Daily News Digest Featured News

Thursday December 1 2016, Daily News Digest


News Comments

United States

  • CAN Capital replaces CEO and other execs. AT: “When a company lets more than one top leader go at the same time, that’s usually an indication that something is wrong with the internal workings of the company. Judging by the comment from the company, I’d say it has to do with investor value. If collection processes impacted this turnover and the company isn’t satisfied with the performance of some of its assets, that spells unsatisfactory profits. According to Bloomberg, CAN’s biggest competitor OnDeck, has seen a decrease in value in its shares by 55%. While CAN Capital is still private, its backers–Wells Fargo Capital Finance, Morgan Stanley, Barclays, and other large banks–will definitely want to see the company’s profits go up, not down, in this critical time when big banks are investing in FinTech.”
  • Croudify startup launches as LC secondary market. AT: “Earlier this year, Prosper shut down its secondary market Foliofn because few investors were using it. This makes me wonder if there is a marketing for Lending Club loans in the secondary sector. We’ll have to wait and see.” GP:” I strongly believe that a secondary market is needed and there is a big demand. I hope the user interface and the process is simply and smooth. I also hope pricing works similarly or better as on Lending Club’s FolioFN. The other interesting part here is how Orchard is still working on theirs…”
  • Online retail credit card fraud increases 20% during holiday shopping. AT: “We’ve been hearing more and more about online credit card fraud and CNP fraud. This is a natural outflow of the rise of e-commerce, but it does need to be addressed. Online retailers need to address this security issue, as do online lenders and alt finance companies that offer consumer loans.”
  • New LC ABS to test market. GP:”This is supposed to be the 1st rated LC securitization.”
  • OnDeck creates new chief risk officer position.GP:”De facto somebody already has or should have this role in each lender. It’s perhaps just a matter of title and holding 1 person accountable.” AT: “If Nick Brown succeeds in this role, I think you’ll see more online lenders appoint risk management officers, and if they can get a handle on the growing problem of loan defaults by improving the borrower approval process, it will be good for the industry as a whole.”
  • Finstar invests in Rocket10.
  • Mara Poling enters crowd investing niche. AT: “Mara Poling’s focus is on multi-family properties, a great niche to develop.”
  • RealtyShares names Bill Lanting VP of commercial debt originations.

United Kingdom

European Union



News Summary

United States

Shakeup at CAN Capital – CEO and 2 other Execs Put on Leave of Absence (deBanked), Rated: AAA

CAN Capital has confirmed that CEO Dan DeMeo has gone on a leave of absence. The company’s chief financial officer Aman Verjee and chief risk officer Kenneth Gang have also reportedly stepped down. Parris Sanz, the company’s Chief Legal Officer, has been made acting head of the company, while Ritesh Gupta has been promoted to COO.

Some of CAN Capital’s referral partners have reported to us that the funding of new deals has been put on hold until January 2017. This could not be confirmed, however.

A statement from CAN Capital is below:
As the board and our leadership team conducted our business reviews and looked at how we can best position the firm for future growth, we self-identified that some assets were not performing as expected and that there was a need for process improvements in collections. It became clear that our business has grown and evolved faster than some of our internal processes.

Croudify Launches Platform for Lending Club Secondary Market (Lend Academy), Rated: AAA

A new company called Croudify recently announced that their secondary market platform for Lending Club was launching in beta. The company describes itself as a secondary trading platform that allows you to find the best listed notes based on analytical models that they have built.

What made Croudify’s platform possible was the creation of Lending Club’s secondary market API last year. In fact, Croudify was the company that worked closely with Lending Club as they were developing the secondary market. Abhishek stated that after beginning work on their product in 2015 they eventually compelled Lending Club to build the API which was eventually made public.

Logging into Croudify you are presented with a portfolio summary which includes a snapshot of your loan portfolios, holdings by states (pictured below) and the percentage of your loans that are performing.


Clicking on a note shares further information.

croudify notes

Online Retail Credit Card Fraud Jumps 20% During Holiday Shopping Weekend (Marketwired), Rated: AAA

iovation, the leading provider of device intelligence for authentication and fraud prevention, today released new data that shows card-not-present fraud — fraudulent transactions where a credit card is not physically presented to a merchant — increased significantly from Black Friday to Cyber Monday 2016 when compared to the same period in past years.

iovation research shows a 20 percent increase in online retail credit card fraud during the 2016 holiday shopping weekend when compared to the same period in 2015, and a 34 percent increase in online credit card fraud from Black Friday to Cyber Monday 2014 to 2016. In addition, iovation disclosed:

