- Today’s main news: AmEx lending pushes beyond credit cards. RateSetter releases performance statistic update. Yirendai presents new open tech platform.
- Today’s main analysis: Securitization spread analysis from PeerIQ
- Today’s thought-provoking articles: SoFi looks at pharmacy schools. P2P lending landscape in China. P2P lending takes hold in Africa.
- AmEx lending push goes beyond credit cards. GP:” I estimat that credit card lenders can enter the unsecured personal lending space more easily then the reverse.” AT: “Just as institutional investors have taken over markeplace lending and changed the industry, it’s inevitable that traditional financial institutions will do the same. First, Goldman Sachs, not AmEx. It’s just a matter of time before SoFi, Prosper, et. al. compete on even ground with traditional banks and finance companies in the MPL space.”
- SoFi looks at best-value pharmacy schools. AT: “SoFi’s best-value lists could become a looked-forward to annual tradition.”
- Securitization spread analysis from PeerIQ on near-prime and super-prime personal loan ABS. GP:” A must read analysis with a very interesting spread chart.”
- Orchard weekly online lending snapshot.
- Remand decision in Madden v. Midland Funding raises questions. GP:” The National Bank Act did not preempt the state usury laws. A very surprising decision.”
- Increasing small biz units act as building blocks for P2P lending.
- JPMorgan Chase to acquire MCX FinTech payments tech for Chase Pay.
- Participate in the 2017 Americas Alt Finance Industry Survey.
- Best 2 P2P lending automation tools for investors.
- IHT Realty seeks crowdfunding for Jacksonville multi-family deal.
- RECF exec is top HUD advisor.
- Is Bitcoin ETF a good investment?
- LendingTree appoints J.D. Moriarty as SVP Corporate Development.
- RateSetter releases performance statistic update.
- PwC, Startupbootcamp chart fintech maturity.
- Currencycloud lands $25M Series D.
- British P2P startup lender secures $100M.
- Former bank CEO joins P2P lender.
- UK PropTech Association discusses rise in technology.
- Yirendai presents new open tech platform at 2017 LendIt USA conference.
- Yirendai CEO on P2P lending in China.
- Brief look at current state of Chinese P2P lending.
- United States
- AmEx’s Lending Push Goes Beyond Cards (WSJ), Rated: AAA
- SoFi takes a look at best-value pharmacy schools (Drug Store News), Rated: AAA
- ARCT 2017-1 as a “Cross-Over” Product between Near-Prime and Super-Prime Personal Loan ABS (PeerIQ), Rated: AAA
- Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA
- REMAND DECISION IN MADDEN V. MIDLAND FUNDING RAISES QUESTIONS REGARDING CHOICE OF LAW CLAUSES IN CONSUMER LOAN AGREEMENTS (Pepper Hamilton LLP), Rated: A
- Increasing Small Business Units to Act as Building Blocks for Peer-to-Peer Lending Market (Digital Journal), Rated: A
- JPMorgan Chase to Acquire MCX ?FinTech Payments Technology for Chase Pay (IT Business Net), Rated: A
- Participate in The 2017 Americas Alternative Finance Industry Survey (Orchard Platform), Rated: A
- The 2 Best P2P Lending Automation Tools For Investors (Forbes), Rated: A
- IHT Realty Seeks Crowdfunding for Jacksonville Multi-Family Deal (Globe Newswire), Rated: B
- Real estate crowdfunding exec is top HUD adviser (The Real Deal), Rated: B
- Is a Bitcoin ETF a Good Investment? (Kiplinger), Rated: B
- LendingTree Appoints J.D. Moriarty as Senior Vice President, Corporate Development (PR Newswire), Rated: B
- United Kingdom
- RateSetter Releases Performance Statistic Update (Crowdfund Insider), Rated: AAA
- PwC and Startupbootcamp chart fintech maturity (Finextra), Rated: A
- Currencycloud lands $25M Series D (Bankless Times), Rated: A
- British P2P startup lender secures $100 million worth of funds (The Technews), Rated: A
- Former bank CEO joins P2P lender (TheAdviser), Rated: A
- UK PropTech Association discusses rise of technology (Development Finance Today), Rated: B
- Yirendai Presents New Open Technology Platform at 2017 LendIt USA Conference (Crowdfund Insider), Rated: AAA
- Yirendai CEO on Peer-to-Peer Lending Landscape in China (Bloomberg), Rated: AAA
- A brief look at the current state of the Chinese P2P lending industry (e27), Rated: A
- Investree on a Push to Expand Peer-to-Peer Lending Network (Jakarta Globe), Rated: A
- This fintech startup is disrupting Korea’s banking sector, rewriting regulation (Geektime), Rated: A
- P2P lending takes hold in Africa (Gadget), Rated: AAA
- Crowdfunding’s growing impetus in Africa (Biz Community), Rated: A
- Need for SME finance sees arrival of FinTech lenders (Moneyweb), Rated: A
AmEx’s Lending Push Goes Beyond Cards (WSJ), Rated: AAA
American Express Co. is pushing into the booming personal-loan business despite investor worries that an expanding roster of lenders may be getting into the game at too late a stage.
