Daily News Digest Featured News

Tuesday October 10 2017, Daily News Digest

U.S. commercial banks
Source: Bloomberg

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News Summary

United States

Money360 Closes More Than $ 100 Million in Loans in Third Quarter, On Track for Record-Breaking 2017 (Marketwired), Rated: AAA

Money360, a technology-enabled direct lender specializing in commercial real estate (CRE) loans, today announced it closed more than $100 million in loans in the third quarter of 2017. This brings the company’s total loan closings to over $450 million, with a target of $600 million in transactions by year-end.

Notable loans closed in the third quarter include:

  • A $15 million bridge loan for a six-story, 310-room hotel property in Bloomingdale, Illinois.
  • A $12.5 million bridge loan for a hospitality property in Burr Ridge, Illinois.
  • A $9.9 million bridge loan for a three-story, multi-tenant office property in Fresno, California.
  • A $7.6 million bridge loan for a multi-family property in Bemidji, Minnesota.
  • A $6.9 million bridge loan for an office property in Denver, Colorado.
  • A $4.4 million permanent loan for a retail property in Mount Olive, New Jersey.
  • A $1.2 million bridge loan for a two-story apartment building in Miami, Florida.

Amazon Could Be Your Lender, Too (Bloomberg), Rated: AAA

Amazon.com Inc. has profoundly changed the way clothes and books are sold and is now targeting food shopping. Its next project may very well be taking on the heart of Wall Street.

The technology giant has had several conversations with banking regulators over the past two years on a wide range of topics, including “financial innovation,” according to lobbying disclosures reviewed by American Banker. It already has a lending operation that it started in 2011 to support merchants that sell on its marketplace. This unit has grown increasingly popular, to the point where it originated $1 billion in loans over 12 months.

U.S. commercial banks
Source: Bloomberg

“Amazon has very broad ambitions,” said Ram Ahluwalia, founder of PeerIQ, a startup that tracks loans originated on online systems. He attended the online lending meeting last month and noted that many people were talking about big technology firms plowing more into financial services, including regulators.

Amazon is not alone. Others, such as PayPal and Google, have also entertained banking ideas. In fact, they’ve joined forces, creating a lobbying group called “Financial Innovation” together, according to American Banker.

PeerIQ Securitization Update: Market Conditions are Strong (Crowdfund Insider), Rated: AAA

Below are some of the highlights of the Marketplace Lending Securitization Tracker for Q3:

  • This quarter saw six marketplace lending securitizations with quarterly issuance of $2.6 Bn, representing 7.6% growth in issuance over 3Q 2016. To date, cumulative issuance equals $23.8Bn across 96 deals.
  • Lending Club (NYSE:LC) issued its first deal with prime loans with borrowers having FICO scores of at least 660. The weighted average FICO score on this deal is 692, which is a shift in borrower profile as MPL lenders seek out higher quality borrowers.
  • All deals this quarter were rated.  DBRS continues to lead the rating agency league table, while Kroll dominates the unsecured consumer sub-segment. We see continued engagement from the top 3 ratings agencies like Fitch, with their rating of PMIT 2017-2A. Goldman Sachs, Deutsche Bank, and Morgan Stanley continue to top the issuance league tables with over 49% of MPL ABS transaction volume. College Avenue, a nascent MPL student loan originator, issued its first securitization CASL 2017 -A, managed by Barclays.
  • Spreads at issuance are marginally tighter in the consumer space on higher rated tranches. As priced 14bps tighter on average, while Bs and Cs priced 1-2bps wider. In the student space, As priced 51bps wider, while Bs and Cs priced 46bps and 61bps wider respectively.
  • Credit support requirements remain stable as rating agencies get more comfortable with collateral performance. We see deterioration in credit performance, but investors are well protected due to structural features and senior tranches deleverage rapidly to gain greater protection. Demand remains robust in this sector.
  • Goldman Sachs purchased $300Mn of solar loans from Mosaic. It would be interesting to see if they would participate in future Mosaic securitizations, as they have in the Marlette transactions.
    3Q17 saw a benign macro environment and low volatility. The Fed announced the beginning of its balance sheet reduction program to start in October, and prepared the market for an interest rate hike at the December meeting.
PeerIQ MPL Securitization Tracker
Source: PeerIQ

Download the PeerIQ Marketplace Lending Securitization Tracker Q3 here.

Equifax, TransUnion, Experian have spent decades avoiding transparency, regulation (Cleveland.com), Rated: AAA

For decades, the three major credit bureaus, along with a smaller fourth player, Innovis, have operated in the shadows of Americans’ finances.

Here’s a quick look at a timeline:

1960s: TransUnion’s original business was not compiling credit data on consumers. It bought a data collector, Credit Bureau of Cook County in 1969.

1970: Congress passed the Fair Credit Reporting Act, aimed at regulating the reporting of credit information.

Around 1970: TransUnion started using automatic tape-to-disc transfer to compile data, which was a lot faster than entering data manually. TransUnion later was the first bureau to offer banks, credit card companies and other creditors online access to data.

1988: TransUnion gains a nationwide presence. Credit reporting takes off.

1989: FICO scores as we know them were introduced.

