- Today’s main news: The end has come for UK banks declining small business loans outright; American Consumer Lending Holdings seeks to securitize Lending Club’s Near-Prime Loans; Prosper’s new credit card optimizer.
- Today’s main analysis : The SEC is unsure if marketplace loans are securities or whole loans.
- Today’s thought-provoking articles: The relationship between stock market prices and the economy; A college student borrowed 500 thousand yuan and vanished.
- A unique article that points out what a good About Us page should say and, most importantly, what it shouldn’t say. In my experience, the About Us page of any company website is among the most visited, and very often I can’t tell what a company does from their About Us page. I think that means lost opportunities for the company, and it also affects its image. I really recommend thinking about what this article says.
- Ron Suber, Prosper COO, gives an update on the industry and where it is going.
- A new real estate auction marketplace called Hubzu offers a unique feature that supports investors looking for rental properties.
- Plousio debuts an alternative lending service for small businesses.
- The Securities and Exchange Commission is unsure whether to classify marketplace loans as securities or whole loans. How hard can it be?
- AXA Investment Managers introduces a new alternative credit platform.
- Orchard Platform’s weekly online lending snapshot. Why online lending is quickly becoming a source of online capital for small businesses.
- Prosper launches a new credit card optimizer so consumers can make better credit card decisions.
- PeerIQ weekly industry update. American Consumer Lending Holdings seeks to securitize Lending Club’s Near-Prime Loans. SoFi partners with JP Morgan, Citi, Deutsche Bank, and Goldman Sachs to kick off the SoFi Consumer Loan Program. And don’t miss the insightful observations from the Q3 2016 Marketplace Lending Securitization Tracker.
- What is the relationship between stock market prices and the economy? You’ll be surprised.
- How are P2P lending taxes treated (Infographic)?
- Which Peer-to-Peer lending platform should you use? Lending Robot has the answer, and it’s not what you think.
- Elevate Credit uses advanced analytics to save its customers billions of dollars.
- The end has come for UK banks declining small business loans outright.
- Lloyds allows consumers a way open accounts with selfies.
- What does the research say about the economics of P2P lending? You don’t want to miss the findings of this study.
- If the government cracks down on foreign workers, will it hurt the fintech industry? One leading fintech CEO thinks so.
- Where is RateSetter now?
- AMTD and LendIt partner on a joint global office, making great strides for the global fintech industry.
- Slovakia-based Žltý melon forms a partnership with Lucron Development to co-finance new housing loans and appoints a new Head of Risk Management.
- Investors in Shanghai take to the streets to protest losses in peer-to-peer lending. Capital fraud may have been involved.
- A college student borrowed 500 thousand yuan and vanished.
- A roundup of great news from WeiyangX Fintech Review, a leading fintech journal in China.
- United States
- Demarketizing fintech About Us pages, (Tradestreaming), Rated: A
- Ron Suber, President of Prosper Marketplace, Delivers Keynote at Context Summits Alt Lending 2016, (Youtube Video), Rated: A
- Hubzu Enhances Investor Experience by Adding RentRange Rental Income Estimates, (Email), Rated: A
- Newest Marketplace Lender Launches In Turbulent Times (PYMNTS.com), Rate: A
- Classification confusion constraining MPL ABS (sci), Rated: A
- AXA IM sheds light on new alternative credit platform (altficredit), Rated: A
- Weekly Online Lending Snapshot – October 07, 2016 (Orchard Platform), Rated: A
- Prosper Daily Helps Consumers Make Smarter Credit Card Decisions with the Launch of Credit Card Optimizer™ (Prosper), Rated: A
- Weekly Industry Update: October 10, 2016 (PeerIQ Email), Rated: A
- Brace for impact? (Lending Robot), Rated: A
- Tax Treatment in Peer Lending (Lending Robot), Rated: B
- Demystifying Diversification (Lending Robot), Rating: A
- Elevate Celebrates $1 Billion in Savings for its Customers (Elevate Press Release), Rated: B
