- Today’s main news: Ron Suber joins Credible as Executive Vice-Chairman. Prosper pulls plug on anti-theft app. FCA extends credit assessment rules for P2P platforms. Klarna launches P2P payment app. Revolut’s Seedrs campaign oversubscribed. Harmoney loses 63% revenue. UIDAI launches mAadhaar app.
- Today’s main analysis: Vintage Analysis on loan performance with age. Elevates Q2 2017 results.
- Today’s thought-provoking articles: AI and the future of digital lending. Are there bubbles in Zhong An Insrance’s IPO? Israel gets new lending platform regulations.
- Ron Suber becomes executive vice-chairman of Credible. AT: “This is a great achievement, both for Ron Suber and for Credible. I’m looking forward to seeing how this plays out for the industry.”
- Revising vintage analysis with Orchard. AT: “Excellent analysis. A must-read, as usual.”
- Elevate Credit announces Q2 2017 results. AT: “Elevate Credit is looking good with 20% YOY revenue growth and rising net incomes.”
- Elevate reports net income of $3M on $150.5 revenue.
- Prosper pulls plug on anti-ID theft app. AT: “I don’t see the reason why. Could it be that it wasn’t used much?”
- AI and the future of digital lending. AT: “A very interesting read. Artificial intelligence is becoming more and more important for the industry.”
- PeerStreet integrates with Personal Capital.
- Realty Mogul’s REIT turns one year old. AT: “Congratulations.”
- Money360 closes $143M in commercial real estate loans in Q2. AT: “Congratulations.”
- Wells Fargo sued for alleged delinquencies.
- Insurance CEOs brace for change.
- Lend Academy podcast with Timothy Li of Fluid.
- Are tech firms the next financial service providers?
- OCC files motion to dismiss fintech charter lawsuit. AT: “No surprise here.”
- 2020 REI Group launches REI Data Systems with Investorwell.
- The role of digital in financial planning.
- Startups want to change what you insure and how.
- An attorney’s take on RECF.
- How to pick a robo-advisor.
- Fourth LEND360 in Dallas.
- Klarna launches P2P payment app called Wavy. AT: “I wonder if there are plans to roll this out internationally? I hope so. At least, here in the U.S.”
- Revolut’s Seedrs campaign is oversubscribed. AT: “This is an understatement. They attracted more than 4 times what they were asking for. Incredible results.”
- auxmoney, N26 partner.
- Latvian P2P lending platforms raise 206M Euro in H1.
- Žltý melón launches P2P investment in secured loans.
- Lendico, SolarisBank partner on SME lending.
- Cork fintech company looking to create 80 new jobs.
- How credit unions can grow in sustainable way.
- Commentary from a neobank skeptic.
- ETHLend creates decentralized lending app on the blockchain.
- UIDAI launches mAadhaar mobile app.
- Fintech leaders feel unavailability of ecosystem could delay digital push.
- United States
- Ron Suber Joins Credible as Executive Vice-Chairman (Credible), Rated: AAA
- Revisiting Vintage Analysis- How Loans Perform With Age (Orchard), Rated: AAA
- ELEVATE CREDIT ANNOUNCES SECOND QUARTER 2017 RESULTS (Elevate), Rated: AAA
- Elevate Reports Net Income of $ 3 Million on $150.5 Million in Revenue (Crowdfund Insider), Rated: A
- Prosper pulls plug on anti-ID-theft app (American Banker), Rated: AAA
- Artificial Intelligence And The Future of Digital Lending (The Financial Brand), Rated: AAA
- PeerStreet Integrates with Personal Capital to Provide More Detailed Investment Overview (PeerStreet Email), Rated: A
- Realty Mogul’s REIT Turns One (Realty Mogul Email), Rated: A
- Money360 Closes $ 143M in Commercial Real Estate Loans in Q2, Marking a Record-Breaking Quarter (Markets Insider), Rated: A
- Wells Fargo Sued in Yet Another Public Embarrassment (Financial Advisor), Rated: A
- Insurance CEOs Say Change Is Coming (CB Insights), Rated: A
- Timothy Li of Fluid (Lend Academy), Rated: A
- Are Technology Firms The Next Financial Service Providers? (Forbes), Rated: A
- OCC files motion to dismiss fintech charter lawsuit (American Banker), Rated: A
- 2020 REI Group Launches REI Data Systems With Investorwell (Digital Journal), Rated: A
- The Role of Digital in Financial Planning (Insead Knowledge), Rated: A
- Startups want to change what you insure and how you insure it (TechCrunch), Rated: A
