Daily News Digest Featured News

Monday May 15 2017, Daily News Digest

alternative lending

News Comments

United States

United Kingdom

China

European Union

International

India

Asia

South America

Philippines

News Summary

United States

New York regulator sues U.S. OCC over ‘fintech’ charters (Reuters), Rated: AAA

New York’s banking regulator on Friday sued the U.S. Office of the Comptroller of the Currency over its decision to offer special-purpose charters that would let online lenders and other “fintech” companies do business nationwide.

In the lawsuit, filed in U.S. district court in Manhattan, Maria Vullo, superintendent of the New York Department of Financial Services, called the decision to grant the national charters “lawless, ill-conceived and destabilizing of financial markets” that are properly and most effectively regulated by the state.

Weekly Industry Update: Future of Fintech & OnDeck Earnings (PeerIQ Email), Rated: AAA

PeerIQ held a panel discussion this Tuesday titled, “What’s Next in Fintech Lending” featuring speakers including moderator, Peter Rudegeair (WSJ), and panelists Ram Ahluwalia (PeerIQ), Zhengyuan Lu (Victory Park), William Black (Moody’s Investors Service) and Greg Nowak (Pepper Hamilton). Discussion centered on credit performance, regulatory developments, and company news. Access the full replay here.

Also, Michael Gilroy, a Cannan Partners VC, penned an op-ed in American Banker, “Fintech’s Future is In the Backend”.

OnDeck released earnings this past Monday. The stock was down 7% on earnings day and, remarkably, trades slightly above book value, fueling M&A speculation and investor interest. Gross revenues and loan loss provisions were up 48% and 82% respectively from the prior year period. Tighter underwriting criteria slowed origination growth to 1%. Guidance for sale of loans thru the marketplace channel reduced from 18% to 5%. Balance sheet funding is now central.

  • Our interpretation is that OnDeck is taking actions that are at least consistent with pursuing a bank charter:
  • Bank regulator friendly actions – OnDeck has gradually lowered rates over time, tightened underwriting, and announced a focus on profitability rather than growth (targeting 2018 GAAP profitability).
  • Increasing bank executive on board and management – Seasoned banking executive, Jim Rosenthal (former COO of Morgan Stanley), joined OnDeck’s board. Seasoned banking personnel are a key requirement ahead of any bank charter approval.
  • Continued focus on originating loans under the JPM bank-approved credit policy.

A PeerIQ analysis shows that a shift to deposit funding would create ~$30 to $40 Mn in savings by reducing financing costs from ~5.9% to funding costs observed in the brokered CD market.

SoFi President Nino Fanlo to Leave Firm for Biotech Startup (WSJ), Rated: AAA

The No. 2 executive at online lender Social Finance Inc. is exiting the company to take a senior job at a biotechnology startup.

Nino Fanlo, SoFi’s president and chief financial officer, is leaving the firm at the end of the month to take over as finance chief at Human Longevity Inc., a four-year-old genomics company, the two companies said. After that time, Mr. Fanlo plans to remain a board observer and adviser to SoFi.

On an interim basis, Mr. Fanlo’s duties will be assumed by Steven Freiberg, a former top executive at E*Trade Financial Corp. ETFC -1.43% and Citigroup Inc. who joined SoFi’s board earlier this year. The company plans to launch a formal search for Mr. Fanlo’s successor.

The next battlefield for Alipay and WeChat is in the US (The Asset), Rated: AAA

As the two most successful payment platforms in China, Alipay and WeChat both share aspirations for overseas expansion.

In China’s domestic online payment market, which is now the largest in the world, Alipay accounts for 42.7% of online payments, while Tenpay (WeChat) accounts for 19.2%, as of Q4 2016.

Data from Iresearch show that mobile payments in China totalled US$5.5 trillion in 2016. In the US, the equivalent figure was only US$112 billion, according to Forrester.

A Birdseye Views Of Alternative Finance (PYMNTS), Rated: A

The Consumer Financial Protection Bureau (CFPB) has kicked off an inquiry into the U.S.’ SME finance space to understand how lenders lend to small businesses — or even define what they are.

The bureau has requested information from industry stakeholders to kick off its inquiry and also released a white paper to explore SME lending, in which it concluded there is a “current lack of comprehensive data in this area.”

