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Friday December 9 2016, Daily News Digest

News Comments

United States

United Kingdom

  • FCA plans tougher rules on P2P lending. AT: “The FCA has released its initial review findings. The interesting thing here is not so much that the FCA plans to regulate P2P lending. We’ve seen that coming for a while. The really interesting thing is what they have to say about Ratesetter. This makes me wonder what will become of Ratesetter and its provision fund. Does the FCA’s prognosis mean tougher regulations of these instruments or a denial of authorization for Ratesetter? I think it’s a clear indication that provision funds are seen as a different category than P2P lending or marketplace loans.”
  • eMoneyUnion responds to FCA report. AT: “Founder Lee Birkett adresses provision funds as well as client money and wind-down arrangements.”
  • CapitalStackers receives FCA authorization. AT: “As we thought, the wave of authorizations continues, but the Big 3 are still waiting.”
  • Ratesetter loses chief risk officer to HSBC. AT: “I can’t help but wonder if this might have anything to do with the FCA.”
  • Interview with LendInvest CIO.

China

India

Asia

United States

LendingHome Exceeds $ 1B in Mortgage Loan Originations (VentureBeat), Rated: AAA

LendingHome, the largest and fastest-growing mortgage marketplace lender, has now funded over $1 billion in mortgage loans in the two and a half years since the company launched.

This year has marked a substantial period of growth for LendingHome. The company completed three securitizations, launched an investor platform for individuals, transitioned to servicing its mortgage loans in-house, expanded programs to include jumbo loans, and grew revenue over 2.5x in the process. Additionally, LendingHome hired two new executives to augment its risk and operational leadership, bringing deep experience in underwriting, risk modeling, credit analytics, mortgage operations, and technology from top financial institutions.

lendinghome

ABS, bank partnerships to lift marketplace lending (Structured Credit Investor), Rated: AAA

Marketplace lending and fintech will play an increasing role in the future of the securities market, according to US SEC chair Mary Jo White. Speaking at a recent SEC fintech seminar, White praised the benefits of innovative financial technologies, but outlined the need for relevant regulatory guidelines to protect investors and wider participants.

White stated that “fintech innovations have the potential to transform key parts of the securities industry” and added that marketplace lenders are providing individuals and SMEs with new paths to access capital. However, while such developments have brought many benefits, the SEC has a responsibility to “evaluate how our existing rules address both the challenges and opportunities presented by these new technologies”.

Specifically on the area of marketplace lending, White stated that the SEC is unique to other regulators as it focuses exclusively on investor protection.

Ram Ahluwalia, ceo and co-founder of PeerIQ, highlighted that securitisation is “the primary financial innovation that has enabled consumers and businesses to access capital markets” and that “it transforms illiquid credit of any kind into marketable securities, which can then be sold into a broader base of institutional investors”.

Conor French, general counsel at Funding Circle, added that marketplace lending has the ability to strengthen the financial system because of its potential to “provide better access to safe and affordable credit to consumers”.

However, he added that the ability of the sector to do this is perhaps limited by a relative amount of uncertainty regarding future regulation. French nevertheless said that he is “excited” to see the SEC refocusing on marketplace lending and that it is important for the sector that it establishes clear “customer guardrails”.

She added, however, that while banks have “low cost deposits and customers”, they don’t have the customer-facing technology that SMEs want today. Mills added that should online lenders wish to partner with banks, they will have to be prepared for “regulatory oversight” that banks have to comply with, which will then apply to marketplace lenders in a bank partnership.

Student Loan Marketplace Credible Partners with New Hampshire Higher Education Loan Corporation (Crowdfund Insider), Rated: A

Student loan marketplace Credible.comannounced that the New Hampshire Higher Education Loan Corporation (NHHELCO) will offer student loan refinancing through the site, expanding the range of options available to borrowers.

Available in all 50 states, NHHELCO’s EDvestinU Consolidation Loan lets borrowers combine multiple student loans, federal and private, into a new loan with a potentially lower interest rate and monthly payment. Borrowers refinancing with EDvestinU can choose a fixed- or variable-rate loan with a repayment term of 5, 10, 15 or 20 years. Variable-rate loans currently range from 2.47% to 6.07% APR, with fixed-rate loans available from 3.94% to 7.54% APR.

