News

April 8th 2016, Daily News Digest

  • Frank Rotman’s view on the state of the marketplace lending industry: just a speed bump.
  • Micro-securitization is live on Ldger platform.
  • LendInvest, real estate focused originator, is now the #3 largest originator in the UK, ahead of Zopa.
  • Archover, SavingStream and FundingSecure break new records.
  • Zopa founder’s view on why p2p is completely different than anything before.
  • OCC requesting comments on their white paper to “Support responsible innovation”.

 

Welcome Back My Friends, (Fintech Junkie), Rated: AAA

LendIt is here once again. Frank Rotman pulled together a quick 2-page primer with a few thoughts to consider if you’re at the conference.  The mood is likely to be more somber than in past years and some real skeptics will be present and vocal.  But as an industry, a lot of great things are happening and in a few quarters, we’ll look back at this time and recognize it for the speed-bump that it is.

1) In times of uncertainty, managed growth is rewarded more than hyper growth

2) Solid business models can survive shocks

3) Giants tend to wake up right about when they can say “I told you so”

4) Survivors are accepted into the club

Secondary Market Platform Ldger Conducts Inaugural Auction of Marketplace Whole Loans, (Press Release), Rated: AAA

Ldger, a secondary market platform for marketplace lending assets, today announced that it successfully completed its inaugural secondary whole loan trading auction of Prosper Marketplace loans.

“We were thrilled to have over 20 participants with just under 10 active bidders in our first auction,” said Hyung Kim, CEO of Ldger. “It was a solid validation for the need of a secondary market for Marketplace lending.”

Ldger auctioned off its own portfolio of Prosper whole loans totaling less than $500k. This first auction was a live test of the platform’s technology and auction process. The company plans to conduct bi­weekly auctions for multiple sellers and buyers. The auction currently supports Prosper whole loans but will expand to include additional marketplace lending platforms.

Heroes and Zeroes – UK Alternative Finance Industry Volume Update, (Alt Fi), Rated: AAA

LendInvest,£51.8m of loans originated, originated the most loans in March 2016, ahead of Zopa, Funding Circle, and RateSetter. Top three UK platforms in descending order or origination for March 2016 were Funding Circle, RateSetter and LendInvest.

Other platforms that recorded new origination highs over the month were:

Three platforms – Money&Co, Proplend, and Relendex are yet to report any loan origination in 2016.

P2P leader hits back at Adair Turner in open memo, ( Financial Reporter), Rated: AAA

Bruce Davis, the cofounder of P2P finance platforms Zopa and Abundance, has written an open memo to Adair Turner about why the IFISA is such an important step in both stimulating real competition in the finance sector and de-risking investment in the UK economy.

“Peer to peer investing creates jobs and growth, not in the financial sector but in the real economy. And we use the money, not credit, to deliver that growth. Money that is gathering dust as cash in bank accounts earning less than the price of a pint of beer let alone keeping pace with the cost of living. Yes, the path to delivering that growth will have mistakes along the way, we aren’t claiming to have a perfect model, but we are always upfront about the concept of risk.”

“That is because P2P lending and investing is not banking. It is a challenge that doesn’t try to replicate the existing business models but fundamentally disrupt them. Show me a bank that can lend £13bn without leverage, where the vast percentage of the profits from that lending are returned to investors, where those investors are prepared to take a risk for a real return and not sponge off any implicit state guarantees or insurance schemes (such as FSCS). Far from being shy of the fact we don’t rely on FSCS, as an industry, we should be proud of it. Leave the moral hazard to the old world of finance.”

FinTech, Marketplace Lending, and National Banks: the OCC White Paper, (Lexology), Rated: AAA

A week ago, March 31, 2016, the Office of the Comptroller of the Currency (OCC) began formally to address FinTech issues in the banking industry with the publication of a white paper, Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective.[1]  The Comptroller discussed the paper in remarks the same day at Harvard.[2]  He also reviewed the paper in remarks earlier today.[3] Comments on the white paper are due by May 31, 2016.  The OCC has scheduled a forum on FinTech on June 23, 2016, in Washington, D.C.