March 2000: FICO creator Fair Isaac Corp. took legal action against an online lender, E-Loan, after E-Loan provided loan applicants with their credit scores.

September 2000: It wasn’t until this time that consumers could pay about $8 to the credit bureaus to get their own FICO credit scores, which had a top score of 850.

2003: Congress amended federal law to require the credit bureaus to give consumers a copy of their credit reports at no cost once a year.

2006: Equifax, TransUnion and Experian formed a joint venture to introduce Vantage scores, which were quite different than FICO scores.

2013: Discover, First National Bank of Omaha and a couple of other major issuers became trendsetters by providing credit card customers with their FICO credit score every month as part of their statement.

2014: The Consumer Financial Protection Bureau, a financial regulator, said it fielded 31,000 consumer complaints in 16 months. About 75 percent of the complaints concerned information in credit files that consumers said was inaccurate.

Jan. 2017: The CFPB said Equifax and TransUnion lied to consumers about the credit scores they were being sold, and ordered Equifax and TransUnion to pay $17.6 million in restitution to consumers and imposed fines of $5.5 million.

March 2017: Experian joined its counterparts and got busted by the CFPB for lying about the credit scores it peddles to consumers.

Sept. 2017: Equifax makes a bombshell disclosure that a cyber thief stole personal information, including Social Security numbers and birth dates, for 145 million people. It’s by far the biggest data breach in U.S. history.

New AutoInvest Feature Enhances Patch of Land Real Estate Investing Platform (Patch of Land), Rated: A

We’ve rolled out an automatic investment tool, AutoInvest, to help our investors more easily access investment opportunities that meet pre-selected investing criteria.

We think you’ll see several nice benefits from Patch of Land’s new AutoInvest feature:

  • Automatically participate in first-lien real estate loans based on pre-selected investing criteria
  • A new lower minimum investment amount ($1,000 per opportunity) versus the $5,000 minimum for manual investing, to help facilitate better portfolio diversification
  • Priority access to opportunities before they are publicly available on Patch of Land’s platform

RealtyShares Finances Several Texas Commercial Properties (BusinessWire), Rated: A

RealtyShares, a leading online marketplace for real estate investing, has deployed more than $10.1 million for a pair of commercial real estate transactions in Texas, collaborating with two different sponsors to provide fast and flexible financing for their projects.

RealtyShares secured a $2.4 million equity investment for a 302-room, full-service Sheraton hotel in Irving, Texas.

The hospitality equity transaction was sponsored by The Buccini/Pollin Group, a real estate acquisition, development and management company with four offices across the U.S. and more than $1 billion under management. Along with its hotel management affiliate, PM Hotel Group, Buccini/Pollin has acquired and developed 40 hotel properties, and possesses experience managing all aspects of project acquisition, finance, development, construction, leasing, operations and dispositions.

Global Debt Registry Raises the Bar on Lending Ecosystem Information Security (AltFi), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced the successful completion of its Service Organization Control [SOC] 1 Type II and SOC 2 Type II attestation reports. Performed by KirkpatrickPrice, the independent audit confirms GDR’s internal security controls meet the American Institute of Certified Public Accountants’ (AICPA) applicable Trust Services Principles and Criteria. These latest verifications reaffirm GDR’s position as a leader in the online lending space for security and operational integrity in providing asset certainty and validation through its suite of digital due diligence solutions.

The SOC 1 Type II audit assessed GDR’s consistent application of internal controls and processes to protect consumer data, maintain operational integrity and comply with industry regulations over a six-month period. The SOC 2 Type II review compared the strength of those internal policies and controls with the AICPA’s own Trust Services Principles of security, availability, confidentiality and processing integrity. The SOC 2 Type II attestation provides a comprehensive and integrated assessment of an organization’s data security and integrity control framework to industry stakeholders — and is missing from organizations which choose to obtain a SOC 1 Type II exclusively and point to their cloud provider’s or vendors’ SOC 2 Type II attestation reports.

What the CFPB’s New Payday Lending Rule Means for Consumers (ConsumerReports.org), Rated: A

The new regulation, announced this week, could significantly restrict lenders of short-term, very high-interest loans, known as payday loans. The practice has long been criticized by Consumers Union, the advocacy and mobilization division of Consumer Reports.

Consumers, in fact, may have better alternatives with community banks and credit unions. And experts say the CFPB’s new rule could pave the way for even more lending by these types of financial institutions.

The payday lending rule is set to take effect in July 2019, unless it is rolled back by Congress. The Congressional Review Act gives Congress 60 days from the time a new regulation is published in the Federal Register to rescind it.

Assuming the rule remains in effect, it’s unclear whether the bulk of the payday industry could adapt. Some payday lenders are changing their practices already, creating less risky, longer-term loans.

Regardless, two types of consumer lenders that are exempt from the CFPB rule—community banks and credit unions—could step into the breach to serve payday loan clients.

The nation’s nearly 6,000 community banks are another potential source for small loans. But community banks don’t actively market their small-dollar loans, explains Lilly Thomas, a senior vice president and senior regulatory counsel for Independent Community Bankers of America, based in Washington, D.C. Rather, they respond to inquiries by individual customers.

But, she added, the CFPB rule changes could change that.