- An Attorney’s Take On Real Estate Crowdfunding (RealCrowd), Rated: A
- How to Pick a Robo-Advisory Platform That Fits Your Needs (TheStreet), Rated: B
- Dallas Welcomes Fintech at 4th Annual LEND360 Conference, October 11–13, 2017 (Benzinga), Rated: B
- United Kingdom
- FCA extends credit assessment rules for P2P platforms (P2P Finance News), Rated: AAA
- Are there bubbles in Zhong An Insurance’s IPO? (Asia Insurance Review), Rated: AAA
- Chinese P2P Lender IQianBang Raised 500 million RMB in Series B from a Personal Investor (Xing Ping She), Rated: A
- European Union
- Klarna launches a peer-to-peer payment app called Wavy (TechCrunch), Rated: AAA
- Revolut’s $ 5.3 million crowdfunding campaign is oversubscribed (TechCrunch), Rated: AAA
- auxmoney & Digital Challenger Bank N26 Partner to Provide Credit to Users (Crowdfund Insider), Rated: A
- EUR 206 mln invested via Latvia’s P2P lending platforms in H1 (Baltic-Course), Rated: A
- Žltý melón launches p2p investment in secured loans to finance mortgage deposits and help homebuyers (Crowdfund Insider), Rated: A
- Lendico and SolarisBank team up for SME lending (Banking Tech), Rated: A
- Cork Fintech company to create 80 jobs (Irish Times), Rated: B
- How can credit unions grow in a sustainable way? (The News), Rated: A
- NeoBank skeptic – Fred Destin (Medium), Rated: A
- ETHLend: The First Decentralized Lending Application Aims to Create Global P2P Lending Market (TechBullion), Rated: A
- Australia/New Zealand
- HARMONEY MORE THAN HALVES ANNUAL LOSS AS REVENUE CLIMBS 63% (Sharechat), Rated: AAA
- UIDAI launches mAadhaar app; Now you can carry your aadhaar on mobile (India Times), Rated: AAA
- Fintech leaders feel unavailability of ecosystem could delay digital push (Money Control), Rated: A
- Leading SMEs beyond boundaries (The Star Online), Rated: A
- South America
- PayU Colombia deploys Mambu for short-term lending (Finextra), Rated: A
- Surge predicted for digital bank accounts in Brazil (ZDNet), Rated: A
- New Lending Platform Regulations (Lexology), Rated: AAA
Ron Suber Joins Credible as Executive Vice-Chairman (Credible), Rated: AAA
Renowned fintech executive, advisor and investor Ron Suber has joined personal finance marketplace Credible.com as executive vice-chairman and a member of the board of directors.
“It’s been extremely exciting to see the Credible team turn a startup with a promising business model into a fast-growing company that’s respected by consumers, lenders and the industry” Suber said. “I have decided that now is the right time to help Credible seize their broader opportunity in the fintech ecosystem.”
Revisiting Vintage Analysis- How Loans Perform With Age (Orchard), Rated: AAA
The older vintages have longer lines, as they have more months of history. Using this data, we can examine how loans booked at different times compare to each other at equivalent periods in their life-cycle. This can help an investor evaluate their current portfolio and help them make comparative judgments about its performance.
Factors to Consider Within Vintage Analysis
Vintage analysis can also help us to see how loans within a particular credit grade perform over time. In our prior analysis, we examined the performance of the top graded loans (A for Lending Club and AA for Prosper). However, as time has passed, these two platforms have increasingly been lending to borrowers with credit just below the top grades.
FICO Score and Debt-to-Income Ratio
From the data below we can see how loans from Lending Club charge-off over time controlling for the debt-to-income ratio of the borrower.
ELEVATE CREDIT ANNOUNCES SECOND QUARTER 2017 RESULTS (Elevate), Rated: AAA
Second Quarter 2017 Financial Highlights
- Nearly 20% year-over-year revenue growth: Revenues totaled $150.5 million, an 18.7% increase from $126.8 million for the prior-year period.
- Almost 29% year-over-year growth in loans receivable: Combined loans receivable – principal, totaled $481.1 million, a 28.7% increase from $373.7 million for the prior-year period.
- Stable credit quality: Loan loss provision was 48.0% of revenues and within our targeted range of 45%- 55%. The ending combined loan loss reserve, as a percentage of combined loans receivable, was 13.8%, lower than the 15.7% reported for the prior-year period.
