Daily News Digest Featured News

Monday March 20 2017, Daily News Digest

lending club delinquency rates

News Comments

United States

United Kingdom

Australia

China

India

South America

Asia

News Summary

United States

Experian and Finicity collaborate to digitize marketplace with less tedious experience for consumers and lenders (Yahoo! Finance), Rated: AAA

Experian®and Finicity have joined together to make it easier for consumers to apply for a loan, accelerating loan underwriting and broadening loan availability. The new technology also improves accuracy and reduces fraud risk for lenders. Experian’s new Digital Verification Solutions will deliver verification of assets and verification of income leveraging Finicity’s data aggregation and insight platform. Experian is the first credit bureau to implement this technology, which will give consumers the opportunity to secure mortgages as well as other types of loans with less paperwork and hassle by connecting with financial institutions digitally.

By digitizing the end-to-end mortgage process, loan approvals that take as long as 70 days, may be approved in as little as 10 days. With Experian’s industry-leading credit decisioning and Finicity’s account insights technology, consumers can rapidly complete the income and assets verification process through a simple digital experience.  Consumers will then permit delivery of appropriate account data, which is pushed to Experian’s Decisioning as a ServiceSM hosted platform. This will give lenders the ability to integrate consumers’ account data into their credit decisioning processes. As a result, lenders and other service providers will assess a consumer’s ability to pay and verify borrower income and assets in a manner compliant with the Fair Credit Reporting Act (FCRA).

Experian and Finicity’s partnership also will benefit the approximately 25 percent of the U.S. population with limited or no credit history, including millennials, who are the largest segment of the workforce and are increasingly applying for loans. While these consumers may have a limited credit history, most consumers have a checking and savings account, as well as other payment obligations such as rent, and utility and phone bills, which can demonstrate they are capable of repaying a loan.

PeerIQ Performance Monitor (PeerIQ), Rated: AAA

  • Lending Club targeted the most significant increases in borrowing rate to riskier borrowers in E, F, and G-grades. Prosper’s recent borrowing rate increases are mild comparing to Lending Club’s rate actions. We expect that the overall borrowing interest rates will continue to increase in response to hikes in Federal Funds rates
  • For Lending Club’s 36-mo and 60-mo products, delinquency rates continue to trend higher for 2016 vintage. We expect loans to approach peak delinquency after ~13 months of seasoning; for Prosper, we expect the 36-mo product to hit peak delinquency about 9 months of seasoning and 13 months for the 60-mo term product.
  • For both Lending Club and Prosper, charge-off rates continue to be elevated for loans in 2016 vintages. The spikes in charge off rates agree with delinquent loan pipelines as loans transition from delinquency to charge-off states. (We note that recent credit buy box tightening will not show up in the 2016 vintage).
  • We expect that originators continue to adjust pricing and credit modeling based on forward-looking credit market, Fed Funds rate expectations, the credit environment andthe competitive landscape in consumer unsecured lending.

lending club delinquency rates

prosper delinquency rates

See the full report here.

Why CommonBond’s CEO says fintech charter could be a game changer (American Banker), Rated: AAA

For the founder of an online lending startup, David Klein, CEO of CommonBond, talks like a sage.

The bearded entrepreneur notes approvingly that the conversations in his industry are becoming “more grounded and mature, rather than all about going to chase the shiny object,” and that company valuations are “catching up to reality.”

What’s new at CommonBond?

DAVID KLEIN: One of the things we are most excited about is what we call the 401(k) for student loans. This is SaaS-based technology that enables employers to contribute to their employees’ student loan repayment every month.

It is very early days, so only about 4% of companies have a student-loan-related benefit. That number is expected to be over 20% in two years.

Over 70% of millennials have student loan debt. Over 50% are thinking about student loans are thinking about them more than retirement and about 80% of them would choose a company to work for if they had this benefit.

In some of your talks over the last year or so, you’ve hypothesized that the number of marketplace lenders would soon shrink. Has it happened the way you thought it would? Have many hung on longer than you thought?

For online lending, 2016 was a year where the strong got stronger and the weak got weaker. There were a few shops that closed up and there were some players that became better known and entered 2017 stronger than ever. I think that continues in 2017 and 2018, regardless of geopolitical or macroeconomic picture, because if you study the emergence of industry, that’s what tends to happen.

What’s the key to that default rate? Are you chasing only the HENRYs?
We look at past credit and future prospects. We look at credit reports and FICO scores, but we look at cash flow, employment, industry of employment. We are looking at a host of factors.

What are your thoughts on the OCC’s proposed fintech charter?

The OCC charter would allow us to comply with regulation in one jurisdiction, instead of 51 jurisdictions including D.C. To the extent that we can save on costs, we could pass that along to customers.