CFPB Has Spoken: Payday Lending Regs Drop (PYMNTS), Rated: A

By the CFPB’s own estimates, the regulations as written will cut the number of short-term loans in the U.S. by more than half, and industry estimates put that figure closer to 80 percent. Other than perhaps the very largest players in the game, most loan lenders can’t soak that kind of volume loss, since payday lending (contrary to public opinion) is not a high-margin business to start with. The average storefront lender clears about $37,000 in profit – and under the new regulations, that annual profit would become a $28,000 loss, according to an economic study paid for by an industry trade association.

Payday Lending (And Its New Rules At A Glance)

Payday lending is a big segment in the U.S., as storefront short-term loan lenders outnumber McDonald’s locations, and collectively lend out about $46 billion per year in loans to about 12 million borrowers.

The typical payday lending customer, according to the Pew Charitable Trusts, is a white woman aged 25 to 44.

Roughly 22 percent of borrowers renewed their loans at least six times, leading to total fees that amounted to more than the size of the initial loan.

Payday lenders do in fact collect a lot of money in fees – about $7 billion as of last year. Default rates are estimated at 20 percent on the low end, while at a mainstream financial institution (FI), that rate is a lot closer to 3 percent on average.

OCC reacts to CFPB’s final payday loan rule by rescinding its deposit advance product guidance (Ballard Spahr), Rated: A

Hours after the CFPB released its final payday/auto title/high-rate installment loan rule on October 5, 2017, the OCC rescinded its guidance on deposit advance products.

How fintech will change bank M&A (Banking Exchange), Rated: A

Cannon, the firm’s global director of research and chief equity strategist, agreed. Today, KBW, traditionally focused on bank equities, also covers firms like PayPal, Square, and Green Dot. And a bit over a year ago, KBW, in cooperation with Nasdaq, launched the KBW Nasdaq Financial Technology Index, an eclectic mixture of 50 publicly traded fintech firms across multiple industry categories.

“We expect that bank M&A will shift over time to bank/fintech M&A with the largest banks looking to acquire successful fintech firms. This will be pushed by the limitations on bank acquisitions by the largest banks, and by the need of fintech firms to partner with banks to expand their operations. While regulators are looking at a new fintech bank charter, we expect that to be limited  in scope.”

Banking Exchange: What started you thinking about a bank/fintech M&A trend?

I’ve been puzzled by the lack of new start-ups since the financial crisis. Most of the discussion around this has concerned regulatory constraints. But as I dug into this, I began to think that maybe the historical entrepreneurship in finance—traditionally folks starting new banks to get their economy going—has shifted from the banking sector to Silicon Valley.

Banking Exchange: Do people just not want to invest in new bank charters anymore?

In the wake of the financial crisis, a lot of capital—such as from private equity firms—that might have gone into new charters went into recapitalizing existing banks. Postcrisis, there certainly was a regulatory element, insofar as increased regulation and FDIC’s reluctance to insure new banks. But while people talk about that, I haven’t heard about people applying for charters and getting turned down by FDIC.

Mid-sized banks are looking for creative ways to build loan books. They already have an advantage in lending to small- and mid-sized companies and in doing commercial real estate loans. But they’re starting to see those sources of assets ebb. And they, too, will be looking toward asset generation from electronic delivery through fintech-type operations.

Banking Exchange: There is also the opposite trend—some of the fintechs, such as Varo, SoFi, and Square are seeking bank or industrial bank charters. Do you see that gaining momentum?

A year or so ago, my son-in-law was refinancing his student loans. Now, remember that part of the key to SoFi’s initial, extremely rapid growth was this: They cherry pick the government program borrowers. They will give strong borrowers a 4% loan to replace the government’s 7% all day long.

Credit fintechs will wither, but small-business lending will prosper (American Banker), Rated: A

In the second half of 2016, the fintech-credit bubble began to show signs of losing air when investors and funders signaled declining confidence in fintechs by withdrawing their investments — triggering some fintech closures. In trying to scale up, some providers went outside their core markets and struggled as their credit models failed (e.g., CAN Capital). Some faltered in attempting to diversify into different loan types, while others — which are now retrenching (e.g., LendingClub) — struggled with costs far outrunning revenues.

The market is ripe for consolidation and beneficial partnerships. Indeed, the remainder of 2017 and 2018 will see more partnerships between the banks and fintechs for the following three reasons.

  1. The whole is greater than the parts
  2. Credit portfolios and models need adjustment
  3. Revenue and liquidity cushions are needed

Kabbage’s Kathryn Petralia on Improving SMB Lending (Business.com), Rated: A

The influx of technology into the alternative lending industry has drastically changed the way small businesses access financing. As the co-founder of the online alternative lending platform Kabbage, Kathryn Petralia has been helping to lead this change.

Q: What drew you to the alternative lending space? Why did you think the market would support a lender like Kabbage?

A: I’ve been in alternative lending since the late ’90s.

Q: When a space is so crowded, like yours, what can you do to differentiate yourself?

A: Additionally, we are the only lender to offer SMBs the option to apply, qualify and draw funds entirely through a mobile app. Our Kabbage card allows qualified customers to draw from their line of credit at checkout or any point of sale (POS).

