- Marlette, Avant, Prosper and LoanDepot dial back marketing by 19% to 66%.
- Prosper and Avant hiring and building in-house managed fund.
- Great data on marketplace/p2p from Cambridge Reseach Center.
- 72% of institutional investors expect consolidation in marketplace lending in 2016
- Capital markets expected to further shake with 1Q2016 earnings.
- Even (not Even Financial) raises $9m
- LendingHome originated $550m in mortgage loans in 2015, 600% growth y-o-y
- Concerns on New Zealand regulatory standards.
- Clarity on who can join the Marketplace Lending Association
- Insurance looks like the next fintech eldorado.
Fintech Lenders Dial Back Marketing in Response to Softer Investor Demand, (Wall Street Journal), Rated: AAA
Prosper Marketplace Inc., which owns one of the largest online loan marketplaces, as well as consumer lenders Marlette Funding LLC and Avant Inc. and mortgage specialist LoanDepot Inc., are all trying to slow down new loan volume, according to executives and data reviewed by The Wall Street Journal.
At Avant, the number of loan offers it sent to customers through the mail fell by nearly two-thirds, from 4.6 million to 1.7 million, between December and February, according to Mintel Comperemedia, a database that tracks advertising trends. The Chicago-based lender says its lending still grew in the first quarter, but at a slower rate than it did last year.
At San Francisco-based Prosper, loan offers sent by mail fell by 19%, from 41.4 million to 33.6 million, over the same period, according to Mintel. Investors are demanding higher yields. Buyers in a bond offering based on Prosper loans last month demanded yields as much as 5 percentage points higher than a similar deal late last year. Prosper says it is also planning to launch a new passively managed fund for investors that want to invest in baskets of its loans. The fund is expected to launch in the second quarter. Social Finance Inc., or SoFi, a student and personal lending firm, created a similar fund earlier this year.
Others are simply slowing down their businesses. Loan volume at Marlette Funding LLC, a lender of unsecured consumer loans based in Wilmington, Del., fell 21% from the third quarter of last year to the fourth and was on pace to decline again in the first quarter, according to Kroll Bond Rating Agency. Marlette Chief Executive Jeffrey Meiler said in an email that company’s pullback wasn’t related to investor demand, but to trying to manage the quality of its loans. He added that Marlette will make more loans in the second quarter than it did in the first.
LoanDepot, based in Foothill Ranch, Calif., launched a consumer personal-loan business to complement its mortgage focus last year, but has since de-emphasized that push. “The market is soft, so we’ve taken the appropriate steps to reduce the overall volume to match the demand from investors,” says LoanDepot Chief Financial Officer Bryan Sullivan.
Cambridge intel reveals alternative finance surge in the Americas, ( Business Weekly), Rated: AAA
Comment: A lot of great numbers for 2015. Worth a read.
Marketplace/P2P consumer lending is the largest market segment in the Americas at $25.74bn, which constituted 71 per cent of the total online alternative finance market volume in the region.
257 online alternative finance platforms operating in the Americas, including 178 from the US and Canada –
Marketplace/P2P business lending reached $2.62bn in 2015, whilst equity-based crowdfunding registered $598m in the Americas.
Real estate alternative finance, including both equity and lending real estate models, are scaling rapidly, having generated more than $1.26bn in the US in 2015.
Institutional investors provided the majority of the funding for marketplace/P2P lending in the US from 2013 to 2015, with 72 per cent of marketplace/P2P business loans and 53 per cent of marketplace/P2P consumer loans funded by institutions including mutual funds, hedge funds, asset management firms, banks and family offices. In contrast, most of the online marketplace funding in the UK comes from retail investors.
Women make up the majority of participants in the donation-based and reward-based crowdfunding models, accounting for 60 per cent of the marketplace as either a funder or fundraiser.
Institutional Investors Taking Leap Into Marketplace Lending, ( Press release), Rated: AAA
Comment : Second Annual Survey by Richards Kibbe & Orbe and Wharton FinTech Reveals Rising Optimism, Participation in Emerging Industry
The survey of more than 300 institutional investors also reveals that optimism about marketplace lending continues to grow among institutional investors, running counter to the widespread predictions by other observers of an industry contraction. More than 80% of respondents expressed high or moderate levels of optimism for marketplace lending’s future, up from 71% last year.
