April 2nd 2016, Daily News Digest, Lending Times

  • US Office of the Comptroller of the Currency soliciting feedback on how to support fintech innovation.
  • Banks to lose 40% of jobs by 2025 according to Citi report.
  • SEC Chairman view on IPOs, Reg A+, Reg CF, fintech and marketplace lending.
  • Survey about hedge fund believes on ABS market in 2016.
  • CFPB’s latest activity.
  • Innovative Financial ISA is now probably a 2017 story.
  • Marketplace in India.
  • Marketplace in Taiwan.

OCC Shares Its Perspective on Responsible Innovation, Announces June 23 Forum on Innovation, (Office of the Comptroller of the Currency), Rated: AAA

The Office of the Comptroller of the Currency (OCC) today published its perspective on responsible innovation in the federal banking system and solicited feedback on what more it could do to support innovation that better serves consumers, businesses, and communities.

Related Links

In Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective, the agency summarizes its research and discusses the principles guiding the development of its framework for understanding and evaluating innovation.

Comments on the whitepaper should be sent to by May 31, 2016.

‘Fintech’ Start-Up Boom Said to Threaten Bank Jobs, ( New York Times), Rated: AAA

Up to 30 percent of the current employees in the banking industry may lose their jobs to new technologies in the next 10 years, according to new projections from Citigroup.

A majority of online payments in China are now handled by nonbank players, like Tenpay and Alipay. New financial technologies have been much slower to gain traction in the United States, where services like Apple Pay have been more of a curiosity than a disruptive force.

“Incumbent financial institutions still have the upper hand in terms of scale and we have not yet reached the tipping point of digital disruption in either the U.S. or Europe,” the managing editor of Citigroup GPS, Kathleen Boyle, wrote in the introduction to the new report. “Given the growth in fintech investment, this isn’t likely to continue for long.”


SEC Chair Mary Jo White Addresses the Challenges of Fintech, Pre-IPO Finance in the Heart of Silicon Valley, (Crowdfund Insider), Rated: AAA

Chair White tackled many of the hottest topics in internet finance today including, Reg A+, marketplace lending, pre-IPO finance, general solicitation, secondary markets, blockchain, unicorn valuation and more.

“70 percent of failed start-ups die within 20 months after their last financing, having raised an average of $11 million.”

As Title II, accredited crowdfunding, and Reg A+ gain in momentum, Reg CF nears this coming May. Chair White stated that “we [the SEC] are counting on brokers and funding portals to be bulwarks of investor protection in this space, and we will hold them to that responsibility.”

The SEC Commissioner is of the opinion that Fintech has “the potential to transform how our markets operate in virtually every respect—from streamlined market operations to more affordable ways to raise capital and advise clients.”

While the SEC remains “concerned” as the information provided to investors, they continue to work with their governmental brethren to develop a “broader understanding” of the marketplace lending industry.

ABS credit quality set to decline, (Asset Finance International), Rated: AAA

Capital One’s annual survey of asset-backed securities (ABS):

54% of respondents are predicting a drop in credit quality in 2016, compared with 29% the previous year. Half (50%) of respondents also anticipate that issuers of ABS securities will tighten their underwriting standards in 2016, up from 11% in 2015.

Despite overall economic uncertainty, nearly 80% of respondents expect buy-side interest will increase or remain the same.

51% of respondents see competition in this asset class increasing in the next year, with only 14% expecting a decrease.

Industry professionals expect the biggest percentage growth in marketplace lending (41%), followed by auto finance (12%) and credit card debt (11%).

“We are seeing cautious optimism in the marketplace; expectations of growth are balanced with understandable concern about asset quality and a potential tightening of credit standards,” said David Kucera, managing director, financial institutions group at Capital One Bank

500 Startups raising a $25mil seed-stage fund focused on fintech, ( Dan Primack’s Termsheet), Rated: A

Commment: “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”― Warren Buffett


CFPB Roundup: Monthly Complaint Snapshot, Supervisory Highlights, and Complaints About Online Marketplace Lenders, (Manatt Monthly Newsletter), Rated: AAA

In the latest edition of the CFPB’s monthly snapshot, the Bureau highlighted consumer complaints about prepaid products and focused its geographical attention on Texas and the Houston metro area.