  • The percent of all online retail fraudulent transactions from Black Friday to Cyber Monday that involved credit card fraud
    • 2016: 59 percent
    • 2015: 49 percent
    • 2014: 44 percent
  • The percent of all online retail fraudulent transactions in 2014, 2015 and 2016 that involved credit card fraud
    • 2016: 59 percent
    • 2015: 42 percent
    • 2014: 50 percent
  • The percent of online retail transactions from Black Friday to Cyber Monday that were fraudulent
    • 2016: 0.38 percent
    • 2015: 1.16 percent
    • 2014: 2.34 percent
  • The percent of online retail transactions in 2014, 2015 and 2016 that were fraudulent
    • 2016: 1.13 percent
    • 2015: 2.89 percent
    • 2014: 2.53 percent

iovation attributes the rise in online credit card fraud to the recent shift from consumers using traditional credit and debit cards with magnetic strips to EMV (Europay, MasterCard, and Visa) chipped cards. While the new chip cards have proven to do a great job of stopping card-present fraud, it is now clear that fraudsters are turning online.

iovation also found that consumers conducted 55 percent of their retail online transactions from this Black Friday to Cyber Monday using mobile phones and tablets compared to 49 percent the rest of 2016. This continues an ongoing mobile retail transaction increase over the holidays and year-to-year. Last year during that same period that percentage was 47 percent compared to 44 percent the rest of the year, in 2014 that was 37 percent compared to 32 percent the rest of the year and in 2013 that was 31 percent compared to 20 percent the rest of the year.

For the holiday shopping weekend, mobile retail transactions compared to all retail online transactions were:

  • 56 percent on Black Friday, Nov. 25
  • 59 percent on Saturday, Nov. 26
  • 59 percent on Sunday, Nov. 27
  • 48 percent on Cyber Monday, Nov. 28

credit card fraud

New Lending Club ABS to test market (GlobalCapital), Rated: A

Sources speaking with GlobalCapital on Wednesday said that the deal could potentially reflect whether investors have been put off by recent reports of several outstanding marketplace loan securitizations breaching their loss triggers earlier than expected.

OnDeck names Nick Brown to newly created position of chief risk officer (MarketWatch), Rated: A

OnDeck Capital Inc. ONDK, -0.22% said Wednesday it has named Nick Brown to the newly created role of chief risk officer. Brown comes to the company from Commonwealth Bank of Australia, where he was general manager of the group decision sciences team. Brown has a PhD in organizational behavior and statistics from Cornell University.

Finstar Announces Investment in Mobile Marketing Tech Company Rocket10 (BusinessWire), Rated: A

Finstar Financial Group, a fintech-focused international private equity group founded by Oleg Boyko, announces that it has invested USD 3 million in Rocket10, a rapidly growing mobile marketing agency. This investment forms part of Finstar’s strategy to use mobile technology to grow its fintech businesses.

As part of the venture investment, Finstar will utilise Rocket10’s mobile marketing technology across the Group’s portfolio of companies. This will offer cost efficiency and unlock new development opportunities for both companies. Finstar has also secured the right to further increase its equity stake in Rocket10.

Financial services is a key focus area for Finstar and its portfolio companies. It is estimated that the number of mobile phone users will hit 4.77 billion in 2017. So mobile is becoming increasingly important, especially in the financial services sector.

Mara Poling Enters Crowd Investing (Digital Journal), Rated: A

Both Mara Poling and FundingTree.com will be sponsoring the Crowd Invest Summit in Los Angeles, California on December 7-8, 2017. Pat Poling, Founder & CEO of Mara Poling will be speaking at CIS as a panelist. Rayaan Arif, Founder & CEO of FundingTree.com will also be moderating a panel at the Summit. Mara Poling has partnered with FundingTree.com to bring Accredited Investors to properties before opening them to the public.

Mara Poling marketing partner, FundingTree.com is a new total commercial real estate marketing solution in the crowd investing and funding marketplace. The principals have decades of experience in Marketing, Social Media, Technology and Fundraising with a strong emphasis on Commercial Real Estate.

Bill Lanting Joins RealtyShares to Expand Commercial Real Estate Debt Program (BusinessWire), Rated: B

RealtyShares, a leading online marketplace for real estate crowdfunding, today announced the hiring of Bill Lanting as Vice President of Commercial Debt Originations.

Lanting brings rich financial experience in the real estate syndication and hospitality industries to the online marketplace. A former executive with Radisson Hotels and Wyndham Hotels, he has recently been responsible for bridge loan originations, underwriting, and raising large, multi-million dollar investment funds from institutional investors for Thorofare Capital and Partners Capital. At RealtyShares, he will head the expansion of the platform’s commercial debt product.

United Kingdom

Defaults gather, and now our Ratesetter watch begins (FT Alphaville), Rated: AAA

As we’ve discussed in detail before, Ratesetter now reserves the right to take interest payments and capital away from investors and put it into the provision fund, in order to make sure there are enough funds to account for loans going bad. The upshot is that investors in Ratesetter need to pay attention to the entire book of loans, rather than their individual investments. (Whisper it softly, it’s sort of like a bank.)