Kabbage is also unique as we license our technology to global banks, providing them more reach and a better user experience to serve their small business customers in a meaningful, cost-effective way. We have bank partnerships with Santander, Scotiabank and ING.

Q: What makes alternative lending an attractive option for small businesses?

A: It’s much faster and easier than traditional processes, and the anonymity of an online application process takes some of the stress out of what is traditionally a very anxiety-ridden experience.

Women in Tech Week Launches in New York City (PR Newswire), Rated: A

CommonBond, a financial technology company that helps students, graduates and employees pay for higher education, today launches Women in Tech Week, which runs through October 15. Together with partners including Betterment, Birchbox, Duolingo and others, CommonBond spent the last several months creating Women in Tech Week to recognize the contributions of women in technology and support the next generation of women leaders.

Women in Tech Week consists of three components:

1. A whitepaper on what women want in the tech workplace: CommonBond commissioned a survey of over 600 women in tech to learn what companies can do to attract and retain women, as well as create environments where women can thrive. The research found women want to see their companies implement the following changes, in order:

  • More women in leadership roles.
  • Better long-term career planning processes.
  • Additional training and professional development opportunities.

2. A social media campaign to support the next generation of women in tech: CommonBond has partnered with Girls Who Code to help fund the next generation of women technologists. CommonBond will donate to Girls Who Code for each social media post that:

  • Answers the question “Why are you proud to be a woman in tech?” or “Why are you proud to support women in tech?”
  • Includes hashtag #2017WITW.

3. A female founders event to encourage and inspire women in tech: On Ada Lovelace Day, a holiday on October 10 that celebrates the achievements of women in STEM, the co-founders of companies such as The Muse, PolicyGenius and WayUp will share their stories with students and professionals pursuing technology careers at an event in New York City.

Highlights from the Most Powerful Women gala (American Banker), Rated: A

Mary Navarro of Huntington and Linda Verba of TD Bank accepted Lifetime Achievement awards, and both shared some of the most important lessons they learned along the way about team-building.

Ohio Loophole Could Hold Back New Payday Lending Rules (WOSU.org), Rated: A

New rules issued this past week by the federal Consumer Financial Protection Bureau are meant to rein in payday and auto title lenders. The rules require enhanced credit checks for some loans and cooling off periods after three loans in a row to a single borrower.

“In Ohio, payday and auto title lenders are not operating under the intended statute,” Horowitz says. “They’re using a loophole that lets them operate as loan brokers.”

A 2008 law capped yearly interest rates at 28 percent. But the Ohio Supreme Court has upheld the loophole used by lenders.

What Works Best Onboarding Clients In The Robo Age (Investors.com), Rated: A

Led by tech innovators like Betterment, SigFig and Wealthfront, the more than 200 current U.S. robo-advisors in existence collectively boast some $53 billion in assets under management, with global robo assets poised to surpass $2.2 trillion by 2020. With such explosive growth in this space, many traditional full-service financial advisors feel compelled to beat their drums louder, when meeting prospects and onboarding new clients.

Despite the robo phenomenon, studies show that most individuals still value human interaction over technology. According to a survey conducted by online student loan marketplace LendEDU, 46.41% of millennials are working with a financial advisor, while only 24.30% have used a robo-advisor.

Furthermore, of the three-quarters of millennials who have yet to take the robo plunge, 61.58% say they’re reluctant to do so because they’ve never heard of robo-advisors, suggesting that general awareness still has a way to go. Finally, 68.92% of those polled said they believe financial advisors are more likely to yield greater returns on their investments.

Startups say this fintech ‘lab’ is giving them needed access to Wall Street and regulators (TechCrunch), Rated: A

Another program that gets high marks from founders is the Financial Solutions Lab (FinLab), an offshoot of the Center for Financial Services Innovation, a 13-year-old nonprofit focused on serving unbanked and underbanked customers.

Broadly speaking, it’s a 2.5-year-old program that aims to find and nurture fintech startups that are helping Americans save, access credit and build assets, and it is itself fueled by a $30 million, five-year grant from JPMorgan.

Among those startups it has worked with so far is Propel, a startup that helps people who receive food stamps manage their benefits.

Another company that’s currently a part of the program is Dave, an app that alerts consumers ahead of an upcoming overdraft and can advance them money.

LendingTree Partners with Jornaya To Deliver Independent TCPA Compliance on Leads (PRWeb), Rated: A

Jornaya, the fast-growing consumer journey insights platform, today announced that LendingTree®, the nation’s leading online loan marketplace, has integrated TCPA Guardian from Jornaya to manage compliance risk associated with the Telephone Consumer Protection Act (TCPA).

Jornaya’s TCPA Guardian integrated with LendingTree’s marketplace provides lenders with ability to validate that the consumer was shown necessary and approved disclosures, including monitoring the size, text, and overall visibility of the necessary TCPA disclosure. What’s more, the solution documents the proof of that consent, allowing both LendingTree and its lenders to deter and help defend the costly and rising number of TCPA complaints.

Will regtech kill bank jobs? (American Banker), Rated: A

Technology and regulation are intersecting in ways that create uncertainty in a number of areas, but for those who work in compliance, the big question is whether advanced technologies like artificial intelligence and blockchain will ultimately replace people.

