- Today’s main news: PawnHero lands $9.7M financing. AltFi Data scoops equity investment, appoints advisory board. Funding Circle to launch new Autobid, Autosell lending features. SocietyOne celebrates fifth anniversary.
- Today’s main analysis: Peter Renton’s MPL results for Q2 2017.
- Today’s thought-provoking articles: How Amazon’s Alexa will upend wealth management. The future of banking investments. Will finance businesses jeopardize the credit quality of Internet companies? The instant gratification of fintech and real-time vacations.
- Peter Renton’s MPL results for Q2. AT: “Is Peter Renton going cool on marketplace lending?”
- How Amazon’s Alexa will upend wealth management. AT: “I don’t know so much that Amazon itself will impact wealth management, but perhaps the underlying technology of Alexa will cause the industry to change more rapidly. I can see Amazon directly impacting banking and finance for consumers, and they’ve already begun to.”
- The future of banking investments. AT: “I agree that banks will adapt to the changing landscape of handling other people’s money, and they’ll do it their own way–probably in a way most of us least expect it.”
- How KeyCorp is impacting commercial payments.
- Tips for bankers on making friends with fintech companies.
- Will a hybrid human-robo approach become the norm in wealth management?
- Property Partner adds student assets to portfolio.
- Online financial websites abound with free information.
- Funding Circle to launch new version of Autobid, Autosell lending. AT: “A little more fleshed out than yesterday’s news report.”
- Regulatory spotlight on P2P lenders and crowdfunding.
- Finance businesses may jeopardize credit quality of internet companies.
- China’s internet finance sector needs supervision.
- Yu’E Bao is easy for payment, difficult in credit.
- Top 3 Swedish fintech startups to watch.
- AltFi Data scoops equity investment, appoints advisory board.
- Funding campaign aims to establish new co-working space in Dublin.
- Instant gratification and real-time vacations. AT: “In 2005, my wife and I toured Germany by train. At that time, we had our laptops and managed to book hospitality services using the public railway system’s free wi-fi. We thought it was cool that we could plan a two-week vacation on the fly and move from one city to the next with minimal planning. Today’s technology is even better and more readily available for this type of ‘vagabonding’.”
- International REITs.
- SocietyOne celebrates fifth year. AT: “Congratulations.”
- United States
- My Quarterly Marketplace Lending Results – Q2 2017 (Lend Academy), Rated: AAA
- How Amazon’s Alexa will upend wealth management (Financial-Planning), Rated: AAA
- The Future Of Banking Investments (Modest Money), Rated: AAA
- What Key’s fintech investments say about commercial payments (American Banker), Rated: A
- Making Friends with Fintech: Tips for Bankers (ABA Banking Journal), Rated: A
- Will the human-robo approach to wealth management become best practice? (WhatInvestment.co.uk), Rated: A
- Property Partner adds student assets to portfolio (Property Week), Rated: B
- Online financial websites abound with free information (Lebanon Democrat), Rated: B
- United Kingdom
- Funding Circle to Launch New Version of Autobid & Autosell Lending (Crowdfund Insider), Rated: AAA
- Regulatory spotlight on crowdfunding & P2P lenders (Moore Stephens), Rated: A
- Finance businesses may jeopardise credit quality of internet companies, Moody’s says (SCMP), Rated: AAA
- Unruly and unregulated, nation’s Internet finance sector urgently needs supervision (Global Times), Rated: A
- Views on Yu’E Bao: easy for payment but difficult in credit! (Xing Ping She), Rated: B
- European Union
- Sweden Cryptocurrency Boom: Top 3 Swedish Fintech Startups To Watch (IBT), Rated: AAA
- AltFi Data scoops equity investment, appoints advisory board (AltFi), Rated: A
- Funding campaign aims to establish new co-working space in Dublin (Irish Times), Rated: B
- Real-Time Vacations: The Instant Gratification Of Fintech (Forbes), Rated: AAA
- International REITs: An Overlooked but Surging Asset Class (Investopedia), Rated: A
- SocietyOne Celebrates Five Year Anniversary Of Helping Customers (Crowdfund Insider), Rated: AAA
- PawnHero bags $ 9.7m financing, partners PLDT fintech arm (Deal Street Asia), Rated: AAA
- Middle East
- Ever a lender or a borrower be… (Khaleej Times), Rated: AAA
My Quarterly Marketplace Lending Results – Q2 2017 (Lend Academy), Rated: AAA
One could almost say my returns are in a downward spiral. Since peaking in Q1 2014 at 12.44% my returns have decreased pretty much every quarter and for the last two years that decrease has averaged around 0.5% per quarter.