The bureau has requested information from industry stakeholders to kick off its inquiry and also released a white paper to explore SME lending, in which it concluded there is a “current lack of comprehensive data in this area.”

$34.2 trillion is held by the world’s shadow banking market, with the U.S. holding the most of that money than anyone else in the world, according to the latest data from the global Financial Stability Board (FSB).

57.4 percent of U.K. SMEs are unaware of alternative lending options, finds the newest analysis from Close Brothers in its Business Barometer. Just over a third, the report found, said they are familiar with how invoice financing works.

OnDeck shares fell 8 percent last week immediately following the alternative lender’s announcement that it would be increasing credit requirements further in an effort to boost long-term profitability.

The 1 percent decline in loan origination volume posted by Lending Club could have investors worried as analysts said progress for the alternative lender has, on a whole, stalled.

The 1 percent decline in loan origination volume posted by Lending Club could have investors worried as analysts said progress for the alternative lender has, on a whole, stalled.

Ron Suber of Prosper Marketplace to Keynote at LEND360 (Lend360 Email), Rate: A

Join Prosper Marketplace President Ron Suber on Thursday, October 12, at 9:00 AM CT as he discusses the opportunities on the horizon in marketplace lending and how non-banks are solidifying their role in providing financial services.
Ron will also explore how the industry can work together and invent ways to deliver much needed access to credit to millions of consumers and small businesses.

New York joins common state licensing platform for fintechs (American Banker), Rated: A

The New York State Department of Financial Services announced Thursday it will allow fintech companies to register through a common platform used by a majority of state regulators, marking another step toward better regulatory coordination that will help states compete with the Office of the Comptroller of the Currency’s fintech charter.

Upstart Loans with Interest Rates Calculated by AI (Nanalyze), Rated: A

Founded in 2012, San Carlos California startup Upstart has taken in $85.65 million in funding so far from the likes of Peter Thiel, Mark Cuban, Google Ventures, and Khosla Ventures among many others. The Company first unveiled their peer to peer (P2P) lending product in May of 2014 and since then they have originated over $700 million in loans with an average loan size of around $12,000:

Upstart loans

We’re not really sure what to make of that double-digit interest rate for a used car loan but that seems to be normal for Upstart since they claim that their average borrower pays 12% for a loan.

Whereas in peer-to-peer platforms like Lending Club you are allowed to select the loans you want to take part in for as little as $25, Upstart allocates loans to lenders randomly with  a minimum requirement of $100. The minimum amount you need to invest to use the platform is $5,000 and that means that you have a 98.9% chance of achieving a rate of return greater than zero. You can also expect an average return of 5.8% using the platform.

From a lenders point of view, it doesn’t appear that AI gives you that much value add. You get around the same rate and the same likelihood of a positive return.

Lending ClubUpstart
A1.55%3.19%
B3.16%3.65%
C5.91%5.47%
D9.72%13.62%
E14.09%11.59%
Total5.476%5.483%

River North marketplace lending fund reaches $ 72m, joins Fidelity investor platform (AltFi), Rated: A

Back in September 2016 River North, an alternative asset manager based in Chicago, launched a new fund targeting income investors and offering exposure solely to marketplace – often called P2P – lending.

The fund is a registered 1940 Act closed-end interval fund dedicated to the rapidly growing marketplace lending online lending asset class.

Since inception, the fund has returned 4.46 per cent, which is largely inline with expectations.

river north
Source: River North

InterNex Capital Raises $ 3.85 Million in Oversubscribed Offering (PR Newswire), Rated: A

Digital asset-based lender InterNex Capital (“InterNex”) raised $3.85 million from family offices and private investors in an oversubscribed seed offering. The convertible notes offering, which originally targeted $2.5 million, closed last week.

InterNex was founded in May 2015 by former GE Capital senior executives & fintech experts. The company’s digital lending platform offers small- and mid-sized businesses an optimized client experience while enhancing asset-based underwriting and monitoring reliability through integrated technology, data analytics and artificial intelligence.

Small- and mid-sized businesses are heavily underserved when it comes to their working capital needs. The seed offering closed on the heels of InterNex securing a $100 million debt financing from 400 Capital Management in late 2016 and growing its digital asset-based revolving line of credit financing solution. InterNex has funded over $5 million to its business clients to date.

