- Today’s main news: Zopa and AirBnb partner; PeerIQ’s quarterly securitization update. Financeit raised $US 17 mil in equity.
- Today’s main analysis : New 40-act funds launching in the US ;4 charts on the state of digital migration in banks
- Today’s thought-provoking articles: An interesting article on Insure-tech startups ; An interesting article on using character profiling in lending; CrowdLending Fund One in Massachusetts
- PeerIQ’s quarterly securitization update. A must read. All indicators are bright.
- New 40-act funds launching in the US. Could this be the needed diversification?
- Transunion launches an anti loan-stacking product.
- 4 charts showing the state of digital migration in banks.
- An interesting article on Insure-tech startups. What they do and why. A must read to learn and see if anything applies to lending.
- CrowdLending Fund One in Massachusetts published from D. Great info and a new fund that invests in the industry.
- Payoneer, a global provider of payment processing, raised $180m to attack China. They are profitable and have a great war chest and they still raised it.
- Update on Blackmoon’s progress and their experience of entering the US market.
- An interesting article on using character profiling in lending.
- Financeit raised $US 17 mil in equity to help fund the recent acquisition of TD’s indirect home improvement financing assets.
- Zopa and AirBnb partner. An interesting model of partnership. Zopa will give better terms to people who get extra income from AirBnB. An extra income does mean lower default and people using AirBnB to rent out house also tells a lot about character.
- CrowdBnk, an SME lender, rebrands as Code Investing.
- Aztec Exchange, an invoice finance provider, launches ePayMe in partnership with Grupo Seres, who brings the clients.
- Kreditech announces new hire as Chief Product and Information Officer.
- DirectMoney, the publicly traded Australian marketplace lender, announces new CEO.
- United States
- PeerIQ’s MPL Securitization Tracker for Q3 2016, (PeerIQ), Rated: AAA
- With new mutual funds, marketplace lenders continue to seek diversified sources of capital, (Tradestreaming), Rated: AAA
- TransUnion Launches Fraud Prevention Exchange to Reduce Online Fraud, (TransUnion Email), Rated: AAA
- 4 charts on the state of digital transformation in banks, (Tradestreaming), Rated: AAA
- Ten fintech start-ups that are causing a stir in insurance, (Financial Times), Rated: A
- Form D Alert: Crowd Lending Fund One Filing. Daniel Najarian Submitted Oct 5 SEC Form, (Frisco Fastball), Rated: A
- Payoneer raises $ 180 million for its global payments technology, (TechCrunch), Rated: A
- Oleg Seydak on Blackmoon & Marketplace Lending as a Service, (Crowdfund Insider), Rated: A
- Tests of character, (The Economist), Rated: AAA
- Financeit announces $US17 million investment round led by The Pritzker Organization, DNS Capital and existing investors, (Email), Rated: AAA
- United Kingdom
- Two P2P Sharing Economy Players Team Up– Airbnb and Zopa, (Finovate), Rated: AAA
- CrowdBnk Re-Launches & Rebrands as Code Investing, (Crowdfund Insider), Rated: A
- European Union
- Aztec Exchange launches online early payment solution ePayMe in Spain through Grupo SERES, (Email), Rated: A
- Kreditech announces former Bank Managing Director Michal Panowicz as CPIO, (Email), Rated: B
- Marketplace Lender DirectMoney Appoints New CEO, (Crowdfund Insider), Rated: A
- Faircent forays into secured loan, (Business Standard), Rated: A
PeerIQ’s MPL Securitization Tracker for Q3 2016, (PeerIQ), Rated: AAA
- Marketplace lending securitization remains a bright spot in the ABS market. Total issuance topped $2.3 billion this quarter—a record—and is up 34.8% from Q2, with cumulative issuance now totaling $12.6 billion. YTD issuance of the sector stands at $5.4 billion as compared to $3.0 billion from the prior year, an 80% increase as compared to a 10% decrease in non-MPL ABS issuance.
- Although MPL origination volumes have declined at some platforms, ABS issuance is increasing as is the proportion of loans funded by ABS. The percentage of loans funded by ABS is over 50%.
- The movement towards rated securitizations at larger transaction sizes continues. All the deals issued in the third quarter were rated, with the exception of LCIT 2016-NP1. Further, the growth in average deal size continued, growing to $267 million in 2016 as compared to $64 million in 2013.
- New issuance spreads continued to tighten in—a friendly environment for securitization. Across all segments in MPL, Q3 2016 saw spread compression across each part of the capital structure, indicating strong investor appetite for MPL ABS paper in the market.
- We estimate $6.0 to $10.3 billion MPL ABS issuance for 2017. Goldman Sachs, Morgan Stanley, and Citi take top positions on the league tables.