Such fears put AmEx executives on the defensive Wednesday at their annual investor day conference. Chief Executive Ken Chenault acknowledged the company has received questions about the timing of recent efforts to expand lending. These include through credit cards and expanding last year into personal loans—the first time the iconic card company has engaged in such lending.
But he said that AmEx is “very comfortable” because the initiative involves lending more to its existing card customers.
Online lenders have been using these loans to appeal to mostly creditworthy consumers who want to consolidate high-interest credit-card debt. Around three out of every five loans LendingClub has made since it began lending in 2007, for instance, went toward paying off higher-cost debt, according to data from the San Francisco-based company.
And there are plenty of credit-card customers to target. Total credit-card balances have grown to be just shy of $1 trillion, climbing steadily toward crisis-era levels. The Federal Reserve reported this week that balances in January were $995 billion.
SoFi takes a look at best-value pharmacy schools (Drug Store News), Rated: AAA
Lender and student loan refinancing company SoFi this week conducted a rundown of which pharmacy schools provide students the best bang for their buck by comparing which schools have the highest average salaries relative to their student debt, on average. It also looked at the pharmacy schools’ graduates have the highest average salaries and schools whose graduates have the highest amount of debt relative to their income.
The pharmacy school with the highest average salary was the University of California, San Francisco, which had an average salary of $145,297, which was 1.3 times the average $109,394 in debt students depart with. The University of the Pacific’s pharmacy school came in second, with an average salary of $137,639 and salary-debt ratio of 0.8. It was followed by Midwestern University – Glendale, whose graduates earn $133,867 on average; University of Southern California, with its average graduate salary of $133,328; and Harding University, with its average salary of $132,748. However, all four schools that followed the top slot had students with debt higher than their average salary, and three were below the average of all pharmacy schools.
ARCT 2017-1 as a “Cross-Over” Product between Near-Prime and Super-Prime Personal Loan ABS (PeerIQ), Rated: AAA
On the weighted-average adjusted basis, we observed flattening in the credit curve: the A tranche is 60 basis points tighter and the B tranche is 130 basis points wider than the corresponding tranches in non-prime deals (Exhibit 3). This flattening behavior is expected as the subordinate tranches on near-prime collaterals have heavier expected losses than that of prime collaterals. Comparing to the SCLP shelf, ARCT 2017-1 is priced about 40 basis points wider on the A tranche and 280 basis points wider on the B tranche. We believe that the “first-dollar” loss risk is relatively low for ARCT 2017-1 A class investors with a 0.83yr WAL.
Orchard Weekly Online Lending Snapshot (Orchard Platform), Rated: AAA
REMAND DECISION IN MADDEN V. MIDLAND FUNDING RAISES QUESTIONS REGARDING CHOICE OF LAW CLAUSES IN CONSUMER LOAN AGREEMENTS (Pepper Hamilton LLP), Rated: A
On February 27, the U.S. District Court for the Southern District of New York issued a highly anticipated decision in Madden v. Midland Funding1 on remand from the U.S. Court of Appeals for the Second Circuit. The decision dashes industry hopes for a favorable ruling on the case’s choice of law issues that would blunt the impact of the Second Circuit’s 2015 conclusion that the National Bank Act (NBA) did not preempt plaintiff Madden’s state law usury claim. Just as importantly, however, the decision turns a spotlight on lenders’ ability to override state usury laws by relying on choice of law clauses in their loan agreements with consumers in certain states like New York.
In finding that New York’s criminal usury law constitutes a “fundamental public policy” of the state, the court cited the Eighth Circuit Court of Appeals’ decision in Electrical & Magneto Service Co. v. AMBAC International Corp. for the position that the “existence of a criminal provision ‘is significant because the legislature would not allow a criminal law to be bypassed by the mere existence a choice of law provision contained in a contract.’”
- The district court’s opinion should raise concern for all non-bank lenders because choice of law clauses are often relied upon in the industry as a means of overcoming more rigorous state usury restrictions.