- Customer acquisition costs within targeted range: The total number of new customer loans for the quarter was approximately 66,000 with an average customer acquisition cost of $294, within our targeted range of $250-$300.
- Second consecutive quarter of net income: Net income of $3.0 million, or $0.08 per diluted share, versus a net loss of $7.5 million, or $(0.59) per diluted share, for the second quarter of 2016.
- Adjusted EBITDA margin: Adjusted EBITDA totaled $19.8 million, up from $7.3 million in the second quarter of 2016. The Adjusted EBITDA margin increased to 13.2% from 5.8% for the prior-year period.
Second Quarter 2017 Business Highlights
- Elevate IPO. On April 6, Elevate began trading on the New York Stock Exchange under the “ELVT” ticker symbol.
- $200 Million in Outstandings for Elastic. Just a year after achieving $100 million in outstandings, Elastic surpassed $200 million in total principal outstandings, with more than 120,000 open accounts.
- Elevate Labs Launched. The Company launched Elevate Labs, including its new San Diego-based Advanced Analytics Center, underscoring its approximately $40 million annual investment in state-of-the art technology and data science.
- RISE Enters Kansas with Line of Credit Product. Bringing additional responsible loan opportunities to non-prime consumers and expanding its product offering, RISE entered its 16th state, Kansas, the first state where RISE offers a line of credit product.
- Savings for Customers. The average effective APR of its products for the quarter was 131%, down from 148% in the same quarter last year. The Company estimates indicate that Elevate’s products – Rise, Elastic and Sunny – saved customers approximately $304 million in the three months ended June 30, 2017 versus payday loans.
Elevate Reports Net Income of $ 3 Million on 0.5 Million in Revenue (Crowdfund Insider), Rated: A
According to the company, revenues for the quarter totaled $150.5 million – an 18.7% increase versus year prior where Elevate delivered $126.8 million in revenue. Elevate reported net income of $3.0 million, or $0.08 per diluted share, versus a net loss of $7.5 million, or $(0.59) per diluted share, for the second quarter of 2016.
Combined loans received were said to total $481.1 million, an increase of 28.7% from $373.7 from year prior quarter.
Prosper pulls plug on anti-ID-theft app (American Banker), Rated: AAA
Prosper Marketplace, one of the largest marketplace lenders, is discontinuing the Prosper Daily app.
The app, formerly known as BillGuard and a favorite of many fintech insiders, helped users protect their identities and monitor their credit scores.
The online lender said it will no longer have access to users’ financial accounts once the app is discontinued and that it will reimburse annual subscribers.
Artificial Intelligence And The Future of Digital Lending (The Financial Brand), Rated: AAA
To be a digital lender, banks and credit unions must do more than provide a digital app. Internal lending processes must be transformed to eliminate friction and unneeded steps, with artificial intelligence (AI) supporting proactive loan decisions.
According to PwC, a financial organization must initially define what is desired from both a customer experience and operational efficiency basis around consumer lending. Next, banks and credit unions must build a digital lending strategy around the following organizational competencies. The path to becoming a true digital lending organization involves five steps.
- User-Centric Design
- Data-Driven Decision Making
- Flexible Infrastructure
- Effective Development Approach
- Organizational Agility
Digital Borrower Expectations
The expectations of the digital borrower have increased over the past several years, mostly based on marketplace offerings and digital experiences in other industries. While the interest rate and closing costs on loans are still primary considerations, the speed, simplicity, transparency and customer service of the entire process is important.
According to the PwC report, Consumer Lending: Understanding Today’s Empowered Borrower, three out of four demographic segments prefer to be online for each phase of the lending process as opposed to traditional methods, such as in person or on the phone.
While some lender apps offer the higher-ranking features – such as the ability to calculate the loan amount that the borrower can afford and the ability to lock in an interest rate on a loan, most of the other features are still not offered by most organizations.
Being a Digital Lender is More Than Just Fewer Clicks
To become a digital bank, organizations need to think beyond ‘minimizing the number of clicks’, reducing manual data entry, and improving the speed of decisions.
The process of becoming a digital lender for the long-term moves investments from ‘digital features’ to a ‘digital mentality’ and process that can support changing digital lending options. It is a major move from investing in just digital output to investing in the digital input that works behind the scenes. It is a strategic framework for the future of digital lending.
