- Today’s main news: Wonga warns borrowers of possible data theft. Lack of lucrative stock options causes mass exit from Klarna. Aadhaar Payment System first of its kind in the world.
- Today’s main analysis: Two Sigma Investments LP acquires new stake in LC.
- Today’s thought-provoking articles: RateSetter CEO says don’t partner with banks. Shanghai court freezes Huishan Dairy’s assets. Malaysian fintechs worried about over-regulation.
- LendingRobot launches fund for institutional investors. GP:” The most interesting part here is the cost of operating a fund. If one operates a fund with 10 people, they need to make about $2mil per year in revenue. At 2% management fee (at the standard 2 and 20 structure, of 2% management and 20% incentive) that means breaking even around $100mil in assets under management (AUM). And for each year when the fund doesn’t have $100m AUM it will lose money which means one needs to raise equity money and diluate ownership. If to run the fund one needs 2 computer programmers and 1 data scientist then it will break even much lower or the fund fees could be much lower, perhaps as low as 0.35% management fee and no incentive fee as we have seen in certain captive funds, mostly in real estate. “AT: “LendingRobot is well on its way to becoming a must-have tool for institutional and personal investors. I can’t wait to see what niche products they come up with next.”
- Two Sigma Investments LP acquires new stake in LC. GP: “Two Sigma has looked in the last year at entering the space in different ways. Perhaps this is the easiest and simplest way to enter the space. And I think buying the LC stock at the present valuation is a good risk to return trade. However, this is not serious: apparently Two Sigma bought for $167k of stock in LC, that’s lunch money, .so it must be just a portofolio equilibrating trade. Renaissance on the other side owns for $11mil of LC stock. And BlackRock bought 0.7% more share in LC, also an adjustment for sure.”
- Consumer borrowing rises a solid $15.2B in February. GP:” There is seasonality in consumer borrowing as the holiday credit card bills come due.” AT: “Sign of an improving economy or a fluke? Still too early to tell, but if auto loans and student loans continue to climb, I’d say it’s a good sign.”
- iinto stands out. GP:”Me too? Their strenght is however Meridian Capital’s backing, with $228bil in experience in the real estate.”
- Wonga warns borrowers of possible data theft. GP:” Credit bureaus take this risk seriously and all online lenders are seating on a lot of prime fraud-enabling personal information. The main problem is that it’s not even clear when data was compromised. And there is always a trade off between access inside the company so that the company can function efficiently and security of data. We haven’t heard any public notices of major data breaches in the industry yet. I am afraid it is just a matter of time. “AT: “Security is an important concern for all lenders. As the industry grows, I believe we’ll see more hacking attempts, and a fair number of them will be successful. This is an area where fintech companies in general, and alt lending platforms specifically, need to get ahead of the curve.”
- Don’t team up with banks yet. GP:” The main value I see is cost of capital, co-branding and customer acquisition.” AT: “RateSetter’s chief warns that partnering with banks will not add enough value to fintech businesses, but this is largely based on his own talks with banks. Every company will have to weigh the pros and cons for their business interests.”
- FCA to expand robo-advice unit to guidance propositions.
- 1M GPB mortgages soar 24% in 12 months. AT: “UK real estate seems to be on the upswing.”
- MarketInvoice new product delivers record quarter. GP:” MARKETINVOICE funded a record £130m of invoices in the first three months of 2017, a very impressive number.”
- Hogan Lovells launches global fintech mentor program.
- Spotcap launches fintech fellowship for aspiring UK grad students.
- Lack of lucrative stock options causes exits at Klarna. GP:” Thre is always a trade off between the cost to keep existing employees and cost of training new ones. And by cost I mean beyond the actual payroll costs, I mean also the untangible experience, motivation, company philosophy and know how who are lost or gained via the old and new employees. Some large companies in fact expect a certain level of turn over. GE, Boston Consulting Group, McKinsey and Goldman Sachs have put a lot of thought into this equilibrium” AT: “a 67% tax rate is excessive. Europe would do well to increase its position in the fintech sector by offering tax incentives to corporations that set up shop in EU countries.”
- Bpifrance joins Lendix. GP: “Lendix’s fund is now 90mil EUR.”
- Shanghai court freezes Huishan Dairy’s assets. AT: “It’s unclear what caused the loan default leading to this asset freeze. What is clear is that Chinese authorities are cracking down on fintechs in an attempt to clean up corruption and get a handle on the fast-growing industry. We may see more asset freezes soon.”