- As noted throughout the opinion, interpretations of state law by federal courts carry little weight as precedent.14 A future court would be free to disregard the district court’s interpretations of New York law and might arrive at a different conclusion regarding the applicability of the criminal usury cap to defaulted debt.
- If NBA federal preemption had applied based on the assignment of plaintiff Madden’s loan to the defendants from a national bank, the choice of law issue would have been moot.
- A future case involving bank model lending would likely have a different outcome, even within the Second Circuit, because the arguments in favor of federal preemption would be stronger than what exists in a case involving the purchase and assignment of defaulted debt due to the bank’s greater degree of ongoing involvement.
Increasing Small Business Units to Act as Building Blocks for Peer-to-Peer Lending Market (Digital Journal), Rated: A
The key trend likely to be adopted by leading players in the global peer-to-peer (P2P) lending market is to build strategic alliances to expand its small business loan divisions. For instance, Prosper Marketplace, Inc. joined hands with OnDeck and bought American Healthcare to improve its product portfolio. Similarly, LendingClub Corporation is also targeting startups by collaborating with trustworthy investors in the market.
Simplification of modes used for peer-to-peer lending such as improved online interfaces has augmented the peer-to-peer lending market in the recent years.
JPMorgan Chase to Acquire MCX ?FinTech Payments Technology for Chase Pay (IT Business Net), Rated: A
JPMorgan Chase (NYSE:JPM) has agreed to acquire MCXs payments technology to help expand Chase Pay, the mobile and digital wallet for Chase customers. MCX, a network of Americas largest merchants, was the premier launch partner for Chase Pay in October 2015. The transaction is expected to close in the coming weeks.
Participate in The 2017 Americas Alternative Finance Industry Survey (Orchard Platform), Rated: A
There’s still time to participate in The 2017 Americas Alternative Finance Industry Survey. The deadline is March, 15. Orchard believes that by participating in this high-profile and high-impact research, originators can help broaden and deepen coverage of our fast-changing industry and is supporting the survey as a key research partner for the second year.
Your platform will be prominently acknowledged and thanked in the report with logo displayed. Your data will only be analyzed and presented in aggregate format by country and model. No individual platform’s data is therefore divulged. After the survey is completed, data that you submit will be encrypted and stored safely to ensure continued anonymity and confidentiality.
The 2 Best P2P Lending Automation Tools For Investors (Forbes), Rated: A
What started as peer-to-peer has grown into a marketplace. The likes of JP Morgan and Citibank now account for over 65% of new capital.
Institutional involvement in the sector has made P2P investing highly competitive. Institutions use algorithms to select the best quality loans, snapping them up only seconds after being listed.
NSR Invest is a registered investment advisor that offers managed and self-directed accounts to P2P investors.
Investors can link their Lending Club, Prosper, and Funding Circle accounts to the website and have NSR invest for them. Depending on the NSR strategy chosen, users outperform the market by as much as 2.6% (average is 1.5%).
LendingRobot (LR) is another registered investment advisor offering fully automated P2P investing. Investors can link their Lending Club, Prosper, and Funding Circle accounts to LR. Like NSR, LR offers managed and self-directed accounts.
For managed accounts, investors can select their desired return levels that range from conservative to aggressive. Based on your selection, LR “cherry picks” suitable loans.
On average, LR users outperformed the market by 1.45% over the course of 2015–2016.
For self-directed accounts, users select loans based on criteria such as monthly income and loan purpose.
IHT Realty Seeks Crowdfunding for Jacksonville Multi-Family Deal (Globe Newswire), Rated: B
IHT Realty Crowdfunding announced on Thursday a new program that will offer investors a guaranteed six-month return regardless of how early the property sells.
Lenger Financial is offering a strong debt coverage ratio of 1.28 with an excellent after repair value (ARV) of 74 percent. The sponsor is projecting a gross annual income of $15,590 and a projected net operating income of $10,443.
Real estate crowdfunding exec is top HUD adviser (The Real Deal), Rated: B
Earlier this week, ProPublica published a list of more than 400 Trump administration officials working across the federal government’s major departments. The list includes a number of officials at the Department of Housing and Urban Development, such as its “Senior White House Advisor,” Maren Kasper. Kasper most recently served as a director at Roofstock, an Oakland-based investment platform for single-family rental homes.