- United Kingdom
- UK Banks Will No Longer Be Allowed to Decline Small Businesses For Loans as Alt Lending Wins, (deBanked), Rated: AAA
- Lloyds Next to Introduce Selfie Technology, (Fintech.Finance), Rated: A
- UK P2P Finance Association Releases Major Research on Economics of Peer to Peer Lending (Crowdfund Insider), Rated: A
- FINTECH CEO: The government’s foreign workers crackdown ‘will be a competitive disadvantage for the UK’ (Business Insider), Rated: B
- Whatever Happened To … RateSetter (PYMNTS.com), Rated: B
- AMTD Group and LendIt Jointly Announce the Formal Establishment of AMTD-LendIt Joint Global Office and Signing of Strategic Partnership Agreement (LendIt Press Release), Rating: A
- European Union
- Slovakia P2P Lender Žltý melon Appoints Head of Risk Management & Announces Partnership With Lucron Development (Crowdfund Insider), Rated: AAA
- Investors protest at EY Shanghai office over P2P lender (Global Times), Rated: A
- Student ‘vanishes’ with half a million yuan in others’ loans (CRJEnglish.com), Rated: A
- China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A
- Show Mudra and banks can’t deny loans to small borrowers, (India Times), Rated: AAA
- Ahead of Diwali, India bitcoin startups Unocoin, Zebpay and Coinsecure mine new investments (Geektime), Rated: AAA
Demarketizing fintech About Us pages, (Tradestreaming), Rated: A
Companies describe themselves as doing the financial equivalent of curing cancer when they’re just taking a splinter out.
Even fintech companies preaching transparency are culprits, shoving so much marketing material into the page you can’t tell what they actually do.
“Fiserv is an organization with solutions for mobile and online banking, payments, risk management, data analytics and core account processing.”
Old: 128 words
New: 20 words
Ron Suber, President of Prosper Marketplace, Delivers Keynote at Context Summits Alt Lending 2016, (Youtube Video), Rated: A
Hubzu Enhances Investor Experience by Adding RentRange Rental Income Estimates, (Email), Rated: A
Hubzu, a real estate auction marketplace, has launched a new feature to support investors seeking to purchase rental properties. The Hubzu® Real Estate Marketplace now displays low, median and high estimates of potential rental income through its integration with RentRange, one of the premier providers of market data and analytics for the single-family rental industry. Since 2009, Hubzu has facilitated the sale of over 159,000 homes via a transparent online sales and auction process.
Newest Marketplace Lender Launches In Turbulent Times (PYMNTS.com), Rate: A
The alternative lending market’s newest market entrant, Plousio, made its debut with an announcement on Thursday (Oct. 6), revealing plans to launch a platform connecting lenders to small business borrowers. Run by CEO Alex Chang, Plousio reportedly has more than 70 lenders already linked to its services.
Companies that are seeking funding through Plousio can obtain loans between $1,000 and $1 million, the company said, and borrowers aren’t restricted in how they can use the funds.
Classification confusion constraining MPL ABS (sci), Rated: A
Uncertainty over how to define marketplace loans – as securities or whole loans – is restricting securitisation of the assets. However, the US SEC could be considering classifying marketplace loans as securities, signalled by the announcement of its upcoming fintech forum.
Not only has this ongoing issue deterred investors from buying securitised marketplace loans, but platforms are also being dissuaded from the securitisation route as a funding tool.
As well as uncertainty about the asset class itself, there are questions about whether the platforms themselves should be redefined as investment companies. Should that happen, they would come under a whole range of different regulations, such as the Investment Company Act.
AXA IM sheds light on new alternative credit platform (altficredit), Rated: A
AXA Investment Managers has created a new alternative credit platform, with over €31bn in assets under management. The new platform has been forged through the merging of AXA’s alternative solutions and structured finance teams, and will be led by Deborah Shire (pictured above), head of structured finance.