This past quarter my overall returns stood at 7.28% and the returns for my original six accounts were 5.07%. My worst Lending Club account was my original account there and it came in at 1.95% for the year. The only good news, if there was any, was that I did not have a negative quarter in any of my accounts this quarter unlike in Q1.
- All the account totals and interest numbers are taken from my monthly statements that I download each month.
- The Net Interest column is the total interest earned plus late fees and recoveries less charge-offs.
- The Average Rate column shows the weighted average interest rate taken directly from Lending Club or Prosper.
- The XIRR ROI column shows my real world return for the trailing 12 months (TTM). I believe the XIRR method is the best way for individual investors to determine their actual return.
- The six older accounts have been separated out to provide a level of continuity with my earlier updates.
- I do not take into account the impact of taxes.
While Lending Club shows an 8.19% return I ignore that number and do my own calculation. My TTM return here is at an all time low of 1.95% but at least I have reversed what happened in Q1 when I had a negative quarter.
Direct Lending Income Fund
The Direct Lending Income Fund continues to be my most consistent performer returning solid double digit returns every quarter since I started investing back in 2013.
How Amazon’s Alexa will upend wealth management (Financial-Planning), Rated: AAA
Advisors wondering how Amazon will enter wealth management should look to its cloud computing arm, Amazon Web Services, which is pitching the natural language processing, machine-learning brain behind its voice interactive service to wirehouses, broker-dealers and robo advisors.
Already, UBS has partnered with Amazon to enable clients and non-clients of the bank to get answers to financial and economic questions through Alexa.
The Future Of Banking Investments (Modest Money), Rated: AAA
I’ve actually had this subject on my mind for awhile. In my article “Customer Experience And Retail Banking: Why Banks Need To Enter The Modern World”, I discussed a day where my district manager came to show us the ABSOLUTE IMPORTANCE OF LOBBY LEADERSHIP!!!!!!! I was rather underwhelmed by its importance, but overwhelmed by the fact that the banks were all putting such a heavy focus on greeting customers at the door and making each trip to the bank “an experience”
One of the downsides of the future of banks—and one of the things that might compel someone to avoid bank stocks—is that they are slow to change. They are loathe to change.
Other businesses are trying to please their customers. Banks are trying to please their regulators. Because customers don’t issue multi-million dollar fines on banks when they don’t get what they want.
A New Challenger Has Entered The Battle!
Businesses always have competition within their field. Banks are no exception. Banks compete with other banks to provide their services to the global market.
Except now, with fintech growing at a record pace, banks face competition from small fintech companies and major technology giants such as Google and Apple.
We’ve seen companies like Lending Club take the world of lending andinvesting by storm with their peer-to-peer lending services. LendingTree has changed the way people shopped for mortgages, and LendKey is fast becoming a leader in student loans by acting as a broker for not-for-profit lenders and providing full after-funding services. I wrote a review about LendKey here.
For non-lending companies that aren’t brought to you by the letter “L”, there’s PolicyGenius (an online life insurance broker). There’s Acorns, a “micro investment” company that takes each of your debit card purchases, rounds them up to the nearest dollar, and invests the spare change into your investment portfolio. And of course, there’s PayPal, the legendary online payments/money transfer company.
Of course, the fintech firms aren’t even the largest future competitors! Ironically, it’s non-financial technology giants that pose the greatest threat to the future of traditional banks!
Why I Think Bank Stocks Are A Great Future Investment
No, I’m bullish on banks because I think that they will adapt, in their own unique way.
What Key’s fintech investments say about commercial payments (American Banker), Rated: A
Last week the Cleveland-based bank announced it had taken an equity stake in the fintech firm Billtrust, which provides digitized and automated accounts receivable capabilities for companies. The investment is one of a series the $134 billion-asset Key has made in the space in the last two years.