- 72%—believe that consolidation of the marketplace lending industry is somewhat or very likely.
- consumer (unsecured), small business and real estate loans are the most popular investments.
- While respondents identified borrower quality as the greatest risk to marketplace lending in 2015, that risk factor fell to third this year, behind two external forces: market-wide credit risks and regulatory risk
- Despite the increased concern over potential regulatory developments, more than 40% of legal/ compliance professionals said they were not at all (9%) or just a little (32%) familiar with the industry’s regulatory framework.
FinTech Lenders Are Putting The Brakes On Customer Acquisitions, ( PYMNTS), Rated: AAA
According to reports by The Wall Street Journal, major names, like Prosper, Marlette Funding, Avant and loanDepot, are actively and intentionally slowing down their customer acquisition efforts.
Suddenly, it seems the hunt is no longer for investors but for buyers interested in investing in the loans. To that end, Avant recently hired Raj Vora — formerly an executive director at UBS Group AG — to oversee the firm’s rollout of new in-house funds that will hold Avant loans.
Loan volume at Marlette Funding fell 21 percent from the third quarter of last year to the fourth and seemed likely to decline again in Q1.
Securitizations have fallen sharply in early 2016. In the first quarter, $1.5 billion worth of online loan pools were sold, down 21 percent from the $1.9 billion sold in the fourth quarter of 2015, according to PeerIQ, a lending data tracker
Standby for terrible news from Wall Street …, (Business Insider), Rated: A
Earnings would be negative for a third straight quarter.
Earnings-per-share growth “has been slowing for the past six quarters, with current projections pointing to a bottom in 1Q16,” he wrote in a client note.Please see impressive chart below:
Please see impressive chart below:
Impact due mostly to energy :
View from Above: Cloud Lending CEO Sees Banks Embracing Fintech, Marketplace Lending, (Crowdfund Insider), Rated: AAA
I am seeing banks and established lenders start to embrace FinTech in new ways. We all know about banks partnering with marketplaces, or putting capital into marketplaces, but we are now seeing banks coming up with innovations around marketplaces that help them retain their valuable customer relationships. We call it hybrid lending, which is essentially a private marketplace for banks’ customers and their investor community. We are also seeing more and more established lenders using FinTech to re-tool their backbone systems, division by division. The market is entering the next phase.
Unsecured consumer lending & small business loans have been the focus of online lending companies, but the increased competition among the online lenders to acquire the same borrower has given rise to a need to innovate further to enable newer asset types including invoice factoring, medical loans and POS loans from retailers.
When the “P” in P2P Means Ponzi, ( Forbes Asiac), Rated: AAA
Comment: Article covering P2P investments in movie profits and general p2p financial risks.
The latest tabloid tale from China’s peer-to-peer (P2P) sector concerns Shanghai-based Deer Financial Group. Deer Financial Group had enjoyed a solid reputation as a nonbank financial platform for many years. By their own account, in 2015 they had registered over 3.5 million digital members in 2015 and booked liabilities of about RMB 16 (USD 3.23) billion.
The plot thickened on March 3, opening day in China for Yip Man 3, the third film about the legendary Kung Fu fighter from Guangdong. Fast Deer was a major investor in this and other films. Funding for Fast Deer’s film slate had been crowd-sourced through its P2P channels and the investment returns were pegged to ticket sales. Box opening sales were reported to be USD 77 million, a sum so large some netizens cried foul. Distributor Beijing Max Screen confessed to manipulating the data and was censored for a month by government film regulators. Promoters and other suppliers to the project have had to dissolve operations. The share price of the Hong Kong company, which owned rights to the box office earnings, continues to sink. And, the story continues to play itself out online.
On April 6, the Group called a press conference where the spokesperson admitted they had missed rollover and redemption deadlines (逾期). Such failures with respect to credit instruments are called defaults.