SOFI’S 2017 NURSING SCHOOL RANKINGS—WHAT YOU’LL MAKE AND WHAT YOU’LL OWE (SoFi), Rated: A

The mean wage for registered nurses is $72,180 a year, and rises to over $100,000 for nurse midwives, nurse practitioners, and nurse anesthetists, who make a mean annual salary of about $164,000, according to the Bureau of Labor Statistics (BLS).

But nurses can also end up carrying tens of thousands of dollars in debt. Graduate nursing students have a median debt of $40,000-$54,999, according to a 2017 loan survey by the American Association of Colleges of Nursing (AACN). Just under a third have to swallow the bitter pill of owing $70,000 or more.

SoFi nursing schools

Nursing grads from all of our 10 least lucrative schools had more debt owed than salary paid.

It’s worth noting that one of our least lucrative schools–-Seton Hall University, one of U.S. News & World Report’s top 100 graduate nursing schools–-is in the same state (New Jersey) as one of our most lucrative schools, Fairleigh Dickinson. Seton Hall nursing grads earn an average of $87,510 a year, but have to pay back over 1.5 times as much.

SoFi least lucrative nursing schools

“When Markets Quake” Online Banks and Their Past, Present and Future” (Orchard Platform), Rated: A

It seems like every few months, or so, another article or paper appears that retells the history of online lending. Orchard published one a few years back, and I’ve written one or two on the subject before joining the team last year. And although I personally have no interest in retreading that ground anytime soon as a writer, I do keep up with the reading. The latest example, “When Markets Quake” Online Banks and Their Past, Present and Future,” comes out of the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School, written by Marshall Lux and Martin Chorzempa.

The authors paint a mostly positive picture of a rapidly evolving industry—acknowledging the fits, starts, and bumps experienced over its short lifespan, doubtless there will be more as we head into the next leg of the credit cycle but confident that the industry will survive (in one form or another) and that the innovation demonstrated by online lenders will likely continue to have “significant benefits for the financial economy.” 

The pair also provides examples of how banks and online lenders are working together today. The 2016 partnership between Avant and Regions Bank resulted in a co-branded portal that channeled borrowers to one or the other company based on underwriting criteria, and SoFi has sold more than $1 billion of its loans to banks and insurers.

The co-authors also voice concerns about the risk of standardizing loans to allow for a more liquid secondary market via open-end funds—because of the liquidity mismatch between the open-end fund (often with daily liquidity) and the underlying asset (loans with three-to-five-year maturities).

AlphaFlow Adds Veteran Fintech Executive AdaPia d’Errico To Management Team (AlphaFlow Email), Rated: A

AlphaFlow, the first automated portfolio service for real estate investments, announced today that veteran fintech executive AdaPia d’Errico has joined the company as Chief Operating Officer to scale the investor platform and expand AlphaFlow’s customer channels.  Ms. d’Errico is nationally recognized for growing businesses through brand advocacy and designing innovative platforms that build engaged communities. She has been at the forefront of real estate crowdfunding since 2014, advocating the power of increased transparency, education and technology to provide opportunities in real estate investments.

Ms. d’Errico’s career spans retail banking, investment management, intellectual property and brand development, and financial technology. Most recently she was Chief Marketing Officer at Patch of Land where she led brand, marketing strategy and operations, and built the investor platform. Prior to Patch of Land, she provided brand and online growth strategy services to consumer and media companies in the US and the UK, and co-founded two businesses.  Ms. d’Errico has over 10 years of experience in banking and investment management with a focus on customer management, client communications and investor relations.

AlphaFlow continues to grow its team with key people from the marketplace lending industry; earlier this year the company hired Miles Deamer, an early LendingHome employee who scaled lending operations there. Mr. Deamer is responsible for portfolio management along with Mr. Sturm.

AlphaFlow Optimized Portfolios are a truly passive, highly diversified and fully transparent managed portfolio service, bringing to real estate what ETFs brought to stocks. For a low minimum investment, each client’s capital is invested in 1st lien real estate loans to produce a personal portfolio of 75-100 notes spread across 15+ states, selected, rebalanced and managed by portfolio managers with the help of smart automation, algorithms and analytics.

SoFi is One Quirky Lender, But It’s Working (Fortune), Rated: A

Fast-forward seven years and SoFi is on fire, the rare example of a startup that hasn’t seemed to flounder after advertising during the Super Bowl.