Weekly Online Lending Snapshot – October 07, 2016 (Orchard Platform), Rated: A
On Monday, Orchard CEO Matt Burton spoke on a panel entitled, “Fin-Tech & Financial Inclusion: How New Technology Can Unlock Capital and Level the Investment and Lending Playing Field.” The panel was hosted by the U.S. Small Business Administration and WeWork, as part of the White House South by South Lawn Festival. Online lending is increasingly becoming an important alternative source of capital for small businesses. Just last week, small business lender OnDeck announced a national marketing campaign to raise awareness of available financing options for small business owners. Also, last week, small business lender Able Lending announced that it had raised $100 million in debt financing from Community Investment Management.
Prosper Daily Helps Consumers Make Smarter Credit Card Decisions with the Launch of Credit Card Optimizer™ (Prosper), Rated: A
Prosper Marketplace announced today the release of Credit Card Optimizer™, a new feature of the award-winning Prosper Daily app that helps consumers make better money decisions daily by providing them with actionable insights.
Credit Card Optimizer™ aims to solve common and costly credit card mishaps by arming people with timely information including payment reminders, a breakdown of interest bearing balances by card, and other contextual advice on how to avoid potential fees.
Weekly Industry Update: October 10, 2016 (PeerIQ Email), Rated: A
Q3 2016 Marketplace Lending Securitization Tracker
We have released our Marketplace Lending Securitization Tracker for Q3. We underscore several observations and insights below:
- Total issuance topped $2.4 billion this quarter—a record—and is up 41.1% from Q2, with cumulative issuance now totaling $12.7 billion.
- Although MPL origination volumes have declined at some platforms, ABS issuance is increasing as is the proportion of loans funded by ABS.
- 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.
- New issuance spreads continued to tighten in—a friendly environment for securitization.
- We estimate $6.0 to $10.3 billion MPL ABS issuance for 2017.
Brace for impact? (Lending Robot), Rated: A
An increase of stock market prices is only sustainable when it matches economic growth. Otherwise it’s pure speculation, and history has shown that ‘corrections’ inevitably happen. The stock market is like a game of musical chairs, everybody knows the music will eventually stops, yet nobody wants to be amongst the players sitting too early.
Tax Treatment in Peer Lending (Lending Robot), Rated: B
Demystifying Diversification (Lending Robot), Rating: A
At some point nearly every Peer Lending investor asks the question, “Which platform should I invest on?”
We use interest rate as a proxy for risk to group loans into asset classes of different risk/return profiles. The interest rates we split on are 9.10, 12.34 , and 16.43 for the 25th, 50th, and 75th percentiles respectively, which are the simple averages of the 25th, 50th, and 75th percentiles on Lending Club and Prosper. 25th_LC corresponds to the asset class of all Lending Club loans with interest rates from 0 to 9.10 , 50th_LC corresponds to the asset class of all Lending Club loans with interest rates from 9.11 to 12.34 , etc.
To determine the return series over time for each asset class, we use the adjusted net yield methodology described in this blog post. A quick summary of the methodology is that each month, we sum all interest received, subtract all fees and charge-offs, and divide that by the outstanding principal at the beginning of the month: . To account for the exponential growth rate in loan originations each month over most of the history for both platforms, we make an adjustment to treat the amounts of new loan originations each month to be equal.
Elevate Celebrates Billion in Savings for its Customers (Elevate Press Release), Rated: B
FORT WORTH, Texas – October 11, 2016 – Elevate Credit today announced cumulative savings for customers of more than $1 billion as the company continues to use advanced analytics to lower the average rates of its products. Since 2013, the average effective rate of the company’s products has dropped over 40% and customers have saved $1.1 billion over what they would have paid for a typical payday loan with a 400% APR.
Elevate’s products represent a new generation of online credit for nonprime consumers that is a significantly lower cost than payday loans, which have an average APR of 400% and bank overdraft products that, according to an FDIC study, have an average effective rate of more than 3,500%.
UK Banks Will No Longer Be Allowed to Decline Small Businesses For Loans as Alt Lending Wins, (deBanked), Rated: AAA
UK Treasury will make it obligatory for banks to refer rejected small businesses to other lenders. Nine of the country’s largest banks including Royal Bank of Scotland, Lloyds, Barclays and HSBC will be legally obligated to do so when the plan goes into effect in the next three months, The Times reported.
