of notes is “anticipated to be rated ‘A(sf)’ on the closing date by Kroll Bond Rating Agency (KBRA).”

Kabbage notes that this is an upgrade on its previous rating.

Lantern Credit boosts machine learning engine through ARC library acquisition (Finextra), Rated: A

Lantern Credit, a financial technology company working to solve systematic inefficiencies in the consumer credit industry, is enhancing its proprietary machine learning engine, Beam AI, with the acquisition of the Abstract Regression-Classification (ARC) Machine Learning Library.

The machine learning library enables Lantern Credit to use a human-machine hybrid learning approach that incorporates human guidance in the machine learning training process to produce more reliable outputs.

Lantern Credit’s Beam AI will use the symbolic regression technology to ensure that credit offers presented to consumers are actionable and timely.

RealtyShares Raises $ 32.9M for Midwest Real Estate Projects Through Crowdfunding (BusinessWire), Rated: A

RealtyShares, a leading online marketplace for real estate investing, has released new data showing the extent of crowdfunded investments in several Midwest real estate markets.

Developers, sponsors and borrowers in Ohio, Wisconsin, Michigan, Indiana and Illinois have raised $32.9 million to date from RealtyShares’ network of investors, offering a source of financing for real estate projects by leveraging technology to connect potential investors with expertly vetted real estate deals.

Thus far 114 deals have been funded in the region through RealtyShares, with an average deal price of $288,000. Deals of up to $1.5 million have been financed in both Columbus, Ohio, and Chicago, Ill. Anchoring RealtyShares’ position in the region, $14 million has been raised for 53 deals in Illinois, with several investors targeting properties in and around Chicago. Buckeyes are also showing a significant level of activity, with $12.25 million raised for 30 deals in Ohio, concentrating around the Cincinnati and Cleveland areas.

Patch of Land Hires Chief Investment Product Officer (PR Newswire), Rated: A

Patch of Land, a leading online real estate marketplace lender and crowdfunding platform, announces the addition of Matthew Zall as Chief Investment Product Officer as the firm prepares to expand into the single-family rental market with longer term, permanent financing products. The number of non-owner occupied single-family properties in the U.S. including townhomes, condos, and 2-4 unit properties grew to almost 24 million units valued at over $6 trillion in 2016, according to ATTOM Data Solutions.

Zall brings to Patch of Land more than 12 years of real estate and mortgage experience, as well as expertise in financing and product development. He pioneered three of the industry’s first-ever multi-borrower single-family rental securitizations, helping to build Blackstone Group subsidiary, B2R Finance, (now known as Finance of America Holdings, LLC) from start up to a multibillion dollar lender in only a few years. Prior to joining B2R, Matt was a Commercial Real Estate (CRE) trader at J.P. Morgan and Bear Stearns. At Patch of Land, Zall will execute strategies to enable the expansion of the firm’s position as a marketplace lender by offering both accredited and institutional investors additional opportunities to invest in this asset class.

Fintech Startup Current Announces $ 3.6 mil Raise With Eye on Injecting “Cs” Into Payments and Banking Space (Huffington Post), Rated: A

Today Current, founded by former Wall Street trader Stuart Sopp in an effort to propel himself from a “stagnating banking industry,” announced a seed round venture capital raise of some $3.6 million backed by Expa (co-founded by Uber’s Garrett Camp and Foursquare’s Naveen Selvadurai among others), Human Ventures and Future Perfect Ventures and other investors.

Once Current hits the ground with products, Sopp says it will deliver a highly secure, transparent payment platform and commerce ecosystem built around financial collaboration addressing “very real economic and community-oriented challenges — problems that have been left unsolved by the incumbent banking sector that lacks the progressive tools to help people manage their everyday lives.”

THE FINTECH PARADOX IN ONLINE BUSINESS LENDING – March 2017 (IOU Financial), Rated: A

However, not all Fintech business models have yet matured into profitability, key to the definition of success. A structural element of future success for new entrants resides in their ability to access cheaper funding and quality customers. Who can offer these things?  With that in mind, Banks, especially small ones, should feel confident they can monetize their position to bring down their cost of innovation.  By working with innovative companies in financial technology, they can quickly benefit from new and very cost efficient ways to grow revenues. Online lending could be the first expertise to explore in order to welcome small business back and help them grow.

It is true that technology has enabled new entrants to offer innovative services not available at banks, either as a product offering or at a more competitive price.  It is also true that banks have been slow at embracing technology as a growth engine, mostly due to lack of capital to fund innovation. This is especially the case for smaller banks who tend to lack financial and human capital to invest heavily in R&D and innovate. Large banks with deep pockets have found ways to either build or partner and grow their presence in areas where technology offer a clear competitive edge. Large banks have in fact recognized the win-win rationale for partnering with Fintech, an opportunity also open to small banks. Large banks love Fintech because they can afford it. Small banks can as well.

How will the paradox divide disappear between banks and Fintech Alternative Lenders?  It will dissipate with the online lender taking time to educate banks about their efficient loan platforms and how they can help banks reach new customers, develop new funding sources and grow revenues, especially non-recourse fee income.  Banks should also be curious and consult with online lenders to better define how they can benefit from their technology and expertise in lending small.

StackSource Announces Lending Marketplace at LendIt Conference (CRE.Tech), Rated: B

Today was a big day for Tim Milazzo, his company StackSource and possibly commercial real estate lending as whole. Tim had been selected as a pitch finalist for the LendIt conference in New York.