…Is Not A Particularly Chinese Phenomenon
Parmalat sold bottled milk to Italian supermarket chains and independent grocery stores but its real business model was to borrow endlessly against milk delivery invoices. Some invoices were real. A healthy proportion turned out to be fake. That is how it grew to be a multinational corporation. Deer Group’s money pattern resembles Parmalat more than eZubao. The difference is the halo: Parmalat’s was milk. Deer Group’s is P2P.
P2P’s alleged cost savings may not be due to disintermediation. There is an intermediary in place that charges underwriting and servicing fees. As these businesses acquire scale, their costs will rise with the same certainty as death and taxes. P2P’s alleged cost savings may not be due to disintermediation. There is an intermediary in place that charges underwriting and servicing fees. As these businesses acquire scale, their costs will rise with the same certainty as death and taxes.
Exclusive: Even Raises $9 Million to Help Hourly Workers With Financial Stability, ( Fortune), Rated: AAA
Comment : 2 different companies exist, New York based Even Financial and Oakland based Even. This article is covering the anti-payday loan Even based in Oakland, CA.
Even’s solution, which is currently available via iOS and Android apps, is a bit like an anti-payday loan. Once users plug their bank accounts into Even’s system, the site analyzes their paychecks and “evens” them out, automatically lending them money on weeks they are short, and paying itself back on good weeks.
Even has raised $9 million in funding led by Valar Ventures, the investment firm backed by Peter Thiel. Prior investors Khosla Ventures, Qualcomm Ventures, Camp One Ventures, BoxGroup, David Tisch, Keith Rabois, and Homebrew Ventures invested, alongside new investors Henry Kravis, Allen & Company and Bob Jain.
ThinCats gets a $10m shot as UK fund takes 30% (The Sydney Morning Herald), Rated: A
Comment: Article covering Australian market.
Online business marketplace lender ThinCats Australia hopes to lend $100 million by the end of 2017 after a much needed debt injection of $10 million by UK fund ESF Capital, the new controlling shareholder of ThinCats UK.
UK fund ESF Capital, an arm of ESO Capital, took a 74 per cent stake in ThinCats UK in December and installed its own CEO. ESF has separately now taken 30 per cent of ThinCats Australia, amounting to about $1 million, and will lend $10 million via the platform.
Before this, ThinCats had managed to sign up about 300 investors in Australia, but it has been struggling to get lenders for larger amounts.
“We have had a little bit of a challenge in terms of the larger loans – $200,000 and upwards,” he said.
Australian rival Banjo has unsecured rates starting at around 8.7 per cent. It is somewhere between a marketplace lender and a “balance sheet lender”, with its funding coming from pools of loans that investors buy and then take the interest payments.
Marketplace Lender P2Binvestor Announces Institutional Investment Relationship with MW Eaglewood Americas LLC, ( PR Newswire), Rated: B
P2Binvestor (P2Bi), a marketplace lender for asset-based working capital, today announced a new relationship with MW Eaglewood Americas LLC, an SEC-registered investment adviser.
P2Binvestor (P2Bi) is a marketplace lender that provides revolving lines of credit of up to $5 million per B2B borrower. P2Bi has provided more than $150 million in revolving credit to its borrowers since going to market in early 2014. Accredited investors participate in funding each line of credit and earn a return through P2Bi’s proprietary investment platform.
LendingHome Funds Over $550M in Loans, Grows 6x YOY as Largest Mortgage Marketplace Lender, (Press release), Rated: AAA
LendingHome today announced at LendIt 2016 that it has funded over $550 million in mortgage loans and grew loan originations 6x in 2015 vs. 2014. Coupled with this key milestone, the company has returned over $200 million in principal and $20 million in interest to investors.
To date, LendingHome is the largest mortgage marketplace in the U.S. enabling real estate investors and entrepreneurs to purchase, rehabilitate, or rent out homes across America.
Additionally, in March, a privately placed securitization of LendingHome assets was completed in the market.
Based in San Francisco, California, LendingHome has 200 employees and has raised $109.3 Million in funding with leading investment from Renren Inc., Ribbit Capital, Foundation Capital, and First Round Capital.