So how’s the provision fund doing? Well, here’s one set of data the company shows to investors on its provision fund page, as it was on Tuesday, with the relevant numbers highlighted:


But there’s another set of data provided by Ratesetter, which tells a slightly different story. It’s on their statistics page, which provides “data on annual performance of loans and returns, updated automatically in real time.” Again, the relevant numbers are highlighted below:

ratesetter performance

The second thing to note is that it’s possible to calculate the total value of expected bad debt using the numbers on the statistics page. It’s a simple matter of applying the “actual lifetime bad debt rate to date” figures to the total amount lent, and then comparing that to the value implied by the “projected lifetime bad debt rate”. The difference is the total amount of defaults that are yet to happen.

It comes to £24.3m, according to our calculations, which is about £2m higher than the amount of current and expected money in the provision fund. However, according to a Ratesetter spokesperson, that’s not the whole story. They said “around £3m” of those losses are on loans not covered by the provision fund, which means they are held by institutional rather than retail investors.

Funding Circle tops £100m in a month (alt fi), Rated: AAA

Funding Circle, a leading marketplace lender for small businesses, has recorded a UK industry first by topping £100m in loan originations in a single month. As of yesterday, the platform was sitting on £107m in loan originations for the month.

In addition to the monthly mark, Funding Circle also notched a daily lending record yesterday, with over £9.3m disbursed.

After a temporary slowdown in volumes post-Brexit, the UK marketplace lenders hit their stride again in September, with Funding Circle, RateSetter and Zopa each posting monthly origination records. Funding Circle led the pack with what was then a UK industry-wide record at £75.2m. Funding Circle then smashed its own monthly record in October, with £95m lent.

UK P2P lending

European Union

Global Companies Enlist DirectID for Real-Time Bank Data Ahead of PSD2 (Benzinga), Rated: AAA

DirectID today announced Fleetcor, Marlette Funding and Shawbrook Bank as examples of 8 new companies using its platform for trusted online verifications and live financial data. With DirectID, these companies can reduce application fraud, enable instant customer on-boarding, and scale services internationally.

These new customers build on earlier DirectID integrations with Prosper Marketplace, Amigo Loans, Bigstone Capital, and other banking, lending, payments, insurance, property and legal businesses. Forward thinking fintech disruptors can use DirectID to unlock the power of live bank data far ahead of the expected European Union Payment Services Directive (PSD2) activation in 2018.

DirectID combines identity verification, real-time financial data, compliance checks, affordability insights and ACH payment confirmation into a single platform. This improved process automates new customer on-boarding and actively reduces risk to support growth and scalability. Businesses using DirectID reduce fraud attempts by 75%, decrease on-boarding time from days to seconds, increase back office efficiencies, and can expand product offerings to over 32 countries.

In addition, DirectID announced that U.S.-based marketplace lending accelerator LendFoundry has integrated the service to offer real-time financial data and insights, such as verification income, to its participating companies for faster and more accurate credit risk underwriting capabilities.

Comrade-to-Comrade Lending? A Marketplace Lender Opens to Russia (The Wall Street Journal), Rated: AAA

Twino, a Latvian company that facilitates peer-to-peer lending, will begin listing Russian subprime loans on its website on Thursday, a first for a European marketplace lender. Investors get scant information on the people they are lending to, but they’re offered double-digit interest payments.

Twino operates a model more akin to a payday-loan operator than a classic peer-to-peer lender. Rather than matching borrowers and lenders, Twino makes loans and then uses its website to resell them to investors. It makes money by taking a cut of the interest payments.

The cut is considerable: The Russian loans will pay around 14% annual interest to investors. The company’s portion depends on the interest charged on the loan. Meanwhile, the borrowers in Russia will pay over 100% in interest, Mr. Kazanins says. Twino says that large margin is enough for it to pledge to repurchase any defaulted loans.

Russia getting slapped with international sanctions in 2014 after annexing Crimea “was a break for us,” says Mr. Kazanins. Russian banks curtailed lending and customers were forced into the nonbank market to get loans.

TRANSFER PRICING Italian ABS hindered by NPL valuation issues (LinkedIn Pulse), Rated: A

The securitisation of non-performing loans (NPLs) has been deemed a credible solution for Italian banks seeking to offload the assets from their balance sheets. Just one deal has launched to date, however. Getting a plausible valuation for the NPL portfolio being transferred to the SPV may be one of the main obstacles.