Is a Bitcoin ETF a Good Investment? (Kiplinger), Rated: B
The Securities and Exchange Commission denied approval of the Winklevoss Bitcoin Trust ETF, an exchange-traded fund that would track the value of digital currency bitcoin. Friday’s highly anticipated decision came nearly four years – and a dozen amendments – after the fund was first proposed and delayed indefinitely making gaining access to the currency as easy as logging into your online brokerage account.
LendingTree Appoints J.D. Moriarty as Senior Vice President, Corporate Development (PR Newswire), Rated: B
LendingTree® (NASDAQ: TREE), the nation’s leading online loan marketplace, today announced that J.D. Moriarty will be joining the company as its Senior Vice President, Corporate Development, effective April, 2017.
In his new role, Moriarty will be responsible for business development and strategic acquisitions as the company continues to expand its footprint in the lending and financial technology industry.
RateSetter Releases Performance Statistic Update (Crowdfund Insider), Rated: AAA
P2P lender RateSetter announced on Friday it has updated its performance statistics. According to the lending platform, a new set of fields on the Performance by year means investors may now view the amount lent by year, which is broken down by lending type.
PwC and Startupbootcamp chart fintech maturity (Finextra), Rated: A
In a new report, ‘The start-up view: a year in FinTech’, Startupbootcamp and PwC analyse application data from Startupbootcamp’s FinTech accelerator programme as well as the volume of deals in the UK FinTech market in 2016.
Startups are putting more emphasis on solving real customer problems using AI and machine learning.
There remains, however, a disconnect in the interest shown in this area by startups and investors, with the report showing that for many investors it is still too soon to invest in smarter faster machines. There remains, however, a disconnect in the interest shown in this area by startups and investors, with the report showing that for many investors it is still too soon to invest in smarter faster machines.
Despite Brexit, the UK should remain a global FinTech centre
UK based startups made up 34% of all applications to Startupbootcamp in 2016, up from 22% the year before, demonstrating the constant growth of innovation and wealth of talent in the UK.
Currencycloud lands M Series D (Bankless Times), Rated: A
Cross border payments platform Currencycloud has completed a £20 million ($25M) Series D round. New investor GV (née Google Ventures) joined existing investors Notion Capital, Sapphire Ventures, Rakuten FinTech Fund and Anthemis. The money will fund a global expansion.
British P2P startup lender secures 0 million worth of funds (The Technews), Rated: A
Funding Circle has successfully managed to lend over 2.5 billion pounds ($3.07mil) internationally in 2016. Currently, the company has offices located in San Francisco, Berlin, and the Netherlands. Moreover, the company has its largest market in the UK worth of $981mil.
Former bank CEO joins P2P lender (TheAdviser), Rated: A
Peer-to-peer lender RateSetter has appointed former ING Direct chief executive Vaughn Richtor to its Australian board of directors.
Mr Richtor has a wealth of experience in the banking sector, having served as the chief executive of ING Retail Banking Asia prior to becoming CEO of ING Direct.
UK PropTech Association discusses rise of technology (Development Finance Today), Rated: B
There is no ignoring the record number of proptech M&As and fundraising events seen in 2016 and this looks set to continue in 2017. Already, proptech funding activity in the UK alone has been astounding this year, with Purplebricks’ £50m raise to drive their international expansion the latest example. This comes on the back of three strong fundraises by proptech finance companies: LendInvest, Habito and Trussle.
In order to support this burgeoning sector, we launched the UK PropTech Association (UKPA) this month.
Yirendai Presents New Open Technology Platform at 2017 LendIt USA Conference (Crowdfund Insider), Rated: AAA
Yirendai (NYSE: YRD) announced the launch of its new open technology platform, Yirendai Enabling Platform (YEP), during the 2017 LendIt USA Conference, which was held earlier this week in New York City.
Yirendai CEO on Peer-to-Peer Lending Landscape in China (Bloomberg), Rated: AAA
Since 2007, peer-to-peer platforms (P2P) lending has mushroomed in China as a new source of fixed income for retail investors. Peer-to-peer lending is a new method of debt financing that allows people to borrow and lend money without a financial institution. Harnessing technology and big data, P2P platforms connect borrowers to investors faster and cheaper than any bank.
Last year, the country’s US$60 billion peer-to-peer lending sector was dogged by scandals and fraud due to loose oversight. This resulted in China’s authorities’ imposing new rules due to concerns about defaults and fraud among the nation’s 2,349 online lenders.
Right now, China is facing two extremes of P2P platforms going up and down: record-breaking funding rounds (Lufax US$10 billion) and record-breaking Ponzi schemes (Ezubao, US$7.6 billion).