PeerStreet Integrates with Personal Capital to Provide More Detailed Investment Overview (PeerStreet Email), Rated: A
PeerStreet, an award-winning platform for investing in real estate backed loans, has announced an integration with Personal Capital, powered by the Envestnet | Yodlee Data Aggregation Platform. Customers of both Personal Capital, an automated investment service with more than $4.8 billion assets under management, and PeerStreet can now view their PeerStreet positions within the context of their investment portfolio on Personal Capital.
Realty Mogul’s REIT Turns One (Realty Mogul Email), Rated: A
Celebrating its one year anniversary, MogulREIT I recently declared its twelfth consecutive month of 8% annualized return on investment. With ten assets across the country, MogulREIT I is a diversified portfolio of commercial real estate investments designed to provide consistent cash distributions, while protecting and returning capital contributions.
Money360 Closes $ 143M in Commercial Real Estate Loans in Q2, Marking a Record-Breaking Quarter (Markets Insider), Rated: A
Money360, a direct marketplace lender focused on commercial real estate, today announced that the company closed $143 million in loans in the second quarter, marking the lender’s best quarter to date. Money360 has now closed more than $350 million in total loans and is on pace to close more than $500 million by the end of the year. On average, the company is now closing $50 million in loans each month.
A few of the $143 million in loans closed in the second quarter include:
- A $15.6 million bridge loan for a three-tenant medical office property in Grand Forks County, North Dakota.
- A $11.1 million bridge loan for the acquisition of a multi-tenant retail property in Wayne County, Michigan.
- A $9.7 million bridge loan for a two-story, 198-room hotel property in Cumberland County, North Carolina.
Wells Fargo Sued in Yet Another Public Embarrassment (Financial Advisor), Rated: A
The assault on the Wells Fargo brand continues, with a lawsuit accusing the bank of pushing almost 250,000 of its clients into delinquency by forcing them into auto insurance they didn’t need — or even ask for, Bloomberg reports.
The bank allegedly made millions of dollars off unsuspecting clients, according to the proposed class-action lawsuit filed in San Francisco federal court and cited by the newswire.
Wells Fargo allegedly didn’t check whether its clients taking out auto loans already had auto insurance, or ignored the fact that they did, Bloomberg reports.
Insurance CEOs Say Change Is Coming (CB Insights), Rated: A
Markel co-CEO Richard Whitt III on the $919M acquisition of State National
We, like a lot of people, are starting to look at the insurtech space. And State National, I think they are ideally situated to sort of be the go between the insurtech folks and sort of your standard insurance carrier types. It’s a clash of cultures there, I would say.
The insurtech folks are used to things happening lightening fast and with minimal regulatory issues and all that and that’s not insurance. So there almost needs to be a translator between insurtech folks and standard insurance folks. And that is a role that State National plays…And we see them helping us with our insurtech initiatives sort of being that translator between us and those folks.
Chubb CEO Evan Greenberg: “Change is coming”
But with that said, change is coming. And we are not alone in terms of carriers improving their capabilities, because of what technology brings that will lead that change. It’s around data, it’s around straight through process, it’s around data that improves the customer experience, while at the same time improving your ability to select risk and to do it quickly i.e. in seconds and to be able to then straight through process business.
You taking out a loan for your business and technology enables those other forms of distribution. The customer will buy it from a desktop, the customer will buy it from a mobile device, they will buy it any time anywhere and they will service it anytime anywhere.
Timothy Li of Fluid (Lend Academy), Rated: A
Into this void steps Fluid, the brainchild of Timothy Li, our next guest on the Lend Academy Podcast. He has found a unique way to provide students access to credit and consequently a way to start building their credit while they are in college. Fluid provides small loans of up to $500 at 0% interest. It is a fascinating idea that we explore in some depth on the show.
Are Technology Firms The Next Financial Service Providers? (Forbes), Rated: A
Financial system regulatory costs continue to climb in part due to it being rife with problems that led to 45% of financial intermediaries, such as money transfer services and stock exchanges, experiencing economic crime. Blockchain increases transparency and decentralizes the financial system with encrypted, unforgeable records embedded in a secure network. By reducing transaction costs and removing intermediaries, blockchain technology is poised to increase mass peer-to-peer collaboration, which could make existing financial organizations unnecessary.
Automated investment services, sometimes referred to as robo-advisors, are emerging as an easily accessible, cost-efficient solution to managing assets with 24/7 availability and annual fees of .2% to .5%, making it substantially less than typical rates.