The paper warrants careful attention by three sets of stakeholders: banks, FinTech companies, and alternative lenders.

The agency’s “objective is to open the door for the banks we supervise to engage in the kind of innovation that can benefit businesses and consumers, including individuals who have not been well served or—in some cases served at all—by traditional banks.”

The 9 questions can be summarized into a single one : Support responsible innovation.

Big Returns Ahead For Lending Club Shareholders, (Seeking Alpha), Rated: A

The big three platforms in the industry set up Marketplace Lending Association.
We hope this will help keep cowboys out of the industry, and enhance its image.
The company’s growth is astounding and we expect it to continue to be the case.
Morgan Stanley expects the industry to reach $122 billion loan originations in a year by 2020.

We would call LendingClub (NYSE:LC) one of the most unloved stocks around, but we feel things could change in the future.

Should you invest in LendingClub or be a lender?

This is a great question which we have pondered over many times. At the current share price, we see far greater gains being a shareholder than being a lender.

DirectMoney Registers a New Record Month, (Alt Fi Data), Rated: A

Australia’s only listed marketplace lender DirectMoney announced today the passing of a new milestone, having issued $1.92m of loans in March 2016, up from its previous record settled in January 2016 with $1.5m. The platform revealed that loan origination growth has being driven by strong partnerships with broker aggregators and direct online channel marketing.

The Sydney-based platform forged a strategic partnership with Macquarie Bank last February. As a part of the deal, Macquire purchased A$5 million of personal loans originated by DirectMoney.

$6.6 Billion in Loans, Still No Mobile Apps: LendingRobot Fills the Mobile Void in Peer Lending, (Business Wire), Rated: A

LendingRobot, the automated investment service for marketplace lending, announced today the very first mobile application built to track portfolio performance in peer lending investments across Lending Club, Prosper and Funding Circle.

Currently, no mobile application in any app store provides broad portfolio-tracking services for peer lending. Further, none of the leading p2p marketplaces, Lending Club, Prosper, or Funding Circle, offer official mobile applications of their own.

“Frankly, it is baffling that no one has created a ‘Mint’ for this industry,”

To use the app, an investor only needs to download the app from the appropriate app store and create a free account at LendingRobot.

Big Data and Artificial Intelligence Will Boost the Global FinTech Investment Market Through 2020, Says Technavio, ( Business Wire), Rated: A

According to the latest research study released by Technavio, the global FinTech investment market is expected to grow at a CAGR of over 53% until 2020.

Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

fintech marketshare in 2020

Police raid Shanghai ‘Ponzi scheme’ suspected of raising ¥30b, ( South China Morning Post), Rated: A

Shanghai police have raided Zhongjin Capital Management. Xu Qin, the owner of Shanghai-based Zhongjin Capital Management, was apprehended at an airport as he attempted to flee the country. More than 20 people were taken into custody for further questioning, local police said.

Local media said Zhongjin had raised about 34 billion yuan from its “business partners” while offering interest rates of up to 2 percent a month.

Who will monitor peer-to-peer lending? Will it be Sebi or RBI? ( The Economic Times), Rated: B  

Comment: Article covering the Indian market.

The Reserve Bank of India (RBI) and the Securities & Exchange Board of India (Sebi) officials will soon meet to figure out which of the two regulators has the jurisdiction over peer-to-peer lending as the unattended segment could become a monster and threaten the sanctity of the financial markets.

BlueVine names Google Capital’s Sirbu VP finance and strategy, (PE Hub), Rated: B

BlueVine, the Palo Alto, California, provides working-capital financing to small businesses. BlueVine named Ana Sirbu vice president of finance and strategy, responsible for financial management and growth strategy, including debt capital financing. Sirbu joins BlueVine from Google Capital, Google’s growth equity investment fund, where she was a manager and led efforts in FinTech. Sirbu’s resume also includes tenures at Skrill, the London online-payments firm, Silver Lake Partners, and UBS.

 

 

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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