- Differences in execution and losses are emerging across issuers. SoFi maintains a significant execution advantage over peer originators, and remains the largest issuer in the category. PeerIQ expects 3 additional deals to breach loss triggers in the coming months.
With new mutual funds, marketplace lenders continue to seek diversified sources of capital, (Tradestreaming), Rated: AAA
The first two marketplace lending mutual funds were approved in the U.S.
Total size of marketplace lending securitization issuance volume to date is $10.3 billion.
The first two marketplace lending mutual funds, sponsored by Stone Ridge Asset Management and RiverNorth Capital Management, were approved recently in the U.S. by the S.E.C., with similar funds launched earlier in the U.K.
“This is an exciting opportunity for RiverNorth and our investors,” said Philip Bartow, co-portfolio manager of the RiverNorth fund. “The benefit of being early to the retail market will give us the enhanced ability to purchase loans directly from quality online lending partners with whom RiverNorth has negotiated loan acquisition and servicing relationships.”
More funds have filed to become ’40 Act funds for marketplace lending and are awaiting S.E.C. approval.
Though anyone can invest directly on the marketplace lending platforms, they are cumbersome compared to mutual funds, a product investors and advisors know how to manage. In order to invest in marketplace lending, one needs to open a new account and learn a new set of analytical tools to aggregate and select loans that fit his risk preferences. If an investor wants to invest in more than one platform, this problem might become prohibitive.
Alternatively, hedge funds, which comprise a big chunk of the capital in marketplace lending, are only open to accredited investors. Launching these mutual funds will give retail investors easier access to consumer debt.
“By expanding marketplace loans to a broader investor base, these new funds will transform the industry and could eventually move today’s platforms towards principal broker-dealer markets, similar to other fixed income instruments,” Monja, a marketplace lending analytics solution, explained in a blog post.
TransUnion Launches Fraud Prevention Exchange to Reduce Online Fraud, (TransUnion Email), Rated: AAA
TransUnion data show that, on average, 4.5% of borrowers take out more than one personal loan on the same day.
TransUnion (NYSE:TRU) today announced the launch of its Fraud Prevention Exchange, a powerful industry collaborative designed to enhance responsible lending by helping combat online fraud. The Fraud Prevention Exchange, which includes established and emerging FinTech lenders, was unveiled at the Lend360 conference.
The Exchange enables lenders to:
- Reduce fraud losses without impacting the consumer experience and lending timelines.
- Receive real-time alerts (within seconds) to mitigate instances where lenders don’t discover problematic accounts until days or weeks have passed and losses may have been incubating unknowingly inside live loans.
- Quickly adjust and adapt to evolving fraud threats and trends.
- Have protection from unknowingly funding a loan to a consumer who already exceeds recommended guidelines for the number and frequency of loans allowed.
The Fraud Prevention Exchange will leverage the power of collective data and help lenders face challenges brought on by originations fraud, including synthetic identity and loan stacking
4 charts on the state of digital transformation in banks, (Tradestreaming), Rated: AAA
Only 11 percent of banking executives plan to enhance mobile or omnichannel banking this year.
Projects prioritized in the next 24 months, are more likely to be middle- and back-office focused, like building an enterprise-wide compliance architecture.
Ten fintech start-ups that are causing a stir in insurance, (Financial Times), Rated: A
Insurtech — or instech — is now attracting entrepreneurs and the investors that back them.
The start-ups are targeting all parts of insurance. Many are focusing on distribution, using new technology to reach consumers that traditional insurers miss. Others are looking at analytics, helping insurers to use data to make better underwriting decisions. Blockchain — the technology that underpins bitcoin — is increasingly popular, while health insurance has been a big area of start-up activity in the US. Nor have start-ups ignored the potential of the “internet of things” — the growing use of data-collecting devices in everyday items, from cars using telematics systems to connected homes.
Few start-ups have become full, risk-bearing insurers. Analysts say that the capital requirements, regulatory burden and complexity required, combined with the desire of investors for short-term returns, means that very few of them underwrite their own policies.
Form D Alert: Crowd Lending Fund One Filing. Daniel Najarian Submitted Oct 5 SEC Form, (Frisco Fastball), Rated: A
The Massachusetts-based Crowd Lending Fund One, Llc had published FormD because of $10.00 million offering. This is a new filing. The Limited Liability Company raised $1.05 million so far. That is 10.50% of the $10.00 million offering. The total offering amount was $10.00 million. This form was filed on 2016-10-05. Crowd Lending Fund One, Llc’s clarification was: none. The offering has $8.95 million left to be raised and is still open.