The financial technology upsurge is bringing accessibility and availability to the forefront, making existing banking options resemble archaic institutions. With apps that let you make quick, feeless transactions (such as Venmo) and peer-to-peer lending platforms (such as Lending Club), customers and millennials are welcoming these innovative platforms. According to a 2015 report, 75% of millennials visit bank branches either once a month or less than that, and 38% of them don’t use a branch to perform banking activities.
Fintech, however, is fostering financial inclusion and building public confidence, evidenced by mobile platforms such as M-Pesa reaching 80% of households within four years.
OCC files motion to dismiss fintech charter lawsuit (American Banker), Rated: A
The Office of the Comptroller of the Currency has filed a motion to dismiss a lawsuit by state regulators challenging the agency’s fintech charter.
2020 REI Group Launches REI Data Systems With Investorwell (Digital Journal), Rated: A
Dallas- based 2020 REI Group has announced the creation of a data services and technology division to further their mission of providing products and services to real estate investors nationwide.
The new division will be labeled as REI Data Systems and will be led by Mike Inman, Vice President of Technology for 2020 REI Group. Inman was most recently IT Manager of Application Development for the City of Grand Prairie and has a vast background in cloud based applications, GIS mapping, mobile applications, and data analytics.
The official launch for InvestorWell will be mid-August. The platform will help real estate investors find funding for their projects based on eight simple questions.
The Role of Digital in Financial Planning (Insead Knowledge), Rated: A
Long-term saving is a classic case study in behavioural biases. These must be managed and mitigated – whether it is through digital or face-to-face advice.
Inertia is one such bias. While people will generally put off taking action, research has shown that if they are intimately involved in preparing a plan, they are more likely to stick to it. The most committed planners also tend to be the most financially literate.
While robo-advisors are getting lots of press at the moment, they are mostly just a delivery mechanism. A nice user interface should not be a substitute for solid advice that ultimately addresses a key financial and behavioural problem. Digital poor advice is still poor advice.
- Users should be asked, in non-misleading terms, whether they want a basic, average or luxury retirement lifestyle.
- The language should be free of jargon and go to the heart of the users’ problem.
- The tool should allow users to be actively involved in making the trade-offs based on their unique needs, wants and circumstances.
Startups want to change what you insure and how you insure it (TechCrunch), Rated: A
In the real world, however, insurance coverage hasn’t kept up with the social and economic changes of recent years. Sharing economies have gained scale. Jobs have gone from full-time to gig-based. And the vast millennial generation has entered adulthood intent on completing any complex transaction in a couple of minutes online.
So far this year, insurance-focused startups have raised more than $700 million in venture funding, according to Crunchbase data, with significant backing from both traditional VCs and large insurers. The lion’s share of investment has gone to companies pioneering and popularizing coverage categories and delivery models, with a particular focus on millennial customers.
One of the most richly funded players in this space is Trōv, which has an app for quickly insuring personal and work items like laptops, smartphones and high-end cameras. The five-year-old company raised a $45 million Series D round in April led by reinsurer Munich Re, bringing total funding to nearly $90 million.
Cover, which just closed an $8 million Series A, offers a similar service. Customers take a picture of the item they want to insure and Cover offers a policy, underwritten by a partner insurance firm.
One of the most richly funded insurance startups over the past few years is Metromile, which insures based on how much customers drive. Rack up few miles, and pay little beyond a small monthly base rate. Drive more, and it goes up. U.K.-based Cuvva, meanwhile, has raised seed funding to build out insurance offerings for short-term use of a car, for people learning to drive and for people who drive very little.
Silicon Valley-based Hippo is also marketing itself as a new kind of homeowners insurance company, with policies that offer stronger protections for common valuables like home electronics.
For short-term rentals, meanwhile, Slice Labs is partitioning off a space.
Next Insurance, founded last year, sells coverage for yoga instructors, photographers, home contractors and others whose needs don’t always fit with standard insurance policies. The Silicon Valley company raised $48 million to date from VC and insurance industry backers. Bunker, which bills itself as an insurer for freelancers and independent contractors, is also scaling up. The San Francisco company closed a $6 million Series A round in May.
One is Ladder, which has raised $16 million to build out a platform for offering direct-to-consumer term life insurance online. Another, Brooklyn-based Fabric, has raised $2.5 million for its digital platform offering instant quotes on accidental death coverage, as well as broader life insurance policies.