Other banks are also making an effort to enhance commercial payments capabilities. Wells Fargo, for example, in June announced that receipt imaging would be available for commercial card customers who use the bank’s commercial card expense reporting service, which allows them to upload and manage receipts directly on mobile devices. U.S. Bank also began offering corporate clients a virtual payments service, for employees who need to make a one-off work-related payment or who make purchases rarely enough that they don’t need a physical plastic corporate card.
Key is hoping that B-to-B payment solutions will make it stand out in the competitive landscape of commercial banking.
Making Friends with Fintech: Tips for Bankers (ABA Banking Journal), Rated: A
Time and reality have since set in, and the tone of the conversation has shifted away from “compete” toward “collaborate.” Banks increasingly see the value of capabilities developed by fintech firms, and those companies in turn are becoming better acquainted with the challenges of regulation and other barriers to bringing their products to market.
For banks, the wakeup call has been the realization that customers are coming to value—and expect—a frictionless banking experience. And if banks can’t provide that kind of frictionless experience, Henrichs says, they’ll turn to alternate solutions.
Keys to building a successful fintech strategy
1. Adopt the right cultural mindset.
First and foremost, the bank must have an appetite for innovation.
For some banks, this may involve a shift away from viewing fintech companies as simply third-party vendors or service providers, and instead as collaborators working side by side to develop something new.
2. Do something.
And size isn’t an excuse to sit back and wait, Henrichs adds. Rather, it’s about choosing an area of focus that makes sense for the bank in terms of available resources. While that may not always be a big, sexy innovation, banks can start by achieving smaller, incremental change—something as simple as building and beta testing a new email delivery system can help build up the bank’s “try and fail muscle” and help lay the groundwork for future, larger-scale projects.
3. Be forward-looking.
Consumers’ demands are shifting every day, and new products will continue to hit the market at an unrelenting pace. Knowing that, bankers must be able to keep an eye on the horizon.
Will the human-robo approach to wealth management become best practice? (WhatInvestment.co.uk), Rated: A
According to the quarterly Fiserv “Expectations & Experiences: Borrowing and Wealth Management” survey conducted in June 2016, 49 per cent of consumers are interested in receiving financial advice from a robo-advisor.
However, there are limits to a robo-only approach. That is why we are witnessing an increase in wealth management firms that incorporate both digital advice and human advice to create a hybrid model, which is likely to become best practice in the industry.
Property Partner adds student assets to portfolio (Property Week), Rated: B
Real estate crowdfunding platform Property Partner has added student accommodation assets to its portfolio for the first time due to its high returns.
Online financial websites abound with free information (Lebanon Democrat), Rated: B
Annualcreditreport.com is a free website and app which will allow you to get a free copy of your credit report every 12 months from each credit reporting company.
Nerdwallet.com is another free website and app. The site offers financial tools and objective advice to help people better understand their financial options and make the best possible financial decisions.
Mint.com is a free website and app that helps you create budgets that make sense today and set you up for success tomorrow.
Bankrate.com is a free website and app that will help you find and compare rates on financial products like mortgages, credit cards, car loans, savings accounts, certificates of deposit, checking ATM fees, home equity loans and banking fees.
Funding Circle to Launch New Version of Autobid & Autosell Lending (Crowdfund Insider), Rated: AAA
On Monday, Funding Circle announced it is set to launch a new version of its existing Autobid and Autosell lending tools. Funding Circle will be eliminating the option to manually choose which businesses an investor may lend to and which loan parts to sell will be withdrawn. This is a significant shift in operation of the peer to peer lending platform as it begins to operate more like a fund.
Funding Circle created a new section on their web site dedicated to the explanation as to why they were moving away from peer to peer lending and becoming more like a fund by eliminating manual selection.
While many investors have enjoyed manually choosing loans, there are some drawbacks to it:
- Many investors do not currently benefit from lending to all types of businesses.
- It can mean your lending is not spread evenly across lots of businesses.
- It can be confusing for investors.73% of new investors who join Funding Circle choose Autobid, and 80% of Funding Circle investors* say simplicity of lending is important to them.”