- Hyperfinance research uncovers key concerns around fintech adoption in Hong Kong.
- Digital payments to become a breeze with Aadhaar Payment System. AT: “India seems intent on becoming the world’s first completely cash-less society.”
- United States
- LendingRobot launches fund for institutional investors in P2P and marketplace lending (AltFi), Rated: AAA
- Two Sigma Investments LP Acquires New Stake in LendingClub Corp (LC) (The Markets Daily), Rated: AAA
- Consumer borrowing rises a solid $ 15.2 billion in February (CNBC), Rated: A
- iintoo Stands Out for its Offerings, Due Diligence & Social Approach to Investing in Real Estate (Crowdfund Insider), Rated: B
- United Kingdom
- Wonga warns its borrowers over possible data theft (Financial Times), Rated: AAA
- Don’t team up with banks just yet, RateSetter’s chief exec warns (P2P Finance News), Rated: AAA
- FCA to expand robo-advice unit to guidance propositions (City Wire), Rated: A
- £1m mortgages soar 24% in 12 months (Property Recorder), Rated: A
- MarketInvoice enjoys record quarter thanks to new invoice product (P2P Finance News), Rated: A
- Hogan Lovells launches global fintech mentors programme (P2P Finance News), Rated: A
- Online Lender Spotcap Launches Fintech Fellowship for Aspiring UK Graduate Students (Crowdfund Insider), Rated: B
- European Union
- Lack of Lucrative Stock Options Causes Exits at Swedish Startup (Bloomberg), Rated: AAA
- Bpifrance Joins Lendix: Subscribes to Co-Financing Fund Associated with the Online Lender (Crowdfund Insider), Rated: A
- Moneysoft helps create new financial advice tool with Mortgage Choice (ifa), Rated: AAA
- Shanghai court freezes Huishan Dairy’s assets on US$ 200 million loan default (SCMP), Rated: AAA
- Hyperfinance research uncovers key concerns around FinTech adoption in Hong Kong and Singapore (Simmons-Simmons), Rated: A
- Digital payments to become a breeze with Aadhaar Payment System (The New Indian Express), Rated: AAA
- Over-regulation of fintech firms hogs limelight at forum (The Star), Rated: AAA
- Fintech Talk: The potential rise of MSMEs and creative industry via P2P lending (The Jakarta Post), Rated: A
LendingRobot launches fund for institutional investors in P2P and marketplace lending (AltFi), Rated: AAA
LendingRobot Series has launched a new fund offering exposure to alternative lending specifically designed for institutional investors called “LendingRobot Professional”.
It is now seeing “significant interest” in its LendingRobot Series offering from wealth managers and family offices. The new launch will add in more advisor-focused features and functionality to Lending Robot’s fully automated fund for alternative lending.
Two Sigma Investments LP Acquires New Stake in LendingClub Corp (LC) (The Markets Daily), Rated: AAA
Two Sigma Investments LP acquired a new stake in LendingClub Corp (NYSE:LC) during the fourth quarter, according to its most recent disclosure with the SEC. The fund acquired 31,856 shares of the company’s stock, valued at approximately $167,000.
Renaissance Technologies LLC boosted its position in LendingClub Corp by 53.9% in the fourth quarter. Renaissance Technologies LLC now owns 2,182,697 shares of the company’s stock valued at $11,459,000 after buying an additional 764,597 shares during the last quarter. BlackRock Investment Management LLC boosted its position in LendingClub Corp by 0.7% in the third quarter.
Consumer borrowing rises a solid $ 15.2 billion in February (CNBC), Rated: A
Consumers stepped up their borrowing in February as a rebound in the use of credit cards offset a slowdown in borrowing on autos and student loans.
The Federal Reserve says that total borrowing rose $15.2 billion in February, the biggest gain in three months and an acceleration from January’s increase of $10.9 billion.
iintoo Stands Out for its Offerings, Due Diligence & Social Approach to Investing in Real Estate (Crowdfund Insider), Rated: B
More and more people are turning to crowd-sourced real estate investing via the internet.
If you are an accredited investor with $25,000 or more to invest, one firm stands out on every important selection criterion:
- Opportunities to invest in individual properties
- Due diligence
- Risk management
- Background in real estate
- Strategic alliances
- Investment platform
This firm is iintoo.
iintoo’s preeminent strategic partner is Meridian Capital, a real estate finance and advisory firm that has arranged more than $228 billion of real estate debt.
