News

April 7th 2106, Daily News Digest

  • US Marketplace Lending Association formed by Lending Club, Prosper and Lending Circle.
  • Banks and Amazon Payments looking for acquisitions in fintech.
  • LendInvest lent £560m to date, of which £50m last month.
  • Real-time access to $6bil in IRA and 401k money for p2p lending.
  • P2p in South East Asia
  • P2p in Jordan
  • Apparent $5.3bil fraud in China in Zhongjin group.

Funding Circle, Lending Club, Prosper Marketplace Launch Marketplace Lending Association, (PR Newswire), Rated: AAA

Leading online credit marketplaces Funding Circle, Lending Club (NYSE: LC) and Prosper Marketplace today announced the launch of the Marketplace Lending Association (MLA), a U.S. non-profit membership organization created to promote responsible business practices and sound public policy to benefit borrowers and investors.

The MLA also plans to engage with policymakers and other stakeholders to inform sound policy development that supports the prudent growth of the marketplace lending industry, as it expands access to affordable credit.

The MLA is governed by a Board of Directors, which will initially consist of one Director nominated by each founding member. As more marketplace lending companies join the MLA, additional directors will be elected based on a vote of the full membership. The MLA intends to hire an executive director and staff as it continues to expand.

Marketplace lenders establish trade body, (Financial Times), Rated: AAA

Comment: Article commenting on the press release above.

The trio of Lending Club, Prosper and Lending Circle — which have originated about $20bn of loans between them — is at the forefront of an industry that has seen originations double every year since 2010.

“As an industry, there’s not one specific issue we’re particularly worried about — the space is already heavily regulated, with borrower protections on one side and securities rules on the other,” said Sam Hodges, co-founder and US managing director of Funding Circle, which is based in London.  “But it is really important to be in active dialogue with regulators, to provide a forum for thoughtful discussion as the industry develops. Specific regulation [for the marketplace lenders] could be a healthy thing.”

Meanwhile, the companies themselves are bulking up compliance teams, while adding board members with deep experience of financial regulation.

The Washington DC-based association will be funded initially by the three founder members, which will each nominate a director for the board. Membership is open to any platform that commits to a set of operating standards endorsed by the MLA. Within a few months, the MLA would hire an executive director and staff, said Mr Hodges, making it an equivalent body to the UK’s Peer2Peer Finance Association, launched in 2011.

Fintech Firms Are Taking On the Big Banks, but Can They Win?, (New York Times), Rated: AAA

An estimated $19 billion of investment poured into the fintech bucket last year, according to Citigroup, up from just $1.8 billion five years earlier.

“Roughly 60 to 70 percent of retail banking employees are doing manual-processing-driven jobs,” the report explained. “If all the current manual processing can be replaced by automation, these jobs can disappear or evolve.”

The ripple effects are enormous: Consider not just the employees but the impact on commercial real estate, for example, if banks shut their coveted branches on the corners in major cities.

Witness JPMorgan Chase’s recent alliance with OnDeck, an online lending platform for small businesses. Rather than build the technology to squash OnDeck or, worse, let OnDeck’s runaway growth continue unchecked, JPMorgan became OnDeck’s “partner.” It has been couched as an early joint venture. But inside JPMorgan, it’s considered an experiment, a way to gather information and get educated about the nascent fintech lending space, and yes — assuming all goes well — possibly to acquire the company or one of its rivals.

Wall Street denizens like the banking investor J. Christopher Flowers have declared that the fintech frenzy is simply that: hype that defies common sense and will leave a trail of failed companies in its wake.

“I’m starting to look at opportunities outside,” Patrick Gauthier, vice president of Amazon Payments, said to CNBC this week at a conference in Europe about the prospect of making acquisitions.

LendInvest records record-breaking March, ( Financial Reporter), Rated: AAA

LendInvest is a lending and investing marketplace  in Real Estate in the UK.

LendInvest has reportedly completed bridging loans worth over £50 million in March – the biggest volume of lending the business has done since it launched in 2013.

LendInvest has now lent more than £560 million since launch.

Additionally, LendInvest’s Real Estate Opportunities Fund closed £10 million of new investment in March, setting another new record for the fund. This fund is one of two managed by LendInvest Capital, the company’s regulated fund management division that invests over £150 million of institutional client money into mortgage loans.

IRA Services Launches P2P Lending’s First Cloud-based API Driven Retirement Investment Solution at LendIt 2016, ( PR Newswire), Rated: AAA

IRA Services allows real-time access to over $6 billion dollars of capital for the P2P industry by providing platform investors with the ability to effortlessly fund their P2P and Crowdfunding investments through their 401(k) and IRA accounts.

IRA Services Trust allows real-time access to over $12 trillion dollars of capital for the P2P industry by providing platform investors with the ability to effortlessly fund their P2P and Crowdfunding investments through their 401(k) and IRA accounts.

Harvard MBA student pitches idea of P2P lending start-up Funding Societies to CEO of major bank in Asia – and hits a homer, (South China Morning Post), Rated: AAA

Comment: Article covering the South East Asian market.

Kelvin Teo, a Harvard Business School student who is building a web-based peer-to-peer lending start-up as part of his curriculum, pitched the project to a potential partner: DBS Group Holdings, Southeast Asia’s biggest bank. Omitting his student status, he sent the proposal last October to CEO Piyush Gupta after guessing the latter’s e-mail address. Three hours later, the executive sent his reply: interested.