An Attorney’s Take On Real Estate Crowdfunding (RealCrowd), Rated: A
How to Pick a Robo-Advisory Platform That Fits Your Needs (TheStreet), Rated: B
Rick Frisbie, CEO of RobustWealth, a digital wealth management platform, outlines four features investors should look for when choosing a robo-platform:
- Low fees.
- Advanced trading algorithms.
- Asset-based fees are charged only when your robo is on.
- Open architecture and flexibility.
Dallas Welcomes Fintech at 4th Annual LEND360 Conference, October 11–13, 2017 (Benzinga), Rated: B
The 4th Annual LEND360, the go-to event for leaders in online lending, will be held October 11-13 at the Fairmont Dallas Hotel in Dallas, Texas.
FCA extends credit assessment rules for P2P platforms (P2P Finance News), Rated: AAA
THE FINANCIAL Conduct Authority (FCA) is proposing widening the scope of affordability assessments for peer-to-peer platforms as part of a wider review of the high-cost credit sector.
The report said creditworthiness requirements will be extended to situations where there is a “significant increase in the amount of credit or the credit limit under a P2P agreement.”
Are there bubbles in Zhong An Insurance’s IPO? (Asia Insurance Review), Rated: AAA
Zhong An Insurance has made a net profit of CNY36.981 million (US$5.5 million) and CNY44.257 million (US$6.5 million) in 2014 and 2015 respectively. But they only made CNY9.372 million net profit in 2016, which was a 78.8% slump.
In the first quarter of 2017, Zhong An made a CNY317 million loss.
According to its 2016 financial report, Zhong An Insurance paid CNY102.7 million for technology services, which account for 60% of its insurance business and management expenses.
Zhong An’s profits come from different sources compared with traditional insurance companies. According to data in 2016, Zhong An’s profits come mainly from non-operating income.
Professional analysts believe that it is not accurate to measure a fast-growing company with EPS or ROE metrics. To investment institutions, if Zhong An is considered as a tech company with 500 million policies, it is definitely worth a high valuation.
Chinese P2P Lender IQianBang Raised 500 million RMB in Series B from a Personal Investor (Xing Ping She), Rated: A
Recently, the online lender IQianBang announced the closing of series B funding, securing 500 million RMB form a personal investor, Zhang Peifeng, the chairman of Chinese A-share listed company Kruide (002072). According to public information, IQianBang, established in August 2013, is one of the earliest platforms engaged in Internet finance and P2P lending. By the end of July 2017, IQianBang reached 500,000 registered users across China, and their accumulative volume passed 8.1 billion RMB. IQianBang is known as one of the first members in Beijing P2P Industry Association, which is the primary association approved by National Internet Finance Association of China (NIFA).
Klarna launches a peer-to-peer payment app called Wavy (TechCrunch), Rated: AAA
When you create a transaction using the app, Wavy generates a link. You can then share this link in any messaging app. It works in Whatsapp, Messenger, iMessage — anything you want. Your recipient can then click on this link to open a web page.
Your recipient can then accept and redeem the payment with a standard IBAN — no need to sign up. If you are requesting money, your recipient can put their credit card or debit card number. Once again, you don’t need an account. If your friend doesn’t click on the link, the transaction expires after a while.
It works in 31 European countries already.
Revolut’s $ 5.3 million crowdfunding campaign is oversubscribed (TechCrunch), Rated: AAA
Fintech startup Revolut just raised a ton of money. But grabbing $66 million from respected VC firms wasn’t enough (£50 million). For the second time, Revolut asked its user base to invest in the startup.
Revolut was looking for $5.3 million on Seedrs (£4 million), but 40,000 customers said that they were interested in the investment opportunity. If Revolut took all the money, it would represent $22.3 million (£17 million). But the company will limit its equity crowdfunding campaign to its initial goal.
auxmoney & Digital Challenger Bank N26 Partner to Provide Credit to Users (Crowdfund Insider), Rated: A
The expanded credit offerings include amounts from €1,000 to €25,000 with loan maturities of 12 to a maximum of 60 months. Interest rates start from 3.95% depending on the loan term and credit rating.
EUR 206 mln invested via Latvia’s P2P lending platforms in H1 (Baltic-Course), Rated: A
In the first quarter of 2017, investments worth EUR 94 million were made through Latvia’s P2P lending platforms and EUR 111 million were invested in the second quarter.