Consumer complaints about prepaid products—one of the fastest-growing types of consumer financial products in the country—”spiked” in recent months, the Bureau reported, with consumers griping about being frozen out of an account, including a “large number” related to an incident with market leader RushCard.

Other problems relayed to the CFPB by consumers were concerns with managing, opening or closing an account (the most common issue, constituting 33 percent of the complaints), unauthorized transactions or other transaction issues (with 29 percent of the complaints), and account access problems when disputing particular charges.

FCA reveals P2P lending platform application backlog, (Finextra), Rated: A

The watchdog says that just eight firms have been fully authorised to operate P2P platforms, with a further 86 awaiting a decision – although 44 of these have “interim permission” because they were previously licensed by the Office of Fair Trading.

The FSA has up to 12 months to decide on applications but says that how long it takes depends on the completeness of the application, the complexity of the business, and the firm’s demonstrated compliance with regulatory requirements.

Why Lenders Might Say No If Your Business Runs on PayPal, ( Fundera Ledger), Rated: A

Financial lenders usually don’t like relying on PayPal statements to verify your company’s cash flow.

While PayPal might fulfill a lot of the same roles as a traditional bank—sending and receiving money, online bill payment, even offering a debit card—PayPal is not a bank.

Without FDIC insurance, PayPal can’t offer that kind of protection. In fact, any funds that you keep in a PayPal account are considered, under their user agreement, an unsecured loan.

Big peer-to-peer lenders still awaiting Isa approval, ( Financial Times), Rated: AAA

Only companies with full regulatory permissions from the regulator will be able to launch an innovative finance Isa. Half of the P2P platforms seeking full authorisation hold interim FCA permission to act as lenders, while the other half are unregulated.

“The majority of the money comes into Isas at the end of the year and not the start,” he said. “This is next year’s story.”

“The majority of investors in P2P are mass affluent and will be thinking about that tax-free income for a year,” “They’re not the type to be worrying about losing their allowance at the end of the tax year.”

While the biggest names in the P2P lending sector await regulatory approval, the FCA confirmed full permissions had been granted to eight much smaller P2P lenders who would be able to launch Isa products on April 6.

With activities ranging from lending to students to investing in real estate, the eight companies are EdAid, Go2Partners, Formax Credit, Crowdstacker, Resolution Compliance, Clasp Investments, Crowd2Fund, and Gracombex.

“Big three” to miss IFISA launch, (AltFi News), Rated: A

Leading peer-to-peer lenders Zopa, Funding Circle and RateSetter have confirmed that they will not be fully authorized by the start of the new tax year – the date upon which the Innovative Finance ISA goes live.


Landlords purchasing in 13% of the country will pay stamp duty for the first time, (Property 118), Rated: A

Comment: This article is about the UK.

A report by Lendinvest indicated that out of 105 post code areas 14 had and average house price below £125,000. This will mean that with the 3% surcharge on Stamp Duty for second properties below this figure coming into effect from the 1st of April that landlords looking to purchase in these areas will pay a maximum additional figure of £3,750.

Tiger Global Management buys $51 Million stake in On Deck Capital Inc (ONDK), ( SCSU), Rated: A

Tiger Global Management scooped up 50,000 additional shares in On Deck Capital Inc during the Q4 period, according to a recent disclosure to the SEC. The investment management firm now holds a total of 6,900,000 shares of On Deck Capital Inc which is valued at $51 Million.On Deck Capital Inc makes up approximately 0.46% of Tiger Global Management’s portfolio.