Whatever SoFi is doing is working. Cagney says the company originated $8 billion in loans last year, a figure that will double this year. He reckons the company will earn $200 million on a pre-tax basis in 2017 on revenues of $650 million.

Podcast 100: A Retrospective With the Lend Academy Team (Lend Academy), Rated: B

For our 100th episode I thought we would do something a little different. We decided to bring the Lend Academy team (pictured above) together to get their perspective on their favorite episodes in the first 100 podcasts.

In this podcast you will learn:

  • Mike Cagney of SoFi (podcast 89) highlights:
    • The speed, scale and unparalleled execution that is SoFi.
    • The user experience when taking a loan at SoFi.
    • The club-like feel that SoFi promotes among its customer base.
  • Stephen Dash of Credible (podcast 78) highlights:
    • How deeply integrated they are with their lending partners.
    • The concept of customer co-ownership because you can’t offer them everything.
    • The idea of intermediation as a way to better serve customers.
  • Todd Nelson of Lightstream (podcast 73) highlights:
    • A great example of a bank (SunTrust) buying an online lending platform.
    • They are under the radar, they have built one of the top five online consumer lenders.
    • Many years before Marcus by Goldman Sachs Lightstream was originating loans.
  • Andrea Jung of Grameen (podcast 95) highlights:
    • How they underwrite risky entrepreneurs with a tiny 0.3% default rate.
    • The importance of social support for successful loan payback.
  • Brew Johnson of Peerstreet (podcast 58) highlights:
    • How grounded they are in data analytics.
    • The importance of finding good partners for a steady stream of borrowers.
  • The Founders of Streetshares (podcast 71) highlights:
    • Using an affinity model to create a unique community driven business.
    • Their groundbreaking offering for non-accredited investors.
  • Brendan Ross of Direct Lending Investments (podcast 74) highlights:
    • The incredible growth record of the DLI fund.
    • The way Brendan was able to negotiate protection for his investors.
    • Their consistent track record as seen in Peter’s quarterly reports.

Ally to Add Digital Signature and Contract Management Capability to Clearlane (PR Newswire), Rated: B

Customers looking to finance or refinance their vehicles through Ally’s newly launched auto finance marketplace, Clearlane, will soon be able to complete financing online through a new digital signing capability. Built on top of the industry’s leading digital transaction management platform, the SmartSign technology from eOriginal will be incorporated into the Clearlane platform in July 2017, and will allow customers to sign and submit their financing documents online or via mobile devices, facilitating a more efficient transaction.

A top banker explains why he left Wells Fargo to join a tech company (Business Insider), Rated: B

DeVall, who served as Senior Vice President of Wells Fargo for two years, recently joined Tipalti, a California-based fintech company that seeks to simplify business to business transactions. He joined the company in March as its director of alliances and business development after a career of more than a decade in banking.

United Kingdom

Mark Carney on how bad Brexit will be for the UK’s household finances (Business Insider), Rated: AAA

On Thursday afternoon, Bank of England Governor Mark Carney did what he does every three months and took questions from the press after the bank released its Quarterly Inflation Report.

As Carney made clear, sclerotic wage growth is not something that is solely happening because of Brexit, and in the past handful of decades myriad factors — including but certainly not limited to the rise of zero-hours contracts and the waning influence of trade unions — have helped subdue the speed at which pay packets are growing.

However, with the return of inflation since June last year, a real and painful squeeze is underway for British households. Inflation, at the last reading, is running at 2.3%, while wage growth was just 2.2%. Inflation’s surge from close to zero reflects the growing cost of imports triggered by the crash in the pound since the referendum.

Carney Brexit

RateSetter clarifies types of lending (P2P Finance News), Rated: AAA

NEW MONEY invested through RateSetter’s platform may be matched to existing wholesale loans, the firm said on Friday.

The ‘big three’ peer-to-peer lender announced in late 2016 that it was winding down its wholesale loan book as the activity may be in breach of regulations.

RateSetter lands FTSE 100 heavyweight as new chairman (Business Insider), Rated: AAA

The chairman of global insurance giant Prudential is joining to board of online lender RateSetter as non-executive chairman.

Paul Manduca will join the board of the peer-to-peer lender in June and will become chair on July 17 when current chairman Alan Hughes’ three-year term expires.