The New York-listed firm, unlike its peers, has not only been expanding its business rapidly but also set its sights on disbursing loans worth 100 billion yuan (HK$ 112.8 billion) a year by 2020.
Just a few days ago, Dianrong made an official announcement that it is launching China’s first-ever blockchain platform, named ‘Chained Finance’ by joining efforts with FnConn, a subsidiary of Foxconn Technology Group.
Lufax (陆金所) is the largest player in China and the third largest in the world. It is important to note that Lufax, formally known as Shanghai Lujiazui International Financial Asset Exchange, is 44% owned by financial conglomerate Ping An Insurance Group.
Investree on a Push to Expand Peer-to-Peer Lending Network (Jakarta Globe), Rated: A
Investree Radhika Jaya, a local startup providing a peer-to-peer lending marketplace, is looking to open representative offices in major Indonesian cities this year as part of a push to expand its lending by more than sixfold this year.
The company, which matches individual lenders with borrowers, expects to mediate Rp 400 billion ($30 million) in loans from lenders to borrowers this year, up from Rp 65 billion last year, Adrian A. Gunadi, Investree co-founder and chairman told the Jakarta Globe on Thursday (09/03).
One is a loan whose terms are custom fit for employees, who will pay it back using automatic deduction from their salary.
The other is for small and medium businesses, which supply listed companies, multinational firms, state-owned enterprises or government offices. This loan is given against these SMEs’ invoices to their clients, reducing risk revenue mismatch that could hamper the debt payment. “These way we do not directly compete with banks. We complement them,” he said.
As of Friday, Investree has processed Rp 86.7 billion in loans for 395 borrowers, most of them SMEs.
This fintech startup is disrupting Korea’s banking sector, rewriting regulation (Geektime), Rated: A
Korean financial services app developer Viva Republic announced last week the close of their Series C funding round, bringing home $48 million in new capital.
Launched in February 2015, the company’s app Toss now claims 6 million users in their native market, providing P2P transfers between friends and family. They have since added services such as loans, a financial dashboard that shows all of the user’s accounts (an important feature as Koreans have 5.4 accounts per person on average), and a credit monitoring service.
Viva Republica’s decision to look abroad for new backers should be taken as a sign that they understand that if they will want to continue to scale, they will need investors with a wider viewpoint on the potential of powerful fintech solutions than what is available to them in their home ecosystem.
P2P lending takes hold in Africa (Gadget), Rated: AAA
Africa has caught the attention of those in the ever-evolving peer-to-peer (P2P) lending sector. A recent report published by the University of Cambridge Judge Business School analyses the current position of Africa on the world’s alternative finance stage.
The report explains that crowdfunding in Africa is just beginning to gain publicity and garner attention. As detailed in the document, the third-largest model in Africa is P2P business lending, which totalled $16 million in volume over a two-year period between 2014 and 2015.
Kenya and South Africa are the market leaders, raising $16.7 million and $15 million respectively from online channels in 2015. P2P business lending had a lower average deal size, of $41,000, with an average of 24 lenders each.
The make-up of the South African market differs markedly from the rest of Africa. In 2015, the vast majority of market activity – $13.8 million – came from P2P consumer and business lending, with the remaining $1.2 million spread across microfinance, donation-based and reward-based crowdfunding.
Crowdfunding’s growing impetus in Africa (Biz Community), Rated: A
Peer-to-peer business lending is the third-largest finance model in Africa, totalling $16m in volume in 2014 and 2015, and it’s growing in popularity.
The Africa and Middle East Alternative Finance Benchmarking Report, published in February, is the first comprehensive study of the size and growth of crowdfunding and P2P lending markets in Africa and the Middle East. It includes additional chapters on the regulatory landscapes in Africa.
Need for SME finance sees arrival of FinTech lenders (Moneyweb), Rated: A
The lending landscape in South Africa is transitioning. Taking the lead from their global counterparts, there are a host of smaller FinTech lenders entering the market, bringing with them an opportunity for SMEs looking for growth funding. However, by year-end we could see yet another shift.
Back home, the growth in the alternative lending space has largely been in response to the increased demand from SMEs looking for smaller and more short-term loans. These smaller deals generally attract more interest and are often unattractive to the bigger, traditional lenders.
International uncertainty, especially around shifts in regulations under the Trump administration, could see shifts in how banks are able to lend. However, the South African Reserve Bank has traditionally erred on the side of caution and we can expect a steady hand in our regulatory outlook. Similarly, if the US interest rates tick upwards, additional risk will enter the market and lending will be affected.