Wonga warns its borrowers over possible data theft (Financial Times), Rated: AAA
Hundreds of thousands of people who have borrowed money from payday lender Wonga are being warned that their personal data could have been stolen by hackers.
The company, which offers short-term loans at annual percentage rates that can be as high as 1,509 per cent, said that it had discovered an intrusion into its systems early last week but initially believed that no customer data had been accessed.
On Saturday, however, the company began notifying 270,000 current and former customers that there might have been “illegal and unauthorised access to some of your personal data on your Wonga.com account”. It added that names, contact details and bank account numbers were among the details that might have been illicitly obtained.
Don’t team up with banks just yet, RateSetter’s chief exec warns (P2P Finance News), Rated: AAA
FINTECH firms should refrain from collaborating with banks, RateSetter’s chief executive said on Monday, as they would lose more than they would gain from partnering up with the sector they had originally set out to disrupt.
Rhydian Lewis (pictured) said that the peer-to-peer lender had had a few “exploratory conversations” with high-street banks, but did not think a tie-up would add enough value for RateSetter.
FCA to expand robo-advice unit to guidance propositions (City Wire), Rated: A
The FCA will extend its robo-advice unit to include firms developing guidance solutions.
The FCA now plans to expand the project to help firms providing guidance rather than just regulated advice. This would see it help firms that do not make a recommendation at the end of the process.
£1m mortgages soar 24% in 12 months (Property Recorder), Rated: A
The latest analysis by peer to peer secured lending platform, Lendy, has found that the number of new residential mortgages worth over £1 million went up by 24% last year, as banks continue to favour lending to owner-occupiers and reduce lending to property developers.
According to the data, the number of new £1 million-plus mortgages written by banks last year increased to 4,844, up from 3,896 in 2015. The total value of these mortgages rose 18% over the same period to £8.95 billion from £7.59 billion.
Recent research from Lendy found that outstanding bank lending to developers fell 7% last year, to £14.8 billion in 2016 from £16 billion in 2015.
MarketInvoice enjoys record quarter thanks to new invoice product (P2P Finance News), Rated: A
MARKETINVOICE funded a record £130m of invoices in the first three months of 2017, putting it on track to achieve its £2bn lending target this year.
The peer-to-peer invoice finance platform concluded its bumper quarter with a record month in March, when it funded £54.7m-worth of invoices raised by UK businesses.
The growth has largely been driven by thelaunch of its new product, MarketInvoice Pro, which offers businesses an open funding line against their outstanding invoices.
Hogan Lovells launches global fintech mentors programme (P2P Finance News), Rated: A
HOGAN Lovells, the City law firm that has helped the likes of Zopa and Landbay move their businesses forward, has launched a global fintech mentors programme to support more firms in the sector.
The company, which announced the programme at the Innovate Finance summit in London, will provide mentors in the UK, US, Germany and Hong Kong, who will offer advice, training and networking opportunities to fintech firms looking to launch, improve and expand their offerings.
Online Lender Spotcap Launches Fintech Fellowship for Aspiring UK Graduate Students (Crowdfund Insider), Rated: B
European-based lending platform Spotcap announced on Monday the launch of its new fintech fellowship, which is geared towards aspiring graduate students. According to the online lender, the program will provide one student per academic year with a £8,000 stipend towards their studies.
Applications are currently open and will close on July 31st.
To be eligible, those interested must have the following:
- An offer of admission to a master’s or MBA program at an accredited British university starting in September/October 2017
- A British citizen
- Achieved or expected to achieve a 2.1 or above in undergraduate degree
Lack of Lucrative Stock Options Causes Exits at Swedish Startup (Bloomberg), Rated: AAA
A lack of lucrative stock options at Klarna AB, one of Europe’s few technology unicorns, is causing a raft of senior exits, highlighting the tech industry’s growing dismay with Swedish tax rules.
The Stockholm-based payments company has lost at least 15 senior staff in the past year. Most recently Brian Billingsley, Klarna’s head of North America, left the company last month.
Four senior Klarna executives who have left the company in the past year contacted for this story all said that the departures were not indicative of management turmoil or strategic failings at the Swedish firm. Instead, they noted that Swedish tax laws make it difficult for Klarna to dole out the lavish stock options that typically make executives loathe to leave fast-growing technology companies before they go public or are acquired.