When BBVA Compass recently began using robotic process automation to carry out specific pieces of compliance, such as retrieving statements, employees were worried.

Northeast Florida Real Estate Firm New Leaf Communities Offers Major Returns on New Deal Crowdsourced by RealtyeVest (PR.com), Rated: B

New Leaf Communities is seeking $4,500,000 in Preferred Equity. The sponsor is offering a 10% preferred return with 8% as a current pay and 2% accrued. RealtyeVest, who is exclusively housing the offer on their crowdfunding platform, will raise the capital in a series of Class A, B and C stocks of $1.5 million each.

It’s first come first serve as the tranches will close once the total for each is raised. Participants in the Class A tranche will receive an 80/20 waterfall participation after the 10% preferred return. The Class B tranche will receive a 70/30 waterfall participation after a 10% preferred return. Lastly, the Class C tranche will receive a 60/40 waterfall participation after a 10% preferred return.

New Payday Loan Regs: Pros and Cons (Investopedia), Rated: A

According to proponents, the new rules are a real positive for consumers. They see the following as pros.

  • Requiring lenders to ensure that borrowers can repay loans protects them from a cycle of debt.
  • While some lenders will be prohibited, consumers can still borrow from those that meet the new requirements.
  • Voters generally prefer stricter guidelines for payday lenders.
  • The new regulations will stop lenders from exploiting loopholes in the law.
  • Limiting the number of times a loan can be rolled over limits the effective APR.
  • Preventing multiple attempts to withdraw from bank accounts will stop excessive overdraft charges for consumers.

The payday lending industry, the Community Financial Services Association of America (CFSA), researchers at Pew Charitable Trusts, the banking industry and even some consumer advocates have pointed out what they see as the cons of these new rules.

  • The proposal exceeds the authority given CFPB by Congress and will be subject to expensive lawsuits.
  • The new rules still allow payday loans with interest rates of 300% or higher.
  • Banks and credit unions will be discouraged or prevented from entering the market with lower-cost loans.
  • Ultimately, the rules will inhibit consumer access to credit, driving them to far worse alternatives.
  • Many payday lenders will be forced out of business, costing jobs and creating credit “deserts” in areas where payday lending currently thrives.
  • Losing the ability to roll over loans will hurt consumers who need more time to pay off debt.

New Rule on Payday Loans to Hurt Industry, Help Banks (Newsmax), Rated: B

Revenues for the $6 billion payday loan industry will shrivel under a new U.S. rule restricting lenders’ ability to profit from high-interest, short-term loans, and much of the business could move to small banks, according to the country’s consumer financial watchdog.

Under the new rule, the industry’s revenue will plummet by two-thirds, the CFPB estimated.

Baptist advocates applaud rule to rein in abusive lending (Baptist Standard), Rated: B

A joint statement issued by the Texas Fair Lending Alliance and Texas Faith Leaders for Fair Lending noted from 2012 to 2016, Texans paid $7.5 billion in fees for high-cost loans.

Texas Appleseed, a public interest center based in Austin, noted for borrowers who do not refinance their loans, a typical $500 payday loan costs $1,351 in installments over five months.

How you can plan and enjoy vacation away from your business (NJBiz.com), Rated: B

According to a 2016 Funding Circle survey, about half of small business owners plan to take less than three days off during the entire holiday season; in fact, nearly 70 percent confess that they at least check emails on Thanksgiving Day, when most businesses nationally close.

United Kingdom

Zopa unveils banking product offering (P2P Finance News), Rated: AAA

Speaking at the LendIt conference in London, Jaidev Janardana (pictured), chief executive of Zopa, said banks have focused too much on products that help their business rather than the customer.

He revealed that Zopa Bank would offer unsecured personal loans with no early repayment charges and credit cards with no introductory offers but a flat rate as well as savings and investments that prioritise existing customers.

It will also offer auto-loans, allowing users to do a soft-search for products.

RateSetter to simplify early withdrawal fees (Bridging&Commercial), Rated: AAA

The peer-to-peer platform will be changing the current two fees for early withdrawal to a single and clear transfer fee for each market.

The transfer fee will be fixed for each market and will be a percentage of the capital being withdrawn (the fee will apply only to capital requested to be withdrawn, not interest).

RateSetter withdrawal fees
Source: Bridging&Commercial

Why an effective online checkout can be the key to great customer experience (ITProPortal), Rated: AAA

Speaking to ITProPortal, Luke Griffiths, MD of Klarna UK, noted that consumer flexibility in terms of payment methods is helping change merchant habits too.

Griffiths revealed that just shy of three million customers in the UK will have used Klarna’s services in some form, with the company counting the likes of the Arcadia Group and JD Sports as clients here.

This includes a “pay after delivery” option, which allows consumers to order their goods, receive them, but only pay after either 14 or 30 days if they are fully satisfied. Targeted mainly towards the fashion online retail space, Griffiths notes that this service has seen great pick-up from both merchants and customers, with the former seeing increased conversion and a drop in returns (as buyers become more confident that they will only pay for the goods they want to keep) and the latter getting a more successful online transaction and “turning the sitting room into the fitting room”.