Following a set of initiatives set out by the Italian government over the past 18 months, many Italian banks are anticipating sales of large NPL portfolios into SPVs for securitisation purposes. The Italian government has agreed to guarantee the senior NPL ABS notes under its Garanzia Cartolarizzazione Sofferenze (GACs) scheme, while the fund Atlante II will invest in mezzanine notes (SCI passim).

Several factors drive the transfer price of an NPL portfolio to an SPV: the quality of the loans, the geographical location and whether the loans are secured or unsecured. However, the lengthy Italian legal process and the availability of loan data are two additional factors that may also be weighing on the NPL valuation process.

Banking Platform Mambu Receives AWS Financial Services Competency Certification (Crowdfund Insider), Rated: B

Mambu, a software as a service (SaaS) banking platform, has received the Amazon Web Services (AWS) Financial Services Competency certification.

The AWS Financial Services Competency is focusing on the AWS Partner Network (APN) members in three categories: Risk Management, Core Systems, and Data Management. Mambu had to achieve specific requirements in order for them to be a recognized partner.


China Emerges As The Biggest Advanced Fintech Market In The World (China Money Network), Rated: AAA

China is the world’s largest financial technology market, with a market size greater than US$1.8 trillion in 2015.

Out of 27 Fintech unicorns globally, China’s eight Fintech unicorns have raised US$9.4 billion in funding and have a combined valuation of US$96.4 billion, according to a report released by entrepreneur Gaurav Sharma.

The four biggest Fintech unicorns in the world are Chinese: Ant Financial (US$60 billion), Lufax (US$18.5 billion), JD Finance (US$7 billion), and Qufenqi (US$5.9 billion).

FinTech unicorns

Mobile payments are also at an all-time high. China has 380 million people shopping online via their phones, as well as nearly 200 million people using their phones as a wallet for in-store payments.

chinese financial services

On the other hand, domestic incumbent banks continue to struggle with their relatively undeveloped systems. The biggest Fintech startups are in payments and lending, which account for nearly 80% of the combined value of all unicorns.

China is also the world’s biggest P2P (peer-to-peer) lender. In 2015, registered P2P lenders originated around US$60 billion consumer and US$40 billion business loans.

Lufax is the largest P2P lender, with a valuation of US$18.5 billion. There is also Jiedaibao, which is backed by JD Capital.

Around Jan 2016, there were 4,500 P2P platforms in China with 50% of them facing frauds, high delinquency, or liquidity issues.

China P2P lending

China is also planning to develop a far-reaching social credit system by collecting information online and providing all its citizens a score.

Hyperledger Project Hits 100 Members With Addition of China’s SinoLending, Gingkoo, ZhongChao (Bitcoin Magazine), Rated: A

Hyperledger Project, an open source blockchain initiative hosted by the Linux Foundation, has hit a major milestone of 100 active members. Several new members from China have joined the project, including Dianrong (formerly SinoLending), Shanghai Gingkoo Financial Technology and ZhongChao Credit Card Industry Development Company.

Dianrong now ranks among the top three peer-to-peer lending platforms in China, according to a report by Wdzj.com and Yingcan Consulting.

Htite has hinted numerous times at his company’s interest in blockchain technology, stating earlier this month that Dianrong has been developing blockchain applications for use in online lending. He said that that the company has committed to invest between U.S. $30-40 million in development over the next two years.

More than 80% of Internet Finance Companies Received C-round Funding are Online Lending Platforms (Crowdfund Insider), Rated: A

Data from IT Juzi.com indicates there are now 30 Chinese internet finance companies having received C-round funding (25thNovember 2016).

China C round fundingIndia

Rupaiya Exchange raises $ 200,000 in funding (Business Standard), Rated: A

Rupaiya Exchange, a peer-to-peer (P2P) lending aggregator, has raised USD 200,000 (about Rs 1.36 crore) in angel funding from a group of high-net-worth individuals (HNIs) and professionals.

The company, which began its operations in November last year, has developed proprietary technology to assess users registered on its platform and perform credit checks on the borrowers.

The information is then shared with lenders which includes banks, non-financial companies (NBFCs) and individuals.

i-lend.in signs pact with Cove Ventures (India Info Online), Rated: A

Hyderabad-based i-lend.in; one of the best performing company in the nascent Peer 2 Peer (P2P) / Alternate Finance and UK-based Cove Venture, a leading Big Data solutions provider entered into a strategic agreement.

Under this strategic agreement, both firms will apply Artificial Intelligence, Deep and Machine Learning algorithms in the Indian Alternate Finance & P2P Lending industry to ensure more people in urban and rural India get access to credit at moderate interest.

The models will help improve the predictability by analyzing online, social and financial behaviour thereby enabling I-lend with significant accuracy. This predictability will help in pricing loans, opening up new segments and deliver better financial performance.


George Popescu
George Popescu
Allen Taylor
Allen Taylor


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