The appointment of a veteran of public markets will likely fuel speculation that RateSetter could soon look to list on the stock market.

LendInvest Finances 66 Affordable Homes in Key Crossrail Town (Landlord News), Rated: A

LendInvest, a leading specialist mortgage lender, has completed its largest development finance deal to date with an experienced borrower, who will build 66 new affordable homes in West Drayton, Hillingdon, a town set to benefit from a Crossrail station in 2019.

LendInvest has been working with the borrower since June 2016, when it provided a bridging loan to acquire the site, while the client applied for enhanced planning for 53 new homes. The borrower then transitioned to a £17m development loan to finance the construction.

The total loan provision for both sites is £21m, with the total gross development value forecast to exceed £31m.

makepositive secures £1m funding round (London Loves Business), Rated: B

makepositive, a London-based consultancy that helps firms to make better use of Salesforce, has raised £1m, made up of £800k in equity finance plus a £200k loan facility from P2P provider RateSetter Business Finance. The additional funding has enabled the business to invest in consultants, sales and marketing as well as in R & D to support the creation of new solutions on the Salesforce platform.

UCL Will Host the P2P Financial Systems International Workshop 2017, July 20-21 (Crypto Insider), Rated: B

The upcoming P2P Financial Systems International Workshop 2017 (P2PFISY) will be held at University College London (UCL), Wilkins Building, on 20-21 July 2017. Partners of the event are the Federal Reserve Bank of Cleveland, De Netherlandsche Bank, and the Bank of Canada with the patronage of the UCL Centre for Blockchain Technologies (UCL CBT).

China

JP Morgan launches virtual branch in China (The Asset), Rated: AAA

JP Morgan has launched a virtual branch in China. The service eliminates the need to be physically present at bank branches. JP Morgan hopes to reduce manual interventions and improve turnaround times through faster transaction processing.

P2P Industry News (Xing Ping She Email), Rated: A

DYCD and Jingdong Finance issued 625M RMB
On May 12th , Diyichedai, a Chinese P2P lending platform focused on auto loans, announced that they have jointed with Jingdong Finance to issue an 625 million RMB ABS of “Zhejing•Weirong-7 ABS trust plan”, and Zhejin Trust acted as trustee agency of the basic assets. The product was launched in otc structured financing market, consisted of ABS products based on used car financial assets.

According to DYCD, Jingdong Finance took part in the program as the credit monitoring services agency, monitoring the basic assets of duration in real time. Up to now, with the uproar of ABS origination in China, it has already become one of the most important source of finance for auto financing companies.

Yu’E Bao Rates Back to 4%, Banks Shrug
Recently, the annualized interest return for 7days of Yu’E Bao, the world’s biggest money funds, has reached over 4%. It is the first time for the rates back to this level after June 2015. Up to Q1 of this year, Yu’E Bao’s accumulative assets up to around 1.14 trillion RMB.

It was revealed that the reason for the increase of Yu’E Bao’s rates was based on the regulator intensifying control on the leverage ratio, along with the liquidity of the financial system has been keeping tightening. As one of the “Big 2” online payments in China, Alipay has been proposing the cash free time. However, unlike official banks, Alipay is not allowed to pay interests directly to their customers according to related Financial Regulatory Policy. Therefore, it created “Yu’E Bao” to provide financial services on Alipay account.

Great interest in peer-to-peer lending (Startup Ticker), Rated: B

Lendity connects alternative lending platforms with the traditional banking system using its infrastructure and technology.

Lendity has been accelerated by F10, Switzerland’s Fintech accelerator founded by SIX, PwC and Julius Baer.

The event proofed that there is a great interest in investing in peer-to-peer lending, marketplace lending, crowdlending and factoring. 200 participants flocked to the event.

European Union

Fintech lender MarketInvoice gets a boost as Portuguese bank puts £45 million on its platform (Business Insider), Rated: AAA

Portuguese bank BNI Europa has agreed to lend £45 million ($57.87 million) over MarketInvoice, a UK peer-to-peer lender for small businesses.

MarketInvoice recently launched a new product, Pro, that allows small businesses to access a rolling credit line and Coelho namechecks this as a reason BNI signed on.

BNI Europa was launched in 2014 and is Portugal’s fastest growing digital-only bank.