But, Tim had an extra surprise in store for this big day. His company StackSource has been a tool for property lenders to centralize workflow. While they are a new company, emerging from the TechStars accelerator program late last year, they have already helped property owners process over $1B of loan offers on the platform. But, this was never the end game for Tim and his co-founder Nathan. They started the company with the idea of creating a marketplace for commercial real estate borrowers. Today, they not only pitched at LendIt, they also went live with the marketplace that they originally envisioned.

United Kingdom

Zopa reports record month of lending (Bridging&Commercial), Rated: AAA

Zopa has recorded its second consecutive month of record lending.

The peer-to-peer platform revealed that it lent more than £81m during February 2017 as it approved nearly 12,000 borrowers.

This was £24m more than for the same period last year.

The platform celebrated a record year of lending during 2016 as it passed the £2bn milestone and back in November it announced plans to launch a bank.

P2P Lender RateSetter Partners with Mortgage Aggregator Connective (Crowdfund Insider), Rated: AAA

P2P lender RateSetter announced a partnership with national mortgage aggregator Connective which aims to give accredited brokers access to their personal loan products.

The move is part of RateSetter’s ongoing focus on the broker channel to continue its growth in consumer and business lending. By joining Connective’s lending panel, RateSetter plans to help brokers improve client’s financial wellbeing in areas outside of the traditional mortgage offerings.

RateSetter returns fall as market demand rises (P2P Finance News), Rated: AAA

RETURNS on RateSetter’s shorter-term accounts have fallen slightly due to changes in market demand.

The platform’s rolling market product was at 3.3 per cent last week and is now offering three per cent, its one year fix is now 2.9 per cent, down from three per cent, while its five year fix has actually increased slightly from 4.8 per cent to 4.9 per cent.

The rates are set by market demand on the RateSetter platform, but as of the end of March 2016 they were at 3.4 per cent for one month, 3.7 per cent for one year, 4.8 per cent for three years and 6.1 per cent for five years.

BondMason to increase bridging funding appetite (Bridging&Commercial), Rated: A

Peer-to-peer (P2P) service provider BondMason aims to expand its lending through bridging lenders in 2017, with over half of investment expected to be through non-P2P platforms.
The news follows a surge in demand for bridging finance in the final quarter of 2016, with the total lending figure for the year standing at £2.83bn.
Stephen added that while the bridging market has seen more competition from P2P lenders, it was mostly “around the edges”.

Misys backs gamification to educate next generation on money management (Zawya), Rated: A

Misys is making gamification an integral part of its Misys FusionBanking Essence Digital platform to help banks educate the next generation on better money management. Integrating Moroku’s GameSystem directly into the Essence Digital architecture enables banks to inject some fun into personal financial management (PFM) and help consumers achieve their savings goals.

With research research forecasting the mobile gaming market in MENA to be worth up to US$400m by 2021, the case for gamification in helping banks to attract, engage and retain customers is compelling. Banks stand to benefit from building greater trust with consumers and capturing market share. Gamification can also deliver a significant boost to customer experience. FusionBanking Essence Digital brings points, leaderboards and rewards to standard banking activity, to educate and also support savings and spend management.

China

China Consumer Finance Challenge Needs High-Tech Solution, China Rapid Finance CEO Tells LendIt (Broadway World), Rated: AAA

The challenge of expanding consumer finance to China’s vast population can only be effectively tackled with a high-tech solution that enables low-cost customer acquisition, Dr. Zhengyu (Zane) Wang, founder, chairman and chief executive officer of China Rapid Finance Limited (“CRF” or “the company”), told the LendIt USA 2017 conference.

Over the past two decades, China has emerged from being a market that in 2000 featured essentially no credit bureau, decision science, or consumer finance, Dr. Wang said in a March 7 keynote address at LendIt USA 2017, which was held at the Jacob Javits Center in New York City. China’s consumer finance market today boasts many of the same elements as the U.S. China now has a central bureau for credit reporting that covers 800 million people, while credit cards serve about 300 million people, he said.

Still, China’s consumer finance market has a long way to go, in a nation where non-mortgage credit is only 2 percent of GDP, Dr. Wang told the LendIt audience. Only about 16 percent of Chinese consumers have credit cards, compared with about 60 percent in the U.S.

MENA

Iran Launches a FinTech Association to Push for Development (Crypocoins News), Rated: AAA

Iranian financial technology companies have banded together to create Iran’s FinTech Association, several months after the Central Bank of Iran (CBI) suggested the idea, reports the Financial Tribune.

Known as FinTech A, the Iran FinTech Association is designed to bring industry players under a single area so that solutions can be found to their problems and improvements can be made between innovators and regulatory bodies.

Nasser Hakimi, director of CBI’s IT Department, said to the Financial Tribune, that he had proposed that FinTech companies develop a forum to figure out the challenges involved, identity key questions, as well as reach out to the regulator for solutions.

Last February, it was reported that while economic sanctions had been lifted against Iran, screening rules were still in place when trading with Iran, putting barriers in place for those within the U.S. and the EU who wanted to conduct bitcoin transactions within the country.

Asia

Indonesian P2P lending platform Amartha raises Series A, aims to disburse US $ 30M by end of year (e27), Rated: AAA

Indonesian P2P lending platform for unbankable society Amartha today announced that it has raised “seven digit” US Dollar in Series A round led by Mandiri Capital Indonesia (MCI).

Amartha plans to use the new funding to expand their coverage by creating mini-branch across Java and Bali, which they aim to complete by end of 2017.

Having had disbursed “more than” IDR68 billion (US$5 million) to 30,000 women who owns small businesses, the startup aims to disburse US$30 million to 100,000 borrowers by end of the year, with 10,000 active lenders on board.

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

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