Avant Welcomes Raj Vora as Vice President and Head of Institutional Fund Products, ( PR Newswire), Rated: A
Raj Vora has joined Avant’s Capital Markets team as the Vice President and Head of Institutional Fund Products. In his role, Raj will lead strategy for its managed investment vehicles and assist with a variety of Avant’s capital raising efforts. Raj was an Executive Director in UBS Investment Bank’s Private Funds Group in Chicago. In this capacity, he was responsible for leading institutional and high net worth limited partner relationships across North America. Prior to joining UBS, Raj served as Senior Vice President in the Private Equity Group at Northern Trust Alternatives, now 50 South Capital Advisors. He began his career at Goldman Sachs in New York and then joined Wind Point Partners in Chicago.
Regions Bank to Offer Expanded Online Consumer Loan Experience Powered by Leading FinTech Firm Avant, (Business Wire), Rated: A
Regions Bank and online lending platform Avant today announced an agreement to offer a streamlined online consumer loan application and underwriting experience for Regions Bank customers. The agreement will combine Regions’ established banking and online presence at www.regions.com with Avant’s technology platform to provide a fast, convenient digital experience for customers seeking consumer loans.
Regions Financial Corporation (NYSE:RF), with $126 billion in assets, is a member of the S&P 500 Index and is one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services. Regions serves customers across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,630 banking offices and 2,000 ATMs. Additional information about Regions and its full line of products and services can be found at www.regions.com.
To date, Avant has secured more than $1.7 billion in funding and another $1.8 billion through its institutional marketplace. More than 500,000 loans have been issued worldwide through the Avant website. Avant operates under the name AvantCredit in the United Kingdom and Canada.
Expat Kiwi running Aussie P2P lender criticizes NZ’s light touch regulatory regime & ‘loans for people who wouldn’t get loans from banks’, ( Interest), Rated: A
Comment : Article covering New Zealand market.
Daniel Foggo, a New Zealander who is CEO of RateSetter Australia: “The regulation overseeing New Zealand’s peer-to-peer (P2P) lenders is too light, and some operators here are facilitating loans to people who wouldn’t get a loan from a bank putting the NZ industry at risk, says the ex-pat Kiwi running an Australian P2P lender.”
Foggo pointed out that in NZ compared to Australia;
‒ There’s no requirement to provide investors with a comprehensive offer document, explaining how the platform works and what the investment risks are (RateSetter’s is here);
‒ There’s no formal compliance plan or formal external compliance committee an operator must comply with;
‒ There are no continuous disclosure obligations, to either the regulator nor investors;
‒ There are no specific obligations to treat investors equally nor for effectively dealing with conflicts of interest, which Foggo argues are especially important when an operator is mixing retail investors with wholesale and/or institutional investors;
‒ There are no requirements to use a third party custodian to reduce the risks associated with funds transfers. And;
‒ There is no requirement to hold operating capital proportional to an operator’s loan book.
NZ scores the highest alternative finance volume on a per capita basis outside of China with US$59.37 per capita, followed by Australia (US$14.83), Singapore (US$7.27), Japan (US$2.83) and Hong Kong (US$1.28). To date the NZ market by volume has been dominated by Harmoney, the first licensed P2P lender to launch in NZ.
Nonetheless “if a single operator in our region does experience investor losses, the impact on the trust of the industry would be significant,” Foggo said
How Alternative Lenders Are Cleaning Up Their Image, (Inc), Rated: A
By some estimates there were more than 1,300 alternative lenders in 2015, which represents a 100 percent growth rate over the previous year, according to a recent survey by Balboa Capital.
At the same time, many questions have been raised regarding transparency about fees, the interest rates charged on loans, and sometimes the scruples of the lenders themselves. Hoping to alleviate some of those concerns, Funding Circle, Lending Club, and Prosper Marketplace announced this week they are forming a group called the Marketplace Lending Association.
The association will be open to any marketplace lender that meets a set of standards, which generally means being in existence for at least one year, having at least $1 million in revenue, and possessing the ability to match at least 75 percent of loan dollar values with commitments from investors prior to making the loans.
- being in existence for at least one year
- having at least $1 million in revenue
- possessing the ability to match at least 75 percent of loan dollar values with commitments from investors prior to making the loans.
In the past year, the alternative lending industry has made other attempts to assure borrowers and federal regulators, including forming an organization called the Responsible Business Lending Coalition, which produced a Small Business Borrowers Bill of Rights.