Day One of Crowd Invest Summit Strives to Broaden Crowdfunding’s Appeal (Equities.com), Rated: A

The Crowd Invest Summit West, held at the Los Angeles Convention center on Wednesday and Thursday, was geared towards helping equity crowdfunding break into the mainstream.

The day’s first speaker was legendary author and investor James Altucher, who delved into his personal history, and what he learned from a roller coaster of success and failure that led him to make millions selling two companies early in his life, only to blow through all that cash twice in a row. One valuable takeaway was to make a point of really engaging with his creative mind.

Following Altucher was a fireside chat between Darren Marble and Ron Suber, President of Prosper Marketplace, a P2P loan platform. Suber delved into the success that Prosper has found, including a hair-raising tale of a long Labor Day weekend when they were perilously close to seeing their success come crashing to a halt. He also emphasized that the key to success for an industry relying on the crowd required balance between users and companies. If any piece of the equation seriously outweighs the others, it disrupts the industry. During his concluding remarks, Suber emphasized that building a strong community was an essential part of finding long-term success for the industry.

Moderator Devin D. Thorpe, author and contributor for Forbes, and panelist Rodney Sampson, veteran author and tech entrepreneur, reminded the audience that the vast majority of venture capital goes to white men living in three states. While crowdfunding offers an opportunity to potentially break the stranglehold that New York, California, and Massachusetts has on startup capital, the industry will still need to address the fundamental issue that there remains a huge disparity in wealth in this country between white families and African-American and Latino families.

Bricksave Launch New Website and First New York Property (Benzinga), Rated: A

Real estate crowdfunding platform Bricksave have launched their brand new website, as well as their first property in the city of New York. The new site includes enhanced security features, a more intuitive investment dashboard and an increased focus on catering to different investor types.

As the platform closes in on successfully funding over $2 million worth of properties, Bricksave are accompanying their new site with the launch of a new investment opportunity in New York, located in the prestigious neighbourhood of Hell’s Kitchen.

Lendit USA 2017 – New York City (Crowdfund Insider), Rated: B

 The World’s Biggest Show in Lending and Fintech LendIt returns to the financial capital of the world for its largest conference and expo ever. Join established and emerging fintech innovators and investors for two-action packed days of networking, learning and dealmaking at the iconic New York Javits Center.

March 6, 2017 – March 7, 2017

Kabbage’s Nationwide “Elevator Pitch” Contest Names Supafly Skate ,000 Grand Prize Winner (SAT PR News), Rated: B

Kabbage(R), the leading financial services data and technology platform, today announced the small business pitch contest finalists and grand prize winner. Kabbage is excited to reveal that Junior Lubin, owner of Supafly Skate Company, Inc., is the $10,000 grand prize winner and recipient of a private, one-hour business consultation with entrepreneur and investor, Lori Greiner.

The following “Elevator Pitch” finalists received a $1,000 consolation prize to help grow their business:

United Kingdom

Finance watchdog plans tougher rules for UK peer-to-peer lenders to ‘strengthen investor protection’ (Business Insider), Rated: AAA

The Financial Conduct Authority (FCA) on Friday released the initial findings of its review into crowdfunding — a term it uses to cover both crowdfunded equity schemes like Crowdcube and peer-to-peer loan providers such as Funding Circle.

The inquiry, launched in July, found that:

  • It’s difficult to compare platforms to each other;
  • Risks are hard to assess;
  • Financial promotions do not always meet requirements to be “clear, fair and not misleading;”
  • Increasingly complex structures are introducing new risks and conflicts of interest;
  • Provision funds, which platforms like RateSetter offer to cover a certain amount of investor losses, “introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors;”
  • Wind-down plans, put in place to take care of loans in case firms go bust, are not adequate;
  • Some platforms client money handling standards are not up to scratch.

eMoneyUnion responds to FCA report (eMoneyUnion Email), Rated: AAA

A number of concerns have been raised by the FCA following our feedback and their own research, such as unnamed platforms provision fund promotion, client-money account management and wind-down arrangements.

A review of our own policies and procedures has taken place throughout the year in consultation with the FCA. This has led to a number of minor amendments to our T&C’s and some day to day client-money management tweaks. These are covered in more detail below.