Regulatory spotlight on crowdfunding & P2P lenders (Moore Stephens), Rated: A
The FCA has launched a crackdown on peer-to-peer (P2P) lending, in the coming months, aiming to ensure protection for retail investors within this heavily risk-associated market.
Finance businesses may jeopardise credit quality of internet companies, Moody’s says (SCMP), Rated: AAA
These operations could weaken the internet companies’ credit quality, especially if their finances are consolidated on the technology companies’ accounts, Moody’s Investors Service said.
That’s because most internet companies don’t generate enough profits from operating these businesses, and they lack a track record of holding borrowers accountable for timely payments on their loans, Moody’s said.
Unruly and unregulated, nation’s Internet finance sector urgently needs supervision (Global Times), Rated: A
After years of explosive but unruly growth, the online finance market requires cooling through tighter regulation.
On the contrary, there were few regulations to guide or hamper China’s Internet finance industry, with no such requirements as reserve levels or loan-to-deposit ratios. The near-absence of regulation greatly lowered the barriers to entry for the sector, which witnessed both explosive expansion and high failure and fraud rates as it grew. Take P2P lending platforms, for example. As of the end of July, 5,916 P2P lending platforms had been set up in China, but only 2,090 were operating normally, with the rest either encountering liquidity problems or simply closing, according to statistics from wangdaizhijia.com, a P2P industry portal.
Views on Yu’E Bao: easy for payment but difficult in credit! (Xing Ping She), Rated: B
Ant Financial has a big market share in the online payments industry in China. However, its ambitions go far beyond that. Recently, Ant Financial was known to get involved in the credit market.
Ant Financial seeks to merge the gap between the Yu ‘E Bao account and the general bank account through the online merchant bank. It hopes to connect the supply and demand side of the credit in its own account system, just as the bank account do.
But it won’t be easy. The biggest difference between the credit business and the payment business is that the credit business is a heavy capital business and a highly regulated licence business with a strong social spillover effect.
Sweden Cryptocurrency Boom: Top 3 Swedish Fintech Startups To Watch (IBT), Rated: AAA
The Swedish startup Klarna made waves this summer by launching its own peer-to-peer payment app called Wavy and acquiring a full banking license, which sets Klarna apart as one of the few fintech companies able to compete with traditional banks head-on. TechCrunch described it as a $2 billion startup working the 700,000 e-commerce sites. In June, Visa Inc. announced it is buying a stake in Klarna plus forming a payments partnership. Klarna is now widely considered one of the world’s most promising fintech startups.
There is a small but growing demand for bitcoin in Sweden. Sweden’s central bank is even considering the merits of making its own national cryptocurrency. In the meantime, Safello aims to become the “ Coinbase of Europe,” since the European bitcoin landscape is far more diverse than North America in terms of regulation and user habits. Coinbase, arguably the world’s best funded bitcoin exchange, is already available in Europe. However, Safello sets itself apart by focusing exclusively on the needs of European users, including support in nine different languages.
So far, Schuil said Safello has facilitated $10 million worth of transactions involving tens of thousands of European users.
Klarna and Safello aren’t the only Swedish startups with the potential to completely overhaul how people interact with money. Among all the startups buzzing around Stockholm, Biohax International certainly stands out. Biohax CEO Jowan Osterlund told IBT his team has implanted 3,000 microchips in people’s bodies, usually their hands, most of which happened in the past year.
These microchips can be used for purchases like train tickets and food. The Wisconsin company Three Square Market now lets employees buy office snacks with the swipe of a bio hacked hand, while also using the chip as a workplace ID for office equipment.
AltFi Data scoops equity investment, appoints advisory board (AltFi), Rated: A
The transparency agenda in online lending has taken a step forwards, as another analytics firm raises capital. AltFi Data has raised an undisclosed sum of equity funding, in tandem to forming a new advisory board.
Roger Spooner and Peter Wilson will join existing backer and executive board-member Michael Baptista on the newly established advisory board. Spooner was most recently a member of the management committee at global data firm Markit, where he was head of global client management. Following a 20 year career in private equity, Wilson was the inaugural CEO of British Business Bank Investments, where he was responsible for £1.5bn of government investment. In this role he oversaw a number of early institutional investments within the UK’s marketplace lending sector.