The insurance tech equation, (Tech Crunch), Rated: AAA
“There are 46 insurance companies in Fortune 500, with an average age of 95 years. Cumulative market cap is more than $1T,”
However, according to Morgan Stanley/BCG consumer’s survey, half of policyholders have one or less interactions per year with their insurers — and less than 60 percent of those who made the contact are satisfied with the experience.
Underwriting and closing a policy may take several days, even several weeks. The commission structure of the status quo is such that agents and insurers make the process a misalignment of interest between the insurers and policyholders.
Insurer’s profit = sum of earned premiums and investment income on premiums after underwriting cost and claim expenses.
The emergence of digital-first insurers has created a new business model on delivering value to consumers. It opened new segments of insurance, where traditional insurers did not touch: Zhong An partnered with Alibaba for coverage on returned goods’ delivery charges and even drone/mobile phone damage policies tailored to the new digital economy.
Anthemis-backed Trov creates customization of home insurance by allowing coverage of individual key items rather than a predefined set with an average payout. An app-based mobile platform helps easily collect information about the things users bought through photos, market values, receipts and other product details.
Insurtech such as Friendsurance, Guevara and stealth Sequoia-backed Lemonade are banging big on P2P insurance models. Using a sharing economy approach, users are invited to form small groups of policyholders who pay partial premiums into a pool to use for small claims. Policyholders are able to get back the remaining pool of money at the end of the year, after claims.
Dara Albright Media Announces New White Paper Illustrating the Magnitude of Tax-deferred Micro Alternative Investing, ( PR Web), Rated: A
“The Renaissance of the Retail Investor and its Monumental Impact on Marketplace Lending, Equities Crowdfunding, and the U.S. Retirement System.”
The paper addresses the legislative changes being promulgated during the most prolific era for FinTech, and how, in confluence, these dynamics have begun galvanizing retail investors – leading to seismic shifts in capital markets’ demographics and America’s retirement system.
Key themes highlighted in the white paper include:
- The correlation between the tax-deferred investing opportunity gap and America’s escalating wealth disparity;
- How traditional equity and credit markets have been failing the investing public;
- How traditional retirement vehicles have been failing the investing public;
- The growing importance of alternative assets to an investor’s portfolio;
- The most recent legislation aimed at democratizing access to alternative investment products;
- The consequences of a class-based investing system and the constitutionality of the accredited investor rule;
- How to protect investors while simultaneously expanding their investing freedoms;
- Groundbreaking investment products, technologies and platforms emerging to support tax-deferred retail alternative investing;
- How FinTech will thwart a looming retirement crisis and allow P2P and equities crowdfunding to scale;
- How the marriage between a game-changing hi-tech retirement vehicle and a new generation of retail alternatives will transform financial services in much the same way that the 401k and mutual fund products did 35 years ago when they came together and, in unison, ballooned into trillion dollar industries.
A hard copy of the white paper will be available exclusively at LendIt 2016
Marketplace Lending Grew by 700% in Four Years: Report, (American Banker), Rated: A
Comment: This data is trough the end of 2014, very old data. The real news here is “Dresslar also indicated that California officials are more concerned about marketplace lenders that provide credit to small businesses than they are about consumer lenders.”
Thirteen of the online lending sector’s largest firms made $15.91 billion in U.S. loans in 2014, up 700% from 2010, according to a report published Friday by the California Office of Business Oversight. In the first six months of last year, the same firms extended $12.47 billion in credit nationwide, the report found.
Those numbers account for loans made by Lending Club, Prosper Marketplace, Social Finance, Avant, Affirm, Funding circle, Kabbage, OnDeck Capital, CAN Capital, Fundbox, Bond Street, PayPal and Square. Dozens of other U.S. online lenders, most of them smaller, were not included in the report.
The numbers were collected as part of a four-month-old inquiry by California officials into the marketplace lending industry.
California’s inquiry – lenders were asked in December to provide five years’ worth of data, as well as narratives about their business models – could be a precursor to new state regulations.
California officials appear to be interested in whether online lenders should be required to get state licenses; some of the sector’s largest participants have chosen not to do so, and have gotten around state interest rate caps by partnering with banks that issue their loans.