It would affect capital costs. We might get access to low-cost deposits like banks do, we might get access to the Fed discount window to get close-to-free money and we might get access to better pricing in the capital markets by being a chartered institution. We’d be poised to significantly lower our cost of capital long term.

The OCC FinTech Charter: A New Model For Tech-Enabled Financial Services? (Payment Law Advisor), Rated: AAA

On February 21, DWT Payments team members Andy Lorentz and Tom Scanlon took part in a discussion organized by NYPAY that focused on the prospects of the OCC special purpose fintech charter.

View the presentation here.

The 5 Best ‘Alternative Investments’ to Consider (Newsmax), Rated: A

Private equityThese investments aren’t publicly traded or listed on the stock market. Private equity or venture capital firms invest in venture capital, start-ups, company growth, or restructuring of a company.

Real estate — Investing in property may include housing, apartment complexes, and commercial real estate. The Wall Street Journal explained that some self-directed individual retirement accounts allow people to diversify their investments into real estate, among other options, but there are many rules and risks. You also can invest in property indirectly through real estate investment trust (REIT) funds, which are available on public exchanges.

NEW REPORT: What’s The Ticket To Platform Payments Success? (PYMNTS.com), Rated: A

Radial, for example, an omnichannel technology and sales platform provider, recently debuted a new deferred payment option called Buy Now, Pay Later. The new payment feature, the result of a collaboration with European solution provider Klarna, allows customers to spread payments out over the course of six to 36 months. Similarly, fundraising platform Virgin Money Giving and payment processors Worldpay recently collaborated on a new payments system designed to handle the high number of donations that are made in the days and hours leading up to major events such as the London Marathon.

Meanwhile, PayPal looked to improve its platform with a new acquisition. The company announced plans to acquire multichannel bill payment processing and receivables company TIO Networks for a total of $233 million, according to reports.

Financial Poise™ Announces “EQUITY CROWDFUNDING,” a Four-Part Webinar Series, Available On-Demand Now through West LegalEdcenter (Benzinga), Rated: B

Financial Poise™ Webinars and West LegalEdcenter are pleased to announce the on-demand premiere of a new webinar series “EQUITY CROWDFUNDING 2017,” designed to introduce attorneys and business owners to the basics of investing in private companies through crowdfunding. Moderator Chris Cahill of Lowis & Gellen joins panelists from firms including Crowdcheck, CFX Markets, Crowdfunding Lawyers.net and Riggs Davie in Episode #1, Title III, Regulation A+, and State Crowdfunding Regimes.

Nasdaq Announces Development Role In Shaping Ad Contracts Blockchain (Yahoo! Sports), Rated: B

Securities exchange operator Nasdaq has announced it is helping to compile a blockchain for ad contracts, in partnership with the New York Interactive Advertising Exchange.

The blockchain is billed as being a transparent market mechanism for advertisers and publishers to set up ad contracts, creating a more fluid, price-driven environment for digital advertising.
It is hoped that the new system will provide a more efficient basis for the wider digital advertising industry, said to be worth in excess of $32 billion per year.
Nasdaq has already filed patents for its technology, in addition to launching its own private market Linq, powered by the same infrastructure, back in 2015.
United Kingdom

RateSetter and Zopa among P2P lenders signed up to money platform Bud (P2P Finance News), Rated: AAA

SIX PEER-TO-PEER lenders including RateSetter and Zopa have partnered with Bud, a new online platform and app that enables consumers to manage their finances on a single dashboard.

Zopa, Landbay and Assetz Capital have all got live pages on the platform, meaning that Bud’s customers will be able to manage their P2P loans alongside their bank accounts, pensions, mortgages and other investments.

LendingWell, Lending Works and RateSetter have also signed up to Bud, although their pages have not gone live yet.

Bud currently has 18 partners operational on the site, with another 20 signed up.

Walsh said that Bud is currently in talks with other P2P platforms.

It has been in its ‘beta’ testing phase since November and currently has around 4,000 customers signed up.

P2P lender launches three-minute loans through app (Bridging&Commercial), Rated: AAA

A fintech app has partnered with peer-to-peer (P2P) platform Lending Works to offer loans in just three minutes.

Revolut customers will now be able to apply for between £500-5,000 in credit in two minutes and receive funds on their contactless card almost instantly.

The London-based company also plans to enable a P2P lending marketplace among its own user base of 530,000 Europeans, ultimately allowing customers to lend and borrow money across borders.

RateSetter funds SME acquisition in the South East (P2P Finance News), Rated: AAA

RATESETTER has channelled £140,000 to fund a small- and medium-sized enterprise (SME) acquisition in the South East, as part of its focus on business lending in the region.