Today, Teo, 29, and his classmate and Funding Societies co-founder, Reynold Wijaya, 27, are seven weeks from graduation at Harvard in Boston. They also have deals signed or pending with DBS and other Southeast Asian banks to collaborate with their start-up, which connects investors with borrowers from small and medium-size businesses.

While fintech is booming in China, it lags in Southeast Asia. Wijaya says basic financing for small to medium-size businesses is lacking in nations such as Indonesia, his home.

From Wall Street Banking, a New Wave of Fintech Investors, (The New York Times), Rated: A

Mr. Vikram Pandit ( ex CEO of Citibank) has also backed the student lending platform CommonBond, the small-business lender Fundbox, and NerdWallet and FeeX, services that help consumers sniff out bargains and hidden fees in their financial dealings.

Mr. Morris, along with Messrs. Pandit, Mack and Winkelried, all back the relatively new online firm Orchard Platform, which helps those institutions make those investments.

SoFi brought in Anshu Jain, the former Deutsche Bank co-chief executive, as a board adviser this year and Arthur Levitt, the former chairman of the Securities and Exchange Commission, last year.

 

VENTURE CAPITALIST: Fintech is about to go ‘pear-shaped’, (Business Insider), Rated: A

Financial technology is a bubble and investors are chasing illusory returns, according to Mark Tluszcz, CEO of Mangrove Capital and the first investor in Skype.

“P2P lending will go pear-shaped,” Tluszcz said. “People underestimate the psychological barrier of handing over your money, you’ve worked hard for it, and trusting it to someone else.”

Meanwhile, the fintech startups that target areas such as payments and remittances just don’t make enough money to warrant high valuations.

Middle East Peer-to-Peer Platform Liwwa Secures $2.3M During Seed Investment Round Led By DASH Ventures, (Crowdfund Insider), Rated: A

Comment: Article covering the Jordanian market.

Middle East peer-to-peer (P2P) Liwwa announced that it has secured $2.3 million during a seed investment round, which was led by DASH Ventures with participation from by Bank al Etihad and MENA Venture Investments (MVI). Liwwa offer p2p SME loans.

Established in 2012,Liwwa,was incubated at Harvard’s Innovation Lab before the company moved to Amman, Jordan, where the it is currently based.

The Innovative Finance ISA is Available Today, Meanwhile Some Large P2P Platforms Wait for FCA Approval, (Crowdfund Insider), Rated: A

ISA, with approximately 22 million adult accounts holding around £500 million, is a great opportunity.

Zopa, the peer-to-peer lending platform that claims to be the first in launching the P2P industry, remains in limbo with programs ready to go once the FCA delivers the green light. Zopa is not alone as other large online lenders sit and wait. Zopa said they have been working with the FCA to gain permission for the past 7 months.

Louise Beaumont of GLI Finance called the IF ISA a “watershed moment” for the industry as alternative finance becomes mainstream finance.

Crowdstacker is one of the platforms that has been approved by the FCA making the April 6th start date. “We’ve seen a lot of traffic to our site and customer service helpline over the last few weeks from people looking for more information about the Innovative Finance ISA. There is definitely a growing appetite out there for IFISA investments that provide more than the paltry returns on offer from other products.”

The fast maturing alternative lending sector captured £1.82 billion or 3.43% of gross national bank’s lending to SMEs.

Peer-to-Peer lending: updates from the FCA & HM Revenue & Customs, (Lexology), Rated: A

Comment: numbers are a little old but still interesting.

The FCA has published a “Statement on Peer-to-Peer applications for full authorisation“.

As at 30 March 2016:

  • 8 Peer-to-Peer (P2P) lending platforms had been fully authorised by the FCA;
  • 44 were operating under an interim permission, which is keeping their respective Office of Fair Trading consumer credit licences alive, until the FCA decides whether to authorise them (or not); and
  • 42 had applied for an FCA authorisation, and their applications were still pending.

Runaway groom: China nabs fraud suspect at airport, (India.com), Rated: A

Chinese authorities have detained Xu Qin, the head of the Zhongjin group.  Police gave no estimates for the size of the case, but reports said it involved more than 130,000 investors with the firm raising at least 34 billion yuan (USD 5.3 billion) in funds. Authorities said Xu registered more than 50 subsidiaries and controlled over 100 linked companies.

He was among more than 20 managers of Zhongjin detained by police and accused of swindling investors through falsifying operations and inflating business performance, according to a police statement released yesterday.

People across Europe aren’t paying for stuff they buy online, ( The Memo), Rated: B

What if when you went to the checkout in Gap the salesperson offered you a deal “do you want to pay for this now, or in 2 weeks?”. British retailers are already getting involved, with the likes of Wish.com, Pavers and Knomousing Klarna and seeing an uptick of browsers becoming buyers. “Maybe for your grocery shopping you don’t care, but if you’re picking up a specific item from another country or whatever, you’ll choose a different payment method, and maybe that payment method will be Klarna.”

Avoid costly student loan mistakes!, ( WWLP), Rated: B

According to LendEDU, a student loan marketplace, seven in 10 seniors owe nearly $30,000 when they graduate from college.

 

 

Author: George Popescu

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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 ( www.currencymountain.com ), 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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