OnDeck MarketCap $559.73 mil

Biggest hindrance for P2P lending is lack of awareness: Rajat Gandhi, Faircent, ( The Financial Express), Rated: A

Comment: Article covering India.

Interview with Faircent Shakti Patra, founder & CEO Rajat Gandhi.

“I would say these are very early days for P2P lending in India. As far as the biggest hindrance is concerned, I think it’s the lack of awareness.

Faircent by end FY16 will have lent over R3 crore, maybe even R3.5 crore with a bit of luck. The yields are hovering between 18% and 20%, and the average ticket-size of loans lent through us is about R1.5 lakh.

Lender profile: He/she has to be a resident Indian aged over 25 with an annual income of R10 lakh or above. Initially, we had a lot of software professionals, people working in an Amazon or a Flipkart, lending through us. Now, we have started getting lots of self-employed professionals.

We are looking at upwards of R50 crore of disbursements in FY17 and over R1,000-2,000 crore in two-three years. We are on the right path. We have raised money from investors like Mohandas Pai and are well funded.”

FSC unclear over legality of peer-to-peer lending, (Taipei Times), Rated: A

Comment: Article covering TAIWAN.

The Financial Supervisory Commission (FSC) yesterday said that peer-to-peer (P2P) lending still has a murky legal status following a meeting with (鄉民貸), which last week debuted as one of the first companies in the nation to offer the service.

“The commission had an hour-long discussion with chief executive Tony Huang (黃智康) about the company’s operations,” Banking Bureau Director Wang Peng-i (王亨毅) said at a press conference.

In related news, the commission said that amid slowing economic growth in Taiwan, local banks are likely to miss its NT$360 billion (US$11.2 billion) loan target for small and medium-sized enterprises (SME) this year.

With non-performing loans to SMEs rising 0.02 percent to 0.46 percent last month, the commission said it would keep encouraging banks to increase SME loans using sound risk management.

Sheila Bair to join board of online lender Avant, ( Financial Times), Rated: A

Sheila Bair is joining the board of Avant, the fast-expanding online lender, becoming the latest dignitary from the US banking industry to cross into the world of alternative lending.

Sheila Bair is  the former head of the Federal Deposit Insurance Corporation

“I think [Avant is] trying to do everything right, and this is a market that desperately needed more competition,” said Ms Bair, who did several months’ due diligence on Avant after being approached towards the end of last year by another board member. “Middle-class families need more people paying attention to their credit needs.”

In joining Avant, Ms Bair follows luminaries such as Arthur Levitt, ex-chairman of the Securities and Exchange Commission, and Anshu Jain, the former co-CEO of Deutsche Bank, who both advise SoFi, a San Francisco-based specialist in student loans. Avant and SoFi are both among the biggest of the online lenders, with about $3bn and $8bn of loans funded, respectively.

The Australian Central Bank Has A Problem It Can’t Ignore Anymore, ( The Wall Street Journal), Rated: A

The Australian dollar has been appreciating even as commodity prices fall. For Australian exports, a fall in commodity prices combined with a rising currency is a worst-case scenario.

The Reserve Bank of New Zealand’s recent experience in the matter is a bad omen, as it cut rates in March, but still failed to devalue the currency.

Recent dovish announcements by the Bank of Japan and the European Central Bank were respectively followed by a strengthening of the yen and the euro. Financial conditions have failed to improve significantly.

Former HSBC Executives Join RateSetter Team, (Crowdfund Insider), Rated: B

RateSetter has announced the appointment of two senior executives; Jim Gunner has joined the RateSetter board ad Non-Executive Director and Chair of the Risk Committee and Nigel Wilkinson is now Head of Commercial Credit. Both Wilkinson and Gunner were previously executives at global financial firm HSBC. Gunner has spent much of his career specialising in risk management.  He was senior executive for group risk at HSBC Holdings plc representing the group in international banking and regulatory forums.


Author: George Popescu

About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.

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