Contrarian Lending Marketplace Younited Credit Crosses €500 million Milestone (Crowdfund Insider), Rated: A

Since it opened for business in 2012, French lending startup Younited Credit has thrived by implementing strategic choices that ran contrary to common practice among lending marketplaces. It was the first of its kind (and still is the only one so far) to get a full banking license and to start fueling its growth through loan securitization.

What sets Younited Credit apart from its competitors is not so much its record growth, as how the company achieved it and how this positions it for the future.

Whereas other lending marketplaces opt for a broker or other financial intermediary status, and often, like Lending Club in the US and Auxmoney in Germany, use a fronting bank to actually issue the loans, Charles Egly and his partners decided that Younited Credit should get its own banking license, an agreement as a credit institution and investment service provider. This came at very high cost in terms of capital requirements, including €5 million in equity plus a €3 million buffer, as well as in financing the two years needed to obtain the agreement from the French regulator, the Autorité de Contrôle Prudentiel et de Résolution.

The faster Younited Credit grows, the more its needs large institutional lenders. Major international institutional investors such as the Dutch insurer Aegon, investment companies Zencap, Eiffel Investment Group and Hexagone Finance are investing through Younited Credit. The company favors institutional investors with patient money such as insurers, investment funds and family offices, rather than the more volatile ones, such as hedge funds.

Millennial wealth gap leads to concerns over intragenerational fairness (The Herald), Rated: A

Online property lending is becoming big business in the UK, generating £700 million worth of investment in 2015 alone. Newer entrants to the industry include Bricklane, which is selling its own property ISA, and Octopus Choice, which offers a target rate of 4.2 per cent.

A further boost has been provided by the introduction of the Innovative Finance ISA, which shields all P2P returns from tax, although only a handful of providers have regulatory permission to sell the product so far, including Lending Crowd, Landbay and LandlordInvest.

The trend is being driven not just by institutional investors but young web-savvy investors who are disillusioned with poor rates of savings. One P2P platform – ThinCats – reckons that millennials are four times more likely to choose this option as those aged over 55.

Property investors also need to note the difference between P2P lending and crowdfunding, which is the category that Housecrowd falls into. Haaris Ahmed, founder of property crowdfunding platform uOwn, said P2P lending consisted of property-backed loans where a lender will pay an interest rate that is “set in stone”, unless a borrower was to default.

Registration for LendIt Europe 2017 is Now Open (Lend Academy), Rated: B

Our 2017 event will be a little different to last year. Similar to what we have done at our USA event we are expanding to include other aspects of fintech beyond online lending. While we will still be covering lending in some depth we also want to highlight the innovations happening in other areas of financial services.

Early confirmed keynote speakers include Jaidev Janardana, the CEO of Zopa, Francesco Brenna, an Executive Partner at IBM Global Business Services and Shane Williams, the co-head of UBS Smartwealth. Our current confirmed speakers are here and if you are interested in becoming a speaker at LendIt Europe 2017 you can submit an application here.

The launch price of £795 is in effect until June 2nd, but as a Lend Academy reader you can receive an additional 15% discount by using the code LENDACADEMYVIP at checkout. The discount code is always good for 15% off but you will receive the best pricing if you purchase before midnight on June 2nd. You can register now on the LendIt website.

LendIt Europe

International

Alternative Lending Deals On Pace For New Low (CB Insights), Rated: AAA

Today, 8 of the 22 global private fintech companies valued at $1B or more are alternative lenders. But 11 years after the founding of Lending Club, investments to private alternative lending companies are hitting new lows, according to CB Insights data.

China Rapid Finance, which last year raised funds at a $1B valuation, went public last month at a $350M valuation.

Deals and dollars to alternative lending companies trended up between 2012 through 2015. Funding saw a 188% funding increase from $1.54B in 2014 to a record $4.43B in 2015 across 94 deals. But at the current run rate, 2017 will see a dip to approximately 42 deals worth $2.01B. And this funding run-rate is actually inflated by SoFi’s $500M Series F, which represents 73% of funding in the year-to-date. The full-year total could come in far lower than $2B.

Alternative lending companies saw both deals and dollars retreat on a year-over-year basis in 2016 with 78 deals worth approximately $2.45B in funding.

alternative lending

Digging into the quarterly data, Q2’15 saw a record 30 deals worth approximately $1.45B in funding.