Crowd Lending Fund One is based in Massachusetts. The company’s business is Pooled Investment Fund. The SEC form was submitted by Daniel Najarian Manager. The company was incorporated in 2016. The filler’s address is: 17 Main Street, Watertown, Ma, Massachusetts, 02472. Daniel Najarian is the related person in the form and it has address: 17 Main Street, Watertown, Ma, Massachusetts, 02472. Link to Crowd Lending Fund One Filing: 000168619216000001.
On average, companies in the Pooled Investment Fund sector, sell 37.80% pooled investment interest. Crowd Lending Fund One sold 10.50% of the offering. The average offering amount is $24.76 million for companies in the Pooled Investment Fund industry sector. The total amount raised is 95.76% smaller than the average for companies in the Pooled Investment Fund sector.
Payoneer raises $ 180 million for its global payments technology, (TechCrunch), Rated: A
Payoneer, a global provider of payment processing technologies, has added another $180 million to its already sizable war chest as it looks to continue to grow its payment services.
Already profitable, and with a solid amount of cash on the balance sheet, the new money will double the company’s product development and technical staff, according to the company’s chief executive officer Scott Galit.
For now, the company’s focus seems to be on China, where Payoneer has launched local bank account services in China for customers that don’t have Chinese accounts.
Oleg Seydak on Blackmoon & Marketplace Lending as a Service, (Crowdfund Insider), Rated: A
Blackmoon Financial Group is a newer entry into the marketplace lending sector. Launched in 2014, Blackmoon is marketed as “marketplace lending as a service” or MLaaS. Focusing on balance sheet lenders, Blackmoon has developed technologies to provide integration with loan originators with institutional investors. The platform started in Europe – starting with Russia – and adding multiple platforms before crossing the Atlantic. Blackmoon has also launched a $100 million fund, along with Target Asset Management, to invest in loans originated by European balance sheet lenders. Announced early in 2016, the fund is open to international investors with minimum commitment size of €125,000 and targeting annual returns of 12-13% net of fees.
This past July, Blackmoon entered the US marketing opening an office in Manhattan.
Blackmoon has set an ambitious goal of $1 billion in brokered loans by the end of 2017.
So far, Blackmoon has had a “good experience in the US”. They currently have 5 institutional investors using their platform including 3 family offices and 2 private equity funds.
The most difficult part of setting up operations in the US? The regulatory environment.
“We have already spent a good amount of money on counsel and attorneys. It is hard to get a clear answer and it is costly. There is no “stop factor”…”
Tests of character, (The Economist), Rated: AAA
How personality testing could help financial inclusion.
In rich countries, lenders use credit scores to weigh risk. But just 7% of Africans and 13% of South Asians are covered by private credit bureaus. Bailey Klinger of the Entrepreneurial Finance Lab (EFL), which explores new kinds of credit data, argues that psychometrics could scoop many more people into the financial system. Everyone has a personality, after all.
Some lenders are convinced. Grupo Monge, a retailer, uses psychometrics to sell household goods on credit to low-income Peruvians. “Most of the time we are the first company to give them credit,” says Gabriel Trelles, its boss in Peru. The biggest market for psychometrics is for such consumer loans. But microlenders and banks are catching on. EFL’s software has been used in 690,000 loan decisions in 27 countries. Creditinfo will use its psychometrics unit, recently acquired from a marketing firm, to expand in emerging markets.
The technique is still in its infancy and will not replace credit bureaus, says Miriam Bruhn of the World Bank. The best way to tell if somebody will repay a loan in future is to see if they have repaid one in the past. But bureaus improve more slowly than technology. Lenders, looking for an edge, will find ever more ways to peer into their customers’ souls.
Financeit announces $US17 million investment round led by The Pritzker Organization, DNS Capital and existing investors, (Email), Rated: AAA
Financeit, a point-of-sale financing provider, today announced a new round of equity financing led by new investors–Pritzker family business interests advised by The Pritzker Organization, L.L.C. (“TPO”) and DNS Capital, LLC (“DNS”)– as well as existing investors.
The capital raise, which follows the close of a minority equity financing round led by Goldman Sachs in October 2015, will also support the ongoing needs of the company as it continues its rapid growth.
This investment round of $US17 million ($CAD22 million) enabled Financeit to fund the recently-announced acquisition of TD Bank Group’s indirect home improvement financing assets, which included the purchase of more than 800 merchant dealer agreements and the transition of a number of former TD relationship managers and operational staff.
After a transition period, the transaction will also lead to Financeit servicing approximately 45,000 existing TD consumer loans.