P2P better placed to keep up with changing borrowers (P2P Finance News), Rated: A

FUNDING Circle co-founder Samir Desai (pictured) has ruled out launching a bank as he outlined the advantages of running a peer-to-peer platform over traditional financial models.

He said banks would find it hard to keep up with emerging technology such as artificial intelligence or machine learning due to the level of regulation.

Desai cast doubts on the ability of traditional banks to move into the online small and medium sized (SME) lending lending space, claiming Germany’s Commerzbank had seen loans underperform since entering this area.

£21.39 Million Raised on ArchOver in 2017 (So Far) (Crowdfund Insider), Rated: A

Peer-to-peer business lending platform ArchOver announced on Monday it has nearly doubled its overall lending in the first nine months of 2017. The company reported that since 2017 its total lending has reached £21.39 million, bringing its cumulative total that has been lent to date to over £48 million.

Ireland’s P2P Lending Platform Linked Finance Launches Pension Investment Product (Crowdfund Insider), Rated: A

Linked Finance, Ireland-based peer-to-peer lending company, announced on Monday the launch of its new type of pension account. The account allows holders of self-managed pensions to make P2P lending to Irish SMEs part of their pension investment portfolio.

The ID Co. launches tool to assess loan applicants on verified income (Finextra), Rated: A

One of the UK’s leading financial technology specialists, The ID Co., has announced it is the first software specialist to offer lenders the capability to calculate and base lending decisions on customers’ real earnings, known as verified income.

The ID Co. has Major Clients including a Large UK Bank, Prosper, Marlette & More (Crowdfund Insider), Rated: B

UK based Fintech, The ID Co., says it is the first software specialist to offer lenders the capability to calculate and base lending decisions based on customers’ real earnings or verified income. The ID Co. has major clients in both the UK and North America including a large UK retail bank, Prosper Marketplace, Marlette Funding, OakNorth Bank, eMoneyUnion, and Fair Finance.

Ex-ECB board member Jorg Asmussen leaves Funding Circle board for advisory role (Business Insider), Rated: B

German economist and politician Jörg Asmussen has moved into an advisory role at Funding Circle, leaving the London-headquartered peer-to-peer lender’s board after a year and a half.

China

China Issued the First Exit Guidelines on P2P Lending platform (Xing Ping She), Rated: AAA

Recently, the official WeChat of Shenzhen Internet finance association issued a notice concerning the exit guide of shenzhen’s marketplace lenders (solicitation draft). It was known as the first exist guide for P2P lending platforms in China. According to the notice, this guideline was drafted to direct and standardize the P2P lending institutions to smooth out of the P2P loan industry, as well as to protect the legitimate rights and interests of lenders, borrowers and P2P institutions. Before officially released, the exposure draft of guide is soliciting opinions from the industry.

Counting Decacorns? Look To Beijing (Forbes), Rated: A

Already, China has climbed to account for 23% of the world’s total 214 unicorns (compared with the U.S. at 50% and India at 9%). China claims such highly valued companies as ride-hailing service Didi, hardware innovator Xiaomi and online lender Lu.com plus newcomers to the 2017 list: bike-sharing service MoBike, news aggregator Toutiao and e-vehicle maker Neo.

Moreover, China is getting with a new class of billion-dollar valued companies, so-called decacorns or startups with valuations past the $10 billion mark. Of 14 current decacorns, Silicon Valley has 5 and so does China — four in Beijing and one in Shenzhen, according to an analysis by GSR Ventures shared by managing director Richard Lim at the recent HYSTA conference.

How and where will the next generation of unicorns be formed? Research by GSR shows that the unicorn action is in China by Chinese returnees. There were 30 unicorns founded by Chinese in China versus 9 U.S. unicorns founded by Chinese.

European Union

Moody’s Upgrades 4Finance Credit Ratings as Online Lender Tops € 5 Billion in Loans (Crowdfund Insider), Rated: AAA

Moody’s Investor Service has upgraded 4Finance‘s credit ratings to B2 from B3. The upgrade comes as 4finance says it has passed € 5 billion in loan originations. The 4finance S.A. senior unsecured issuer rating was also upgraded to B2 from B3. The outlook on all ratings is stable.

Banks generally ready for rising rates (The News Tribune), Rated: A

The European Central Bank says banks under its jurisdiction appear well-prepared to face unexpectedly higher interest rates, but may be less ready for disruption from online banking.

The ECB’s banking supervision division released results Monday of a stress test that showed suddenly rising rates would increase net interest income, an important part of bank finances.

Netherlands Crowdfunding Award Nominees (Crowdfund Insider), Rated: A

The Netherlands Crowdfunding Association has recently announced the nominees for the annual Crowdfunding Awards.

The Assocation states that Dutch investors have contributed more than €400 million in more than 4,000 different companies.

Click here for a list of nominees.

International

Canada Embraces Cashless Economy; UK Falls Behind Sweden in Cashless Technology Uptake (ForexBonuses.org), Rated: AAA

A recent study from Forex Bonuses finds the countries among the 20 largest economies who are adapting quickest to using cashless systems like phones and contactless cards – revealing that Canada narrowly edges out Sweden for the top position.