Funding campaign aims to establish new co-working space in Dublin (Irish Times), Rated: B
Sona 10 Newmarket, which is located next to the Teeling Whiskey Distillery, is being created in collaboration with the long-established Dublin Food Co-Op and will be hosted on its premises.
The brainchild of Adrian O’Connor, a Canadian entrepreneur who has lived and worked in the area for about a decade, Sona 10 has already raised some private funding to get the building open with some tenants already coming on board.
It is now seeking to raise an additional €25,000 via the Irish crowdfunding platform Flender to kit out the premises.
Real-Time Vacations: The Instant Gratification Of Fintech (Forbes), Rated: AAA
Being able to transfer money between accounts in real-time has become part of our daily lives, so much so that when these automatic services do not work, it becomes a problem.
Smartphones have become global standard: ‘conventional banking meant writing traveler’s checks and exchanging physical currency ahead of a trip, both of which are very expensive for the average consumer. Since then, new fintech providers – even in emerging markets – have dramatically increased the acceptance of foreign credit and debit cards,’ Likar said.
Vacationing in real-time is here: ‘you can now rent an apartment for same-day arrival on Airbnb or HomeAway, find last-minute dinner reservations through OpenTable, borrow a car near your location with Turo, and even book by-the-minute hotel rooms through the Recharge app.
Another aim of the fintech industry, in the same vein of the eradication of cash, is helping those that are unbanked and underbanked pay for services only available for those with credit cards. ‘Most airlines today accept payments from alternatives like PayPal. Other financial services companies, such as Affirm, offer three, six and twelve-month financing plans for customers who cannot afford to pay for the flight up front.’
WeSwap is a multi-currency card that can hold up to 18 different currencies, ensuring that consumers can lock in the exchange rate upfront rather than after the purchase,’ Likar mentioned.
International REITs: An Overlooked but Surging Asset Class (Investopedia), Rated: A
As WisdomTree points out in a recent note, a massive chunk of global real estate investments are actually found outside the U.S. (See also: Eyeing Emerging Markets REITs? See These ETFs.)
SocietyOne Celebrates Five Year Anniversary Of Helping Customers (Crowdfund Insider), Rated: AAA
Australia-based online lender SocietyOne announced on Monday it is celebrating its five-year anniversary of helping customers achieve their lending needs. This celebration comes less than two months after the lending platform surpassed $300 million in total originations. The lender revealed that more than 13,000 customers thanks to $325 million provided by its investor funders.
PawnHero bags $ 9.7m financing, partners PLDT fintech arm (Deal Street Asia), Rated: AAA
Southeast Asia’s first digital pawn shop PawnHero has closed a $9.7 million (P500 million) financing deal with a Philippine investment bank even as it signed a partnership agreement with the fintech arm of telco giant PLDT.
Ever a lender or a borrower be… (Khaleej Times), Rated: AAA
The key to the banks’ risk taking ability is aggregation. The bank is able to get the deposits at scale and at the same time lend to a large number of customers most of which are likely to pay back. In a portfolio of loans, historically, only a small percentage is non-performing. The individual lender has so far not had the ability to create a portfolio. The start of crowdfunding a few years ago began to change that. Crowdfunding works in the area of providing returns through some level of ownership of either the product itself or the company which is promoting it. For individual investors seeking a stream of steady income on the other hand, P2P Lending or Marketplace Lending makes more sense.
However, the speed of growth of P2P lending outstrips that of traditional banking. An excellent December 2014 whitepaper, A Trillion Dollar Market By the People, For the People published by Foundation Capital, describes the blistering pace at which P2P lending grew from a base of $870 million dollars in 2012. Estimates of the size of the industry vary from between $100 billion to $200 billion. The whitepaper predicts that the market size will be about $1 trillion by 2025.
On average, P2P lending platforms like Beehive are able to reduce interest rate spreads between sourcing and lending money by about 400 basis points (4 per cent). That’s because players in this space do not keep the loans on their balance sheets.