Two P2P Sharing Economy Players Team Up– Airbnb and Zopa, (Finovate), Rated: AAA
Here’s how it works, upon logging into their Zopa dashboard, borrowers click a link to sign up to become an Airbnb host. If they earn £500 from Airbnb within six months, they get £50 off their loan. If they earn £1,000 from Airbnb rentals, they get £100 off. U.K. hosts earn an average of £2,000 per year for renting their home for 46 nights, which means borrowers would need to rent out their homes around 18 times over the course of a year to take full advantage of Zopa’s offer.
While the partnership makes sense for Zopa– it’s a focused way to help borrowers increase their income– I don’t envision banks making the same move.
Zopa debuted at FinovateSpring 2008. Since then, the company has weathered the ups and downs of the financial crisis and the P2P lending industry itself. Earlier this year, Zoparevamped its product lineup, debuting Classic, Access, and Plus, which allows institutions to lend to higher risk borrowers. In May, the company began offering auto loan refinancing, tapping into the used car financing market. Most recently, Zopa appointed Ronen Benchtrit as its CTO in an effort to grow its technology strategy.
CrowdBnk Re-Launches & Rebrands as Code Investing, (Crowdfund Insider), Rated: A
Our focus on supporting proven small businesses seeking larger sums of growth capital, means we no longer feel the name CrowdBnk is fully representative of what we do and the services we provide. We have never been a bank and neither do we wish to emulate their position.
Management stated that around one-in-ten firms are considering P2P lending in the coming year. Additionally, one in six firms with revenues over £10 million are considering this option. This data supported the decision to reposition their platform and help SMEs raise between £1 million to £20 million in financing.
Aztec Exchange launches online early payment solution ePayMe in Spain through Grupo SERES, (Email), Rated: A
DUBLIN, IRELAND and MADRID, SPAIN – Aztec Exchange, a global supplier of invoice finance products and services, today announced the launch in Spain of its early payment solution ePayMe (payme.cloud/es/) through Grupo SERES, reaching their 6,000 SME clients. With this partnership, Aztec continues to grow its position among European SMEs seeking early payment – a nearly €1.6 trillion market.[i]
ePayMe takes traditional early payment services like factoring and turns it on its head. Typically issuing payment within 24 hours, ePayMe offers complete transparency, so there are no hidden costs or interest charges, and suppliers only pay minimal fees. Additionally, a supplier can sell as many invoices as it wants, provided the corporate debtors are creditworthy, and there are no long-term contracts.
Kreditech announces former Bank Managing Director Michal Panowicz as CPIO, (Email), Rated: B
Hamburg, October 6 2016 – Kreditech, the consumer finance technology Group, today announced that Michal Panowicz is joining as Chief Product and Information Officer (CPIO). In the newly created role of the CPIO, Michal will be responsible for the product and technology departments. Michal joins the Executive Team in the Hamburg Headquarters together with Founder and CEO Alexander Graubner-Müller, CFO Rene Griemens, CDO José Garcia Moreno-Torres and COO Oliver Prill.
Kreditech Group’s mission is to improve financial freedom for the underbanked by the use of technology. Combining non-traditional data sources and machine learning, the Company is aiming to provide access to better credit and a higher convenience for digital banking services.
Marketplace Lender DirectMoney Appoints New CEO, (Crowdfund Insider), Rated: A
Australian marketplace lending platformDirectMoney has appointed Anthony Nantes as CEO. Former CEO Peter Beaumont will move into the Chief Operating Officer role. DirectMoney released a statement that Nantes will bring a set of skills that will deliver the next phase of company growth.
He was previously Chief Operating Officer at Prospa, a fintech lending company, which during his tenure in 2015 was recognised by Deloitte as the fastest growing technology company in Australia.
DirectMoney is listed on the ASX and shares have performed poorly during the past 12 months. The company has garnered some support from Macquarie Group but has struggled at times to find sufficient capital to fund loans. The most recent financial results published indicate top line growth of 177% and loan originations growth of 77%. The company continues to deliver a net loss.
Faircent forays into secured loan, (Business Standard), Rated: A
Faircent, country’s largest peer-to-peer (P2P) lending firm, has now started focusing on secured loans, a segment that these players had so far not been present in. Now, with tie-ups with companies the firm has forayed into auto loans and is eyeing dispensing loans for other asset backed products.
Vinay Mathews, Co-founder and Chief Operating Officer,Faircent explained that apart from personal loans, even for the secured products some consumers may find it difficult to take a loan because of their income or risk profile.
As per a RBI report in April, there are around 30 start-up P2P lending companies in India, RBI said. Globally, the cumulative lending through P2P platforms at the end of fourth quarter of 2015 reached ?4.4 billion, from just ?2.2 million in 2012. And in most countries where these firms are allowed to exist they are treated as banking intermediaries. Now, even RBI is looking at regulating this sector and is supposed to come out with guidelines pertaining to it.