The peer-to-peer finance platform has arranged two loans to enable Thame-headquartered digital marketing agency Purple Frog acquire Oxfordshire neighbour OXLink, an IT specialist that will help it scale up its operations.

Zopa Celebrates Plus Products 1st Birthday (Crowdfund Insider), Rated: AAA

On Friday, peer-to-peer lender Zopa celebrated the one year birthday of its product, Zopa Plus, by taking a look back at its progress over the past twelve months.

While revealing how Zopa Plus has performed to date, the Zopa team explained that the product is performing in line with expectations. Although each individual investor has different Plus experiences, 73% of investors have notably invested for an average of at least six months, with no loan sales, have achieved actual returns of at least 6%.

Fintech Startup CurrencyCloud Raises m in Series D Funding Round (Finance Magnates), Rated: A

UK-based fintech company CurrencyCloud, a cross border payment-as-a-service provider, announced the raising of £20 million (US $25M) in Series D funding round. The company has raised from backers a total of £44 million ($61 million) in venture funding to date.

The firm has amassed an impressive roster of investors which this time included Alphabet’s venture arm GV, formerly Google Ventures, in addition to existing investors Notion Capital, Sapphire Ventures, Rakuten FinTech Fund, and Anthemis.

MarketInvoice names Zopa’s Giles Andrews as chairman (P2P Finance News), Rated: A

ZOPA co-founder Giles Andrews OBE has been appointed chairman of MarketInvoice, to help support the peer-to-peer invoice finance platform’s plans for growth this year.

Andrews will work directly with MarketInvoice’s co-founders Anil Stocker and Ilya Kondrashov to drive scale in the business, as well as chairing and managing the board of directors, the company said.

The high-profile appointment comes at a pivotal time for MarketInvoice, as it is looking to double its lending to £2bn this year.

 

Merseyside Pension Fund finances Canary Wharf development (IPE), Rated: A

The Merseyside Pension Fund has backed a £12m (€13.8m) loan secured against a development in Canary Wharf.

The £6.8bn public sector scheme has partnered with LendInvest on the deal.

The loan will help finance a planned development in London’s Docklands, which will include a 320-bedroom hotel and 199 residential units.

Digital Disruption Has Arrived In FinTech (Forbes), Rated: A

ClearBank, the first new clearing bank to be authorized in the UK in over 250 years launched on February 28th.

It is the only UK clearing bank that does not offer services direct to the consumer – a neutral and independent platform service that does not compete with its own customers.

There are big incentives for FinTechs and incumbents to use ClearBank. Put simply, they will be able to process payments and offer new competitive transactional banking services more cost effectively, efficiently and faster than has ever been possible.

I suspect ClearBank will be on the radar of everyone in the global FinTech ecosystem.

Blockchain, Distributed Ledger, Artificial Intelligence, and Identity technologies all promise to deliver technology enabled disruption, but appear to be slow out of the starting blocks with adoptable and scalable use cases. ed on February 28th.

Crowdfunding platform becomes Sharia-certified (Bridging&Commercial), Rated: A

Crowdfunding property investment platform Yielders has secured full Sharia certification from the UK Islamic Finance Council (UKIFC).

Launched in April 2016, Yielders specialises in pre-funded investment opportunities with pre-defined rental incomes, enabling investors the chance to start earning returns almost immediately.

How to find your way through the Isa maze (This is Money), Rated: B

Over the years, Individual Savings Accounts – Isas for short – have helped millions of people build long-term wealth they can access tax-free and at any time (unlike a pension).

But the Isa is about to get a major facelift which will make it a more exciting proposition than ever before.

From the beginning of the new tax year on April 6, a family of four – with two children under the age of 18 – will between them be able to squirrel away a maximum £48,256 in Isas over the course of 12 months.

Australia

AI automation FinTech startup Presagen secures competitive commercialization funding (Newsmaker), Rated: A

AI automation FinTech startup Presagen has secured its first round of funding as part of the South Australian Early Commercialization Fund  (SAECF), which is administered by TechInSA. SAECF is a new government grant funding scheme for companies with innovative technologies that have potential for global markets and large revenues. Presagen has been awarded the first of three possible phases of funding. Companies that are awarded all three phases can receive up to $500,000 in funding to support global commercialization initiatives. Presagen will use the funding to bolster its growing technical team.

Presagen uses a unique behavioral AI technique which emerged from the defense industry to automate complex human-centric tasks using software.

China

China, Blockchain & The Holy Grail of Marketplace Lending (CoinDesk), Rated: AAA

When one of the world’s largest corporations gets together with one of its largest peer-to-peer (P2P) lenders, you can almost hear the market sit up.

That’s what happened last week, when Chinese conglomerate Foxconn joined forces with P2P lender Dianrong to launch a blockchain platform for working capital. The benefits to supply chains are clear: smoother cash flows for suppliers will strengthen their liquidity, lower their costs and avoid delays in delivery due to lack of funding.