The applicants will be referred to three loan marketplaces — Funding Options, Funding Xchange and Bizfitech that will make referral fees for loans funded on their platforms.
Lloyds Next to Introduce Selfie Technology, (Fintech.Finance), Rated: A
Customers applying online through the new simplified application form will sometimes be required to provide ID. They will be able to complete a simple step-by-step application process to open a current account and take pictures of their UK driving licence or passport, along with selfie images to confirm their identity.
UK P2P Finance Association Releases Major Research on Economics of Peer to Peer Lending (Crowdfund Insider), Rated: A
The UK Peer to Peer Finance Association (P2PFA) has released a commissioned study on the economics of the peer to peer lending market in the UK. The independent assessment, provided by the economic consulting firm of Oxera, analysed the risks, costs and benefits of peer-to-peer lending and provided an objective account of how P2P business models work. The study focused specifically on the eight-member platforms of the P2PFA – each held to high standards of transparency and operation – which collectively comprise over seventy-five per cent of the UK market.
FINTECH CEO: The government’s foreign workers crackdown ‘will be a competitive disadvantage for the UK’ (Business Insider), Rated: B
The CEO of a leading London fintech startup says the government’s planned crackdown on foreign workers would be a “competitive disadvantage” for the nascent industry.
Home Secretary Amber Rudd said in a speech earlier this month that the government would make it harder for companies to give jobs to immigrants before recruiting British people, as part of a post-Brexit crackdown on immigration.
Whatever Happened To … RateSetter (PYMNTS.com), Rated: B
RateSetter was founded in 2010 by Lewis, a former Lazard investment banker, and Pete Behrens, the current chief commercial officer, who formerly worked in law and then banking at the Royal Bank of Scotland.
RateSetter’s business is based on peer-to-peer lending, with both borrowers and lenders competing for matched loans, specifying a particular rate they’re willing to accept. Lenders can participate in four markets — one, 12, 36 or 60 months — while borrowers can apply for loans from six to 60 months.
2014 was a big year for RateSetter. In July, the British Business Bank released that it would start lending via the business in order to support individuals, traders and other business-related purposes. Later in November, RateSetter opened an office in Australia. As for the RateSetter team, it’s grown quickly from just two employees to its current 170 employees.
Looking to the future, Lewis said the plan is to achieve a system where each investor gets at least the market rate of interest to ultimately make the RateSetter system become a “benchmark.”
AMTD Group and LendIt Jointly Announce the Formal Establishment of AMTD-LendIt Joint Global Office and Signing of Strategic Partnership Agreement (LendIt Press Release), Rating: A
London, 11 October 2016 – AMTD Group Company Limited (“AMTD”) – the leading diversified financial services group based in Hong Kong with broad business coverage and network across Asia, and LendIt – the world’s largest and most influential Fintech summit organization, are pleased to formally announce the establishment of AMTD-LendIt Joint Global Office (“Joint Global Office”) as well as the signing of a strategic partnership agreement, creating a premier conduit for optimal and seamless exchange between Asian / global capital and the leading global internet / Fintech universe. In recognition of its global footprint, this announcement comes during LendIt’s Europe event in London, currently in full swing with its highest attendee numbers ever.
This latest collaboration marks the next stage of a long-term partnership between AMTD and LendIt, on the back of the resoundingly successful and unprecedented inaugural LendIt-AMTD Global Fintech Investment Summit held in Hong Kong in July 2016. AMTD and LendIt are committed to cultivating the global Fintech industry through resources sharing, capital infusion and technology development.
Slovakia P2P Lender Žltý melon Appoints Head of Risk Management & Announces Partnership With Lucron Development (Crowdfund Insider), Rated: AAA
On Monday, Slovakia-based peer-to-peer lending platform Žltý melon announced it appointed Michal Milko as Head of Risk Management. Milko joins the online lender after serving as Head of Credit Policy at mBank Czech Republic and Slovakia, a Polish internet bank. He has also held several positions in Retail risk management in VUB/Banca Intesa and CSOB.