  • Provision Funds: The use of a provision fund is NOT to be deemed a guarantee or insurance policy, and as you are all aware, when the funds in the rainy day pot are gone; they’re gone. The Provision figure we promote is a financial buffer to smooth out late payments by unsecured borrowers and is displayed to approved lenders only and not on the public website. Property loans are not covered by the provision fund, as the properties themselves carry equity as the financial cushion to any potential losses.
  • Client Money: As reported earlier in the year, we are pleased to confirm that our client account policies and procedures meet the required regulatory standards. When the FCA client money team visited our offices, it was confirmed to them that that provision fund is a discretionary tool of the platform. And is not deemed “client money” it’s actually discretionary “platform money” and will not co-mingle with “client money”
  • Wind-down arrangements: As reported in September, our related party business Moneybrain Ltd, which is our contracted wind-down provider, received full FCA Authorisation.

I was very pleased to see from the FCA report, proposals for new rules to be considered in Q1 2017, in particular “extending mortgage-lending standards to loan-based platforms.”

As property lending (mortgages) is very much part of our JustUs.co plans for 2017, when coupled with our team’s mortgage experience over the last 25 years; the future is looking very positive indeed!

Lee Birkett, eMoneyUnion founder

P2P Lending Platform CapitalStackers Receives Full FCA Authorization (Crowdfund Insider), Rated: A

UK peer-to-peer lending platform CapitalStackers announced it received full authorization from the Financial Conduct Authority (FCA) following a detail assessment. 

Its key mission is to plug the funding gap between typical bank debt and developer’s equity. CapitalStackers noted that investors typically receive double digital returns up to 20%.

Ratesetter loses recently-hired chief risk officer to HSBC (Financial Times), Rated: A

The chief risk officer of Ratesetter, one of the UK’s top three “peer-to-peer” lenders, has left the company just six months after joining.

Sallé de Chou said in a text he had moved to HSBC to be chief risk officer of their European retail business. “[It is] a great opportunity I could not refuse. Not a sign of concerns re RateSetter. I thoroughly enjoyed my time at RateSetter,” he said.

One to One: Ian Thomas, Co-founder and CIO, LendInvest (Mortgage Strategy), Rated: A

We were always confident that Scotland was a good destination for our first ‘office’ out of London. The market is undersupplied for short-term mortgages and small-scale development finance. The housing situation is no less desperate than in England and Wales. There are too few houses in Scotland, so supporting SME developers to get more houses built is a good thing.

We’ve also just launched in northern England and have appointed Damien Druce to lead our efforts there.

I want 2017 to be the year when we really accelerate our lending throughout the country.

I also want our Property Development Academy to launch outside London, helping aspiring developers to gain skills anywhere in the UK.

China

China outpaces US, UK to become undisputed global fintech hub (The Asset), Rated: AAA

China has leapfrogged the US and UK as the undisputed global fintech hub, according to a collaborative report produced by DBS and EY entitled “The Rise of FinTech in China.”

Currently, 40% of Chinese consumers use new payment methods compared with 4% in Singapore, while, 35% use fintech to access insurance products compared with 1%–2% in many Southeast Asian markets. There are also significantly higher rates of fintech participation in wealth management and lending.

As of the end of 2015, mobile online payment users reached 358 million, 64.5% up year-on-year. At that point, China’s utilisation ratio of mobile online payments stood at 57.7%, with more than 1-in-2 persons using their smartphone to conduct financial transactions primarily through Alibaba’s Alipay or WeChat’s payment service.

Ant Financial, Alibaba Group’s financial affiliate which operates Alipay, have expanded into investment products, lending, credit scoring, insurance and so on.

China fintechIndia

Mywish Marketplaces Announces Appointment of New Members to the Board (TechStory), Rated: A

Mywish Marketplaces (MMPL), the company that owns Deal4loans.com, today announced strategic additions to their Board of Directors. Financial industry veterans Alok Sethi, Chairman, Franklin Templeton Services, and Vivek Kudva, Managing Director, EMEA & India, Franklin Templeton Investments have joined the company’s Board of Directors effective July 2016.

MMPL pioneered the neutral loan marketplace in India and has successfully established trust with over 7 million customers, leveraging technology to enhance customer acquisition for participating banks’ loan products, and smarter matching of customers with products.

Asia

Mambu expands to Singapore (Finextra), Rated: AAA

Mambu, the SaaS banking platform provider, today announced the company has opened its first office in the APAC region.

Mambu’s APAC clients are spread across China and South East Asia as well as Australia and New Zealand, accounting for nearly a third of the company’s total business to date.

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

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