Dresslar also indicated that California officials are more concerned about marketplace lenders that provide credit to small businesses than they are about consumer lenders.
OnDeck and Minor League Baseball Step to the Plate in Partnership for Small Business, ( Sys Con), Rated: B
OnDeck® (NYSE: ONDK), and Minor League Baseball, today announced the renewal of their successful partnership on behalf of the nation’s small business owners. As part of the current agreement, OnDeck will serve as an “Official Partner of Minor League Baseball” and the “Proud Partner” of 15 MiLB clubs. As a “Proud Partner,” OnDeck will activate in-stadium elements focused on small business including signage, on-field promotional activities, video board messaging and public address announcements.
Borrowing Directly From the Wealthy Can Be a Lifeline for Some, (New York Times), Rated: B
Comment: Article aimed to explaining SME lending to the large public.
With rates that can top 20 percent, even for 12 months, the affluent lenders are filling a specific niche. (Mr. Sinensky of Assure put the default rate with this kind of lending at around 7 to 8 percent.)
Most of the loans made by wealthy individuals are to small businesses, particularly to companies younger than two years. “There are so many healthy businesses that can’t get loans but are a year old,” said Mr. Sinensky of Assure Funding.
When these lenders — big or small — step in, they stand to make a substantial return. The borrowers get money they wouldn’t get otherwise, and perhaps a push from the high rate to pay it back quickly.
LendingRobot’s Mobile App is “Mint” for P2P Lending Accounts, (Finovate), Rated: A
Lending Robot has launched a third-party app that allows to aggregate P2P lending accounts– similar to what Mint did 10 years ago for bank accounts.
Interview with Gideon Valkin, CEO of FriendlyScore, ( P2p-banking), Rated: A
Our most common use case in the p2p space is for FriendlyScore to be offered as an optional way for borrowers to bump up to a higher internal credit rating if they get a high FriendlyScore. In other words, it is an opportunity for borderline declines to get bumped up to higher-riskaccepted, and for the accepted applications to get a better risk grade and hence a lower interest rate from the lending community.
FriendlyScore was born out of an online lending platform trying to solve the problem of very low approval rates among young borrowers because of a lack of credit data at the bureau. He started using facebook data to get more information on his customers in an attempt to lend to more of them. Good results led to the use of more online data sources and eventually selling the lending business to focus entirely on building a product to solve the same problem for other lending businesses, FriendlyScore.
P2P lending marketplace Fellow Finance is now open for borrowers in Poland. Polish customers can now apply for peer-to-peer loans with maturity from 1 to 3 years up to 12 000 PLN. For Fellow Finance investors this gives an opportunity to diversify their investments geographically and in two currencies (EUR and PLN) with single consolidated user interface and reporting in investor’s own preferred currency. ‘Poland is a huge market in Europe with 38 million people.
Digital mortgage broker aims to bring market into “21st century” and save consumers £29bn after securing £1.55m in seed funding, ( City A.M.) Rated: B
Habito said it has been backed by the chief executives of Transferwise and Funding Circle. The seed funding round was led by Mosaic Ventures. Habito secured £1.55m in seed funding. Habito said it is the world’s first digital-only mortgage broker and “plans to revolutionalise a market that has failed to keep pace with the needs of 21st century consumers”.
Venture Capitalist Bill Tai Backs Kickfurther & Joins Advisory Board, (Press release), Rated : B
Kickfurther,an inventory and invoice financing crowd-funding platform that connects companies and backers seeking qualified short-term deal financing, today announced that venture capitalist Bill Tai is an investor and new member of its board of advisors. Tai is a Partner at Charles Rivers Ventures, and co-founder of Mai Tai Global.
Introducing NSR Platform 3.0, (Press release), Rated: B
NSR Platform, a managed account services for p2p lenders focused on retail investors, has released a new version of their platform, version 3.0. Some of the many enhancements include:
Fresh Site Design
New Account Dashboard
More Powerful Strategy Builder (previously known as Backtesting/Analytics)
Secondary Market Selling for Lending Club
More Performance Metrics Throughout
Author: George Popescu