- Today’s main news: Betterment to offer human advice. Dubai to open to crowdfunding.
- Today’s main analysis: Zopa provides insight into borrowers.
- Today’s thought-provoking articles: Why Yirendai is not a good investment. i-lend expands across India.
- Betterment to offer human advice. AT: “If there was ever evidence that robots won’t kill human financial advisors, this is it. While there is certainly value in robo-only advice, if robo-advisors are going to compete against traditional financial advisors, they’ve got to expand. The hybrid model will likely become the new norm.”
- Tim Duncan to join board of FinMkt. AT: “This is a feather in the cap for FinMkt.”
- PeerIQ partners with Freedom Financial Network. AT: “Freedom Financial is using PeerIQ for its analytics capability. A great partnership.”
- Braintree hires former LC exec at CTO.
- FT Partners’ CEO FinTech Market report.
- Industries where FinTech is changing the game.
- SoFi ranks Fordham Law graduates No. 15 in average salary.
- Zopa gives insight into borrowers. AT: “What’s interesting is that Zopa does not rely on borrrowers who are in dire need of borrowing. Less than one third of its portfolio is made up of debt consolidation loans. Very interesting.”
- P2P lenders expect higher UK rates.
- Let’s be positive as P2P pain looms. AT: “In every market there are blips and bumps. In new markets, there are always growing pains. I think the ‘strains’ and ‘pains’ are overstated.”
- Would you invest in Folk-2-Folk for 6.5% interest?
- Investors should be leery of Yirendai. AT: “This is a very long, detailed analysis of Yirendai from an investment standpoint, however, there are some great insights into the Chinese P2P lending market from a business standoint, as well. Could the Chinese be headed toward an LC-style crisis?”
- i-lend looks at pan-India expansion. AT: “There are some great things going on in India right now.”
- United States
- Betterment now offering human advice with its robo (InvestmentNews), Rated: AAA
- Former CIO of the CFPB and FinTech Entrepreneur Joins FinMkt’s Advisory Board (deBanked), Rated: A
- PeerIQ Announces Agreement with Freedom Financial Network (Yahoo! Finance), Rated: A
- Braintree hires former Lending Club exec as chief technology officer (Chicago Tribune), Rated: A
- FT Partners’ CEO Monthly FinTech Market (FT Partners), Rated: A
- Industries Where FinTech Is Changing The Game (NASDAQ), Rated: B
- SoFi Ranks Fordham Law Graduates No. 15 In Average Salary (The Fordham Ram), Rated: B
- United Kingdom
- Zopa gives insight into its borrowers (Business Insider), Rated: AAA
- Lewis: Peer-to-Peer Lenders Expect Higher UK Rates (Bloomberg), Rated: A
- Anthony Hilton: Let’s be positive as peer-to-peer pain looms (EveningStandard), Rated: A
- So would you invest in Folk-2-Folk for 6.5% interest? (This is Money), Rated: A
- European Union
- Belgian P2P lending startup Mozzeno launches (Finextra), Rated: A
- Yirendai: Leaked Internal Emails Raise Much Deeper Concerns (Seeking Alpha), Rated: AAA
- P2P platform i-lend eyes pan-India expansion, fresh capital (India Times), Rated: AAA
- Middle East
- Dubai To Open Up To Crowdfunding Platforms, As Part Of Fintech Push (Forbes), Rated: AAA
Betterment now offering human advice with its robo (InvestmentNews), Rated: AAA
The New York-based firm has hired about a dozen financial advisers, half of them certified financial planners, whom Betterment’s retail clients can now reach out to for help via phone or email for an additional cost, the firm said Tuesday. It’s offering two tiers of service, with the initial digital-plus-adviser service requiring clients have a $100,000 minimum.
The Betterment Plus service will give clients with at least $100,000 in assets an annual planning call with an adviser and unlimited advice via email for 40 basis points, while Betterment Premium will provide unlimited calls and emails for clients with $250,000 in assets for 50 basis points.
For its core digital-only clients, Betterment recently changed its pricing from a tiered system based on assets to a 25 basis point annual fee no matter the account size. As a result, clients who have less than $10,000 in their accounts will see their fee decline from 35 basis points, and clients with $100,000 or more will see it increase from 15 basis points.
Former CIO of the CFPB and FinTech Entrepreneur Joins FinMkt’s Advisory Board (deBanked), Rated: A
New York City-based FinMkt, a leading provider of marketplace technology solutions for the financial services industry, today announced the addition of Tim Duncan, a seasoned financial technology entrepreneur and innovative leader, to its Advisory Board. Tim brings an impressive roster of experience, including serving on the executive launch team for the U.S. Consumer Financial Protection Bureau as its Head of Technology and CIO. Tim will advise FinMkt’s management team on strategy and product development.
Tim was recruited by Elizabeth Warren, then Special Assistant to the President of the United States, to join the executive team tasked with launching the CFPB on time and on budget. As Head of Technology and CIO, Tim led technology strategy, planning, and implementation for this inaugural federal agency in the digital age with a budget of $500 million. Under his leadership, the agency implemented an agile, lean process to document, budget, approve, and prioritize technology projects and also became the first federal agency to utilize scalable commercial cloud services while increasing staff from 50 to 500 in an 