Q3’15 was a record quarter for funding with approximately $2.14B invested across 24 deals.

alternative lending

India

Indian millennials are taking to peer-to-peer lending for investment (India Times), Rated: A

When 28-year-old Karan Lalchandani had to take a call on expanding his investment portfolio, he steered away from the common options -real estate, equities and precious metal.Instead, he took a small loan on peer-to-peer (p2p) lending platform Faircent.

Lalchandani is part of a growing tribe of young professionals who, not happy with the rate of return or long lock-in period that traditional investment options have, are looking at the p2p lending model.

According to Rajat Gandhi, chief executive of Faircent, about 60% of the 10,000 lenders on the platform are under the age of 35, with a significant chunk being under 30. “Most 30-year-olds haven’t experienced a good asset class.This offers quick returns monthon-month,“ he said.

This trend has been visible across various p2p lending platforms like Lendbox and i2iFunding, many of which rely solely on social media to reach out to this lender profile. Chaudhary, for instance, came across p2p lending through a simple online search on investment options.

Should you invest in Bitcoins, crowd funding, P2P lending? (India Times), Rated: A

After dabbling in traditional investment avenues like stocks, fixed deposits, gold, mutual funds and real estate, some investors are
venturing into more adventurous territory—digital currency, crowdfunding and P2P funding—to make their wealth grow.

There are a little over 15 million bitcoins in circulation today and no more than 21 million will be mined ever, making the virtual currency attractive to investors. The rising demand for and lack of supply of have pushed up the price of bitcoins from $16 per coin in 2013 to $1,700 today.

P2P platforms have brought lenders and borrowers closer. Technology allows easy credit to borrowers, while lenders earn high returns on idle funds. Chennai-based Jose Joseph, 45, has been lending on P2P platforms since 2015. On the Rs 1 lakh he has put in so far, he has earned an average return of 20%.

Microfinance and P2P lending – Twin Brothers? (Telangana Today), Rated: B

Microfinance consists in providing of financial help to low-income families or individuals who traditionally lack access to banking and loans (a.k.a. the “unbanked”).

Going by the above, there is no relationship or link between microfinance loan product and peer to peer lending. Urban MFIs have a income household parameter of minimum 1.6 lacs per annum. Do they have an individual income parameter? If yes, they could partner with P2P platforms and lend on the platform.Going by what we have above, it is not possible to design a P2P platform to suit the needs of microfinance landscape. But it is a very important question to ask how MFIs can decrease their operational and transactional costs using technology. This is being addressed since almost 10 years with less success. Is it really possible to successfully implement BC/CSP model?

Asia

Indonesian P2P lending platform Taralite raises US$ 6.3M, aims to build “world class” R&D team (e27), Rated: AAA

Jakarta-based P2P lending platform Taralite today announced that it has a raised a funding round from Japanese fintech conglomerate SBI Group.

It operates a US$300 million finTech-focussed fund.

To achieve this, it partners with various online marketplaces and booking platform such as Tokopedia, Bukalapak, Lazada, MatahariMall, and Airy Rooms.

Taralite offers swift application processes and affordable loans starting from 0.99 per cent per month. It claimed to have disbursed loans to 1,000 borrowers with more than 70 per cent retention rate.

South America

Nubank reported a net loss of $ 39 million (Conexao Fintech), Rated: AAA

Nubank, Brazil’s biggest Fintech startup, reported a net loss of BRL 122 million last year. In 2015, the loss had been BRL 32.7 million. Operating income in the period was BRL 77.09 million, a significant expansion of BRL 10.4 million from the previous year.

In order to finance the operations with the rotary – whose rates vary from 2.75% to 14% per month – Nubank allocates part of its card receivables portfolio to a fund. The portfolio totals BRL 1.4 billion, while the receivables fund closed 2016 with approximately BRL 150 million.

Philippines

Peer-to-peer lending The Basics and The Benefits (Manila Bulletin), Rated: A

Peer-to-peer lending, sometimes referred to as “social lending”, allows individuals to borrow and lend money without the intervention of standard or official financial institutions, like banks.

  1. It’s hassle-free.
  2. It’s a win-win process.
  3. Hello flexible fees!
  4. It’s user-friendly.
  5. Enter into a new community

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

Testimonials

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

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"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

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

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"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

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"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

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