Žltý melon also announced it formed a new partnership with real estate development company Lucron Development for the co-financing of new housing loans. The lender stated it has a similar commercial partnership is already running successfully in cooperation with the Cresco Group for the past two years and during just this short time already 25% of the group’s private customers have taken advantage of this new lending opportunity.
Investors protest at EY Shanghai office over P2P lender (Global Times), Rated: A
A dozen angry investors gathered in front of the Shanghai office of audit firm EY on Sunday, alleging that the firm had participated in capital fraud involving online peer-to-peer (P2P) lending platform Uprosper Assets.
Student ‘vanishes’ with half a million yuan in others’ loans (CRJEnglish.com), Rated: A
Fang Feiyang, a senior student in a Hunan province college was out of touch after borrowing over 500 thousand yuan from 12 online peer-to-peer (p2p) lending platforms. He utilized 18 of his classmates personal IDs to borrow the money since last October.
China: WeiyangX Fintech Review (Crowdfund Insider), Rated: A
Up to 30th September, 2016, PowerEgg Drone from PowerVision has raised more than ¥86.3 million (USD $12.87 million), becoming the most funded campaign on JD.com’s crowdfunding platform.
AllPay, Taiwan’s first platform specializing in digital payments, finally hits the market. The platform now has more than 20,000 cooperative partners and 1.45 million users.
After CBRC released the official rules for online lending, the whole industry has witnessed a fiercer competition environment and an increase in operation cost. In respond to that, many platforms chose to reduce their loan yield rates.
According to a newly released regulatory document from PBOC, from the 1stDecember, one non-bank payment institution shall only open one fully-functional account for one individual or company.
According to a P2P Monthly Report (September) from Yingcan Consulting, there are now 2202 p2p lending platforms in operation in China (33 less than in August), with 43 newly added ones.
Show Mudra and banks can’t deny loans to small borrowers, (India Times), Rated: AAA
Mudra was established as a subsidiary of the Small Industries Development Bank of India (SIDBI) by Prime Minister Narendra Modi in April this year.
Banks which for long used the lack of data for small borrowers as an excuse to withhold loans will see that rationale evaporate with Mudra, the company formed to lend to small and medium enterprises (SME), launching a digital platform where potential borrowers can register themselves.
In the past five months, Mudra LtdBSE has disbursed Rs 42,000 crore, one fourth of its total annual target of Rs 1,80,000 crore. The lending agency’s disbursals nearly doubled in the last two months to about Rs 27,000 crore from the Rs 15,000 crore it disbursed in the first quarter of the current fiscal year.
This loan marketplace will have data which may be ten times more than what the credit bureaus have and would be accessible to all banks.
“The application forms filled by customers will go into a loan marketplace and gets pushed to preferred banks,” Jiji Mammem, MD & CEO, Mudra said. “So far we may have disbursed nearly Rs 300 crore under the scheme.”
Out of the total registrations of 9,300, loans have already been sanctioned to nearly 2,700 borrowers.
Of the planned disbursement of Rs 1.8 lakh crore this fiscal year, public sector banks would disburse Rs 77,700 crore, followed by Rs 21,000 crore by private and foreign banks, Rs 15,000 crore by regional rural banks and Rs 64,240 crore by MFIs.
Ahead of Diwali, India bitcoin startups Unocoin, Zebpay and Coinsecure mine new investments (Geektime), Rated: AAA
Zebpay, a bitcoin wallet provider based in India, is raising a new funding round of between $4 million and $5 million, following a $1 million seed investment the company got earlier this year. Like a number of new Fintech and e-commerce startups in India and Southeast Asia, the company is tying mobile payments to personal cell accounts because so many residents of that part of the world are unbanked.
Zebpay, founded as BuySellBitco.in in 2012, is integrating bitcoins into mobile payment services for Indian customers of Flipkart, Amazon and MakeMyTrip.
Some are predicting a bitcoin surge over Diwali. There are some unique factors behind the rise of the coin in Bangalore, Mumbai and New Delhi. India saw another recent bitcoin investment in the $1.5 million round of Bangalore-and-Tumkur-based Unocoin, which boasts 100,000 users and 30 employees, according to Bitcoin Magazine.