Žltý melón launches p2p investment in secured loans to finance mortgage deposits and help homebuyers (Crowdfund Insider), Rated: A
Žltý melón, a peer to peer lender based in Bratislava, has launched a secured loan product to finance mortgage deposits and help homebuyers purchase a home. Lenders may now invest in loans to homebuyers with additional security.
The new CashFree Hypo loan is available to anyone that has been approved for a standard mortgage by a bank in Slovakia. Homebuyers can borrow up to €35,000, currently with an interest rate of between 4.9% and 5.9% APR to finance the deposit.
Lendico and SolarisBank team up for SME lending (Banking Tech), Rated: A
The Berlin-based duo of peer-to-peer lending provider Lendico and fintech firm SolarisBank are working together on a long-term collaboration for financing SME loans.
Cork Fintech company to create 80 jobs (Irish Times), Rated: B
Financial technology company Global Shares plans to create 80 new jobs over the next 24 months.
The west Cork-based company’s plans come “due to a rapid global expansion” and will bring its total employee base to 228.
How can credit unions grow in a sustainable way? (The News), Rated: A
Dave Taylor of G & C Mutual Bank in Australia described how the organisation had to play by the same capital rules as other banks.
Two years ago G & C started to work with a fintech called Society One, a peer-to-peer lending company. It was a natural synergy between the two organisations, said Mr Taylor, as mutual banks and credit unions are the original peer-to-peer lenders. Rather than have Society One cut their business, they partnered with them to diversify their lending mix and attract a new demographic of members.
Since working with the fintech, the bank has granted 822 loans though their own channels and 6,891 through Society One’s platform. Their personal loans proportion has increased to 11%.
In Brazil, Sicredi is among the country’s biggest financial players, including a network of credit unions and a bank. The bank is growing at a rate of 20% a year, more than traditional banks (13.9%). Its capital ratio is 24%, above the Basel Committee’s minimum capital adequacy ratio that banks must maintain is 8%.
NeoBank skeptic – Fred Destin (Medium), Rated: A
The difficulty I see for all NeoBanks is as follows:
- Acquisition of any financial product customer tends to be expensive (typically $150 to $500 in the mainstream population) and trust hard to build, although this is where some of the NeoBanks shine and have achieved lower numbers through social and viral loops.
- The conversion path of a new customer is painful. First you need him or her to sign up, then you need card and account activation, then you need a (decent) balance transfer. That’s only the beginning of the journey though as you want to generate repeat usage, and experience shows old banking habits die hard. Real adoption comes when they move their salary over, at which point the cycle of adoption is complete. If you can’t run significant volumes through the system, making unit economics work is hard.
- Even if you have a customer using your system in anger, the battle isn’t over yet. The day that customer needs a mortgage or a loan, the advantage of the incumbents come into full force . For example, access to a mortgage product is a great opportunity for an incumbent bank to force your core banking back onto their platform, so churn is of great concern.
- Historically the onboarding processes were further hampered by some nasty breaks in the process. Ask any of the NeoBanks who tried to build without a banking license, e.g. on top of BankCorp, what the customer experience of opening an account was like.
- Great customer service is hard to achieve at scale. The startups may deride the big banks, but as they scale they will feel the pain (and cost) just like the others. My own experience (onboarding my mum on N26) was far from great.
I am sure that one or two of the NeoBanks will become big successes. In particular, the one that manages to scale its balance sheet to become a full service lender / mortgage lender will probably be able to solve the retention issue. For the others, I suspect we will see decent acquisitions based on the number of clients acquired.
ETHLend: The First Decentralized Lending Application Aims to Create Global P2P Lending Market (TechBullion), Rated: A
ETHLend aims to provide a global peer-to-peer lending market by using blockchain technology and smart contracts. Currently, borrowers in peer-to-peer lending are limited to local lenders mainly for the reason that lenders have better access to local credit scores compared to abroad. Moreover, international bank transfers might complicate the lending process and banking institutions are still not available for the 2 billion unbanked, limiting their access to finance.
Beyond local lending. ETHLend unfolds global lending by the use of cryptocurrency. Lenders and borrowers use Ethereum-native token Ether (ETH) for the loan transactions. By using Ether, the loan transactions are executed within seconds instead of days, which is a medium equivalent within the banking system on international transfers.
In Europe, interest rate on secured loan might be as lows as under 1%. However, in India or Russia, inflation adjusted interest rate might be as high as 14%. ETHLend aims to democratize the interest rates differences and challenge local lenders by providing liquidity from all parts of the world with the help of cryptocurrency.