Investigating twenty of the world’s most significant markets, the study looks into contactless card saturation, number of debit and credit cards issued per capita, usage of cashless methods, growth of these cashless payments, and the proportion of people who are aware of which mobile payment services are available.

Cashless Economies

The top position has gone to Canada, who, while only having contactless functionality in 26% of their cards (compared to 41% in the UK and 56% in China) and the lowest number of debit cards per capita included in the research (0.7), were found to have over two credit cards per person, a figure only exceeded by their neighbours in the US, who had just under 3.

Likewise, the majority of their payments were made using cashless means at 57% of transactions, outmatched only by 2% in both Sweden and France. The UK reached 52% on this scale, while China, despite the majority of cards being contactless, used cashless methods in only 10% of transactions. China were also the most educated on mobile payment services, with 77% of survey respondents claiming they were aware of the options available to them in this regard. In comparison, only 47% in the UK claimed the same.

cashless societies
Source: ForexBonuses.org

Global Online Lender Issues €120M In Credit Lines to SMEs (PaymentsJournal), Rated: A

In three years, online lender Spotcap has issued more than €120 million in credit lines to small and medium-sized enterprises (SMEs).

The fintech also raised an additional €22 million of equity and debt funding from its existing investor network. It has now raised €100 million of investment since its launch in September 2014.

Alternative Finance’s Popularity Won’t Break With Investors (PYMNTS), Rated: A

In this week’s B2B venture capital breakdown, alternative lending for small- and medium-sized businesses (and their employees) is the clear winner.

SalaryFinance

The company, based in the U.K., recently announced about $52.5 million by Legal & General, while Blenheim Chalcot also participated, according to reports. The funding round will need approval from the Financial Conduct Authority, reports added.

Taulia

This supply chain financing company has been mum about the funding, with reports only catching onto the investment of about $20 million (so far) through a Securities and Exchange Commission (SEC) filing. According to reports, the firm plans to raise a total of $33.29 million, though it is unclear who provided the funding or when Taulia will officially announce the raise.

Siigo

Colombia’s Siigo, which provides accounting and administrative software for small- and medium-sized businesses, raised an undisclosed sum late last week by Accel-KKR, reports said.

4 ways FinTech is changing global finance (The Next Web), Rated: A

1. Lending

One of the biggest and most profitable sectors of the financial industry is the lending sector. Most financial institutions have used the existing models to create new ones that better fit their business models and reach their profit targets.

2. Payments

Another major role played by banks is to facilitate the transfer of funds between parties. Banks have been rumored to make at least $4 billion annually just from fees obtained during funds transfers.

4. Facilitating speedy payments

For a business to thrive, its invoices should be paid on time and in a prescribed way. One of the things that make businesses go under is the accumulation of bad debt. When invoices are not paid on time, the business suffers because the business owner must find other means of paying his creditors.

Voice Sizzles, Equifax Fizzles And Social Security Numbers Get Ready For A Curtain Call (PYMNTS), Rated: B

Singapore’s OCBC Bank is integrating Siri to help conduct corporate banking across 12,000 customers. Voice commands send payments and can also inquire about account balances. Alexa is now available in India, and will soon debut in Japan later in the year.

JG Summit scales new peak with fintech (National Multimedia), Rated: B

JG Summit’s unit, Express Holdings Inc, inked an exclusive partnership with Greater China-based Oriente to create a peer-to-peer lending solution for “under-banked” consumers.

Australia

SocietyOne announces record lending growth in 2017 (Finder), Rated: AAA

Peer-to-peer (P2P) lender SocietyOne has announced three lending milestones for 2017 with the year not even over yet, showing how Australians are embracing this innovative way to borrow and invest.

This is a record for SocietyOne, as it has now originated more than twice the loans of the company’s nearest competitor and had seven successive quarters of growth.

The first three-quarters of 2017 also saw a record amount of funding made available by investor funders. The total number of funders has risen to 320 since SocietyOne’s inception and there is $61 million of committed available funding as at 30 September 2017.

Global SME lender Spotcap surpasses $ 180 million in credit issued (Finder), Rated: AAA

Online lender Spotcap has announced it has issued more than $180 million in credit lines to small- and medium-sized enterprises (SMEs) globally in just three years. The lender offers lines of credit up to $250,000 and has been operating in Australia since 2015.

Spring FG to launch its fintech platform in Australia (Proactive Investors), Rated: A

Spring FG Ltd (ASX:SFL) is planning a pre-Christmas launch of its innovative fintech platform, MyMoney247.

MyMoney247 will allow consumers to link hundreds of Australian bank, brokerage and investment accounts and retail and industry super funds.

Spring’s platform will employ customised technology from Australian fintech company, MoneyBrilliant, including advanced budgeting, cashflow management, bill management and spending analysis.

India

P2P platforms look for biz model restructuring to comply with RBI norms (Business-Standard), Rated: AAA

With the Reserve Bank of spelling out guidelines for regulating peer-to-peer (P2P) lending, many of these are looking at ways to comply with the norms by their business models. Further, companies find Rs 10 lakh cap on restrictive, given the phenomenal growth of the sector in the past couple of years.