Should this change occur as projected, investment is likely to migrate to the stronger P2P lenders, shrinking the pool of potential borrowers.

The opportunity to lend to entities with a better-than-average risk profile at a reasonable return is the ‘holy grail’ of marketplace lending.

Peak Establishes New Fintech Subsidiary in China (Military-Technologies), Rated: B

Peak Positioning Technologies Inc. (CSE: PKK) (OTC PINK: PKKFF) („Peak” or the „Company”) today announced that the Company has established a new fintech subsidiary in Shanghai.

India

RBI likely to add tough riders to regulate P2P growth (India Times), Rated: AAA

The Reserve Bank of India (RBI) is expected to introduce strong riders to prevent the nimble peer-to-peer (P2P) lending industry from growing rapidly and suffering the same fate it did in many countries where P2P almost ended up looking like a ponzi scheme.

The RBI, which is expected to release the guidelines on the industry soon, believes that while the sector is yet to show much scale and traction, there should be a strict vigil on its functioning.

The regulator is worried about some cash-based unscrupulous lenders joining these platforms and lending at high interest rates, and would prefer institutional lenders to enter the space and perhaps reduce rates.

Credy looks to digitize personal lending in India  (TechCrunch), Rated: B

Lending platform Credy is looking to change the way people gain access to personal loans in India. The company, which is currently a part of Y Combinator’s Winter 2017 batch, is digitizing the process and improving access to capital for residents by opening up peer-to-peer loans to a wider group of borrowers and lenders.

With all that in mind, Credy has emerged to improve personal lending in a market that is worth $50 billion and is growing at a 30 percent rate.

South America

Brazil’s Creditas taps asset-backed debt market to fund auto loans (Reuters), Rated: AAA

Brazilian financial technology company Creditas Soluções Financeiras Ltda tapped the asset-backed debt market to raise 50 million reais (US$16 million) for auto loan refinancing, its chief executive said, an area shunned by traditional lenders after soaring delinquencies.

Sergio Furio said the transaction in February was the first in which Creditas fully decided collection and credit scoring procedures. Proceeds will go to refinance borrowers at a fraction of the cost of auto loans from banks.

Consumers in Latin America’s biggest country pay an average 190 percent a year for unsecured overdraft, credit card and consumer loans with banks.

Secured personal credit accounts for 1 percent of Brazil’s outstanding lending, a sign large banks have overlooked a segment that could thrive as benchmark domestic interest rates approach single-digits.

Asia

Our fintech future (Bangkok Post), Rated: A

In a digital world where the exchange of money is being revolutionised, banks are stepping up their collaboration with financial technology specialists to shape the future of financial institutions along with their security and data collecting systems.

While the internet has made banking much easier for consumers, it can also be a gold mine for hackers. In the old days they were simply called thieves, and they are breathing down the necks of banks, which are racing to find ways to make security cheaper and more effective. This is where fintech comes in.

In addition to working with fintech innovators on security systems and on ways to make customers’ banking experience better and faster. Mobile applications and various other electronic payment systems besides the ATM are the top examples that come to mind.

The Malaysia-based bank is broadening its fintech reach by joining with the likes of Samsung Pay and Go-Jek, a transport, logistics and payments startup in Indonesia, to provide more payment channels. It is also collaborating with the Thai mobile market leader Advanced Info Service for a mobile point of sale application, an e-wallet system for mobile money transfers, as well as Touch N’ Go, whose customers include Malaysian tollway operators, and the shopping portal Lazada for e-commerce payments.

US-based IDC provides market intelligence, advisory services and events for the information technology, telecommunications and consumer technology markets.

Artificial intelligence (AI) applications used to collect and analyse this personal information are getting smarter every day, opening more opportunities.

Mobile banking applications can be about providing services such as information about exchange rates or locations of businesses since it is not always about money transactions.

fintech

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

Testimonials

default image

"Your daily letter is great!" , Ram , Founder and CEO, PeerIQ

default image

"Hi George - just want to tell you that you are doing a great work with Lending Times;-) Brgds, Kasper" , Kasper, Partner and Co-founder at Dansk Faktura Børs A/S

default image

"I've been following your newsletter for some time now and have been very impressed with the content." Charlie,Co-Founder | Bolstr

default image

"Hey George, I must say I really enjoy your site. It has inspired me to do some changes at our platform and we are the biggest consumer lender in Sweden." , Ludwig, CEO @ Savelend Sweden AB

default image

"Your daily email is very useful. It gives quick update on what's going in the market. Thank you very much for all that info." Yann Murciano, Head of Base Metals Trading at Morgan Stanley

Our daily p2p news digest