Additionally in developed countries, 43% of Millennials have bad credit, leaving them to struggle to obtain finance.
HARMONEY MORE THAN HALVES ANNUAL LOSS AS REVENUE CLIMBS 63% (Sharechat), Rated: AAA
Harmoney Corp, the country’s biggest peer-to-peer lending platform, more than halved its annual loss as revenue climbed 63 percent in its second full year of operation, and has since crossed $500 million lent through the portal.
The Auckland-based company posted a loss of $6.5 million in the 12 months ended March from $14.2 million a year earlier, its financial statements lodged with the Companies Office show. Revenue climbed to $14 million from $8.6 million a year earlier, while its biggest expenditure item – marketing – dropped 14 percent to $7 million and staff costs were flat at $6.3 million.
The big revenue gains were from note fees charged to wholesale lenders, which soared to $3.6 million from $491,000 a year earlier, while service and lender fees almost tripled to $2.6 million. Platform fees charged for arranging loans through the platform dropped to $5.4 million from $6.3 million. Harmoney facilitated $216 million of loans in the 2017 financial year, up from $178 million a year earlier, and crossed the $500 million mark in June.
UIDAI launches mAadhaar app; Now you can carry your aadhaar on mobile (India Times), Rated: AAA
UIDAI, which issues Aadhaar numbers, has launched mAadhaar app for mobile users that will allow users to carry unique identification profile on mobile. A user can download Aadhaar number profile through their smartphones and will therefore not require hard copies of the card, wherever applicable.
It allow users to carry their Aadhaar demographic information, i.e. name, date of birth, gender, address and the photograph linked with their Aadhaar number, on their smartphones.
Fintech leaders feel unavailability of ecosystem could delay digital push (Money Control), Rated: A
Unavailability of an appropriate ecosystem and lack of trust among digital means could prove to be the biggest hindrances India’s ambition to turn fully digital, according to experts.
He said that the “backend wasn’t ready” in India yet to go completely digital.
Leading SMEs beyond boundaries (The Star Online), Rated: A
At the event, Ambank Group Business Banking managing director Christopher Yap revealed that 80% of businesses failed because of poor internal management while 20% of failures were caused by external challenges.
“These days, SMEs have easy access to digital financial services such as equity crowdfunding and peer-to-peer lending other than banking services. However, you must remember that the fate of your business depends on how you utilise your funds.
“With the digital platform and solutions easily available to us, SMEs should make use of them to expand business and potentially, go abroad and penetrate the international market because the world is your market,” Wong said.
PayU Colombia deploys Mambu for short-term lending (Finextra), Rated: A
Mambu, the SaaS banking engine powering innovative loan and deposit products, today announced that PayU Colombia has deployed their solution to drive the payment services provider’s new short term deferred payment product.
PayU Colombia has over 600,000 pre-approved customers already using their system who could benefit from this new payment instrument.
Surge predicted for digital bank accounts in Brazil (ZDNet), Rated: A
Brazil is expected to see a 229 percent increase in the number of entirely digital bank accounts by the end of 2017, recent research suggests.
There are currently 1 million online bank accounts in the country and the number is expected to reach 3.3 million by year end, according to the Brazilian Banking Federation (FEBRABAN).
New Lending Platform Regulations (Lexology), Rated: AAA
Recently, the Knesset approved an amendment to the Supervision of Financial Services Law, which regulates the activities of online lending platforms that broker between people and businesses under a peer-to-peer (P2P) model.
Up until today, under Israeli law, the activities of these platforms were not being regulated or supervised.
The new amendment imposes a licensing obligation on operators of P2P lending platforms and subjects the platforms to the supervision by the Supervisor of Regulated Financial Services. Similarly to the licensing regime prescribed in the law with respect to other financial services, the P2P lending segment will also be divided into two licensing categories: a basic license, for a limited volume of activity (accumulated credit of up to NIS 25 million), and an expanded license, for a material volume of activity (accumulated credit exceeding NIS 25 million). Furthermore, the general provisions applying to financial service providers will apply to the licensees, the objectives being to ensure the proper operation of the platforms and to protect the interests of borrowers and lenders using them.
Within the scope of the law, and in order to also enable small businesses to obtain loans being offered via P2P lending platforms, the Securities Law was also be amended so that companies can seek and obtain a loan of up to NIS 1 million through P2P platforms, provided they are not deemed reporting corporations.