RBI’s new P2P lending norms good for honest borrowers, but needs more clarity (Zeebiz), Rated: AAA

Banks and NBFCs usually offer personal loans to a salaried employees having minimum income salaried between Rs 1.20 lakh – to Rs 2.40 lakh with loan eligibility salaried between Rs 15 lakhs and Rs 20 lakhs.

banks India
Source: Zeebiz

 

SlicePay Adds International Investors To Its Board; Raises Mn In Series A Funding (Inc42), Rated: A

Bengaluru-based fintech startup SlicePay has raised $2 Mn as part of its ongoing Series A funding round. The investment was led by Japan-based Das Capital, Simile Ventures from Russia and few undisclosed angel investors.

Existing investor Blume Ventures also participated in the round, who earlier invested $500K in association with  Tracxn Labs in February 2016. With the raised funds, SlicePay plans to expand in three more cities, as well as make some senior-level hiring.

NBFC status to P2P places compliance burden; lending to go up (Business-Standard), Rated: A

Lending activity will gather pace on peer-to-peer (P2P) platform with the sector getting status even as the burden on them may eliminate some entities out of the market, industry players say.

Operational guidelines for P2P lending platforms and MediaNama’s take (Medianama), Rated: A

The guidelines from the RBI norms for disclosures are welcome. The disclosures on how companies are calculating credit scores are welcome to borrowers. Right now, with many companies looking to build credit scores through by looking at cash-flows and information on how the platforms collect this information is crucial. Companies such as EarlySalary are building credit profiles based on information on social media. Meanwhile, there are untested methods which profiles people psychologically on seeing if they are eligible for a loan.

Asia

Singapore’s OCBC Bank Pulls Siri Into B2B Payments (PYMNTS), Rated: A

Singapore’s OCBC Bank wants to use Siri to help corporates do their banking.

OCBC said in an announcement on Wednesday (Oct. 4) that it is integrating its Business Mobile Banking app with Apple’s voice assistant Siri for more than 120,000 corporate customers. The integration means professionals will be able to initiate B2B payments and funds transfers to other OCBC business accounts using Siri voice commands.Singapore’s OCBC Bank wants to use Siri to help corporates do their banking.

P2P lending can help curb national debt with data (The Korea Herald), Rated: A

One of South Korea’s leading P2P lending platform operator Lendit appears to have taken advantage of its maturing big data. The accumulated volume of personal loans originated from the firm doubled in six months as of early September to some 70 billion won ($61.6 million), after some 28 months of operation.

The database allows an individual lender to invest 10 million won at maximum in a “customized” package composed of possibly hundreds of bonds in different interest rates, while promising the lender a return of between 6 percent and 10 percent including tax and commission fee.

Kim, 31, believes Lendit could help mitigate the rapid growth of the national household debt, projected to have exceeded 1,400 trillion won in the third quarter. Household debt in Korea is considered a powder keg of the national economy amid looming signs of central banks ending expansionary monetary policies. Consumer loans take up nearly 20 percent of all household debt in Korea.

Latin America

Afluenta Celebrates Fifth Anniversary By Launching Commercial Loans to New Platform (Crowdfund Insider), Rated: AAA

Argentina-based peer-to-peer (P2P) lending platform Afluenta recently announced during its fifth-anniversary celebration it was launching commercial loans to the fifth version of its lending platform. According to the lender, in the latest version, it will add its own proprietary credit scoring and introduces commercial loans for people with commercial activities, which is noted to usually not served by traditional banks.

Small business lending in Mexico gets a boost (TechCrunch), Rated: A

Micro-lending and small business financing are a critical component of economic growth around the world, and the need for access to low-cost capital is especially important in developing countries.

The Catch-22 is that these countries are also the ones where the lending markets are the least developed, and where most financial institutions are reluctant to lend money to people who don’t have any credit history (what the industry calls “thin-file” customers).

The problem is especially acute in Mexico, where only 39 percent of the population has a bank account and 75 million people still have no access to the kind of financial services and lending support they would need to start micro- and small- businesses.

That’s the thinking behind Konfio, a Mexican startup that’s raised $10 million in new funding led by the International Finance Corp. (the investment arm of the development-focused World Bank) and previous investors, including QED InvestorsKaszek VenturesAccion Frontier Inclusion FundAccion Venture Lab and Jaguar Ventures.

Canada

Helping Ontarians Trapped in Payday Loans (BayStreet), Rated: A

In Ontario, the payday-loan industry offers sums of cash of less than $1,500 for short terms — less than 62 days — at very high interest rates: there are currently 657% on an annualized basis on the average 10-day term, down from 766% before the regulations took effect.

These lenders fill a unique niche in Ontario’s lending market for customers known as ALICE — an acronym for Asset-Limited, Income-Constrained, and Employed. More than two-thirds of ALICEs earn less than $50,000 per year. And while payday lenders’ reputation for being the somewhat shifty cousins of banks is not entirely undeserved, they nonetheless provide a real and needed service to people who, for a variety of reasons, can’t or don’t have the cash to meet their needs. The majority of people who take out a payday loan are doing so to avoid late charges, NSF fees, or maintain power in their digs.

 

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

About the author

Allen Taylor

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