Tech firms in Sweden are chafing against government rules around taxes. Under current law, stock options are taxed as income from employment, at a rate as high as 67 percent. In the U.K., by contrast, a range of options to decrease capital gains taxes are easily available.
Alongside Billingsley’s exit, Klarna’s chief financial officer, its top communications executive and several top European regional executives all left over the past year.
Bpifrance Joins Lendix: Subscribes to Co-Financing Fund Associated with the Online Lender (Crowdfund Insider), Rated: A
Online lender Lendix announced on Monday that Bpifrance has joined its lending platform through a co-financing fund.
According to Lendix, Bpifrance’s new commitment brings the fund to the likely size of its hard cap set at 90 million euros.
Moneysoft helps create new financial advice tool with Mortgage Choice (ifa), Rated: AAA
Moneysoft has said it partnered with Mortgage Choice Financial Planning to create a financial advice tool with the aim of “bolstering” clients’ money skills.
In a statement this morning, Moneysoft said its advice technology will power MoneyTrack, a new tool to be offered by Mortgage Choice Financial Planning.
China Huishan Dairy Holding said a Shanghai court has frozen assets of the company and its chairman as requested by a mainland wealth management firm, and that HSBC alleges it has defaulted on a US$200 million loan.
Huishan, the country’s largest dairy farm operator, said in a filing to the Hong Kong stock exchange late Monday that it had received a letter on Friday from HSBC alleging “non-compliance with certain of the covenants” and “has therefore called events of default under the Facility Agreement”. HSBC acted on behalf of six creditor banks including China CITIC Bank International.
Huishan also said that a Shanghai court ordered last week that cash or equivalent assets worth 546.1 million yuan (US$79 million) be frozen, after an application was filesd by Gopher Asset Management. The asset freeze applies to the dairy, its chairman Yang Kai, and his wife.
Hyperfinance research uncovers key concerns around FinTech adoption in Hong Kong and Singapore (Simmons-Simmons), Rated: A
Hyperfinance, the firm’s flagship research programme, investigates what large banks and asset managers need to do to succeed in accelerating their digital innovation and overcome the challenges they face.
Institutions in Hong Kong and Singapore report very high levels of interest in FinTech, with focus on both external and internal investment. 92% of respondents in the two markets expect to collaborate with a FinTech firm in the next 18 months.
M&A and Regulatory risk
- Almost two thirds (62%) of respondents report building in-house expertise to improve digital and FinTech capability in recent years, while less than half (47%) consider consortia projects with other institutions to be effective in improving digital/FinTech innovation.
Digital payments to become a breeze with Aadhaar Payment System (The New Indian Express), Rated: AAA
The Aadhaar Payment System (APS), to be launched on April 14, is a revolutionary model that allows users to pay without using plastic money or a prepaid payment instrument such as PayTM. No such card-less, personal identification number (PIN)-less payment system exists in the world yet and this is a first-of-its-kind model India is experimenting. “It’s a giant leap and has the ability to transform the way digital payments are made, particularly in rural areas, where the use of mobile phones and cards is less,” says A P Hota, managing director and CEO, National Payments Corporation of India.
Over-regulation of fintech firms hogs limelight at forum (The Star), Rated: AAA
The need for alternative financing options for SMEs and the over-regulation by authorities faced by fintech (financial technology) companies were among the key arguments raised at a discussion among stakeholders of the financial sector.
Titled “Will Fintech disrupt the future of capital-raising?”, the session at the IFN Forum Asia 2017 saw representation from the traditional banking sector and fintech companies as well as the SME segment.
SME Corp Malaysia deputy CEO (II) Mohd Rithaudden Makip noted that Malaysia had been progressive in terms of facilitating the entry of fintechs, particularly to cater to the needs of the SMEs.
Fintech Talk: The potential rise of MSMEs and creative industry via P2P lending (The Jakarta Post), Rated: A
It is no longer breaking news that micro, small and medium enterprises (MSMEs) are among Indonesia’s economic turbines and a particular focus of President Joko “Jokowi” Widodo’s administration.
The number of MSMEs in Indonesia reportedly stands at approximately 49 million and they are projected to absorb 107 million workers.
It is a fact noted by the Cooperatives and Small and Medium Enterprises Ministry, as the contribution amounted to 60.3 percent of total GDP in 2016 from 57.8 percent in 2011.
The birth of financial technology (fintech), specifically peer-to-peer lending (P2P lending), which is backed by technological developments, is a breath of fresh air offering financing solutions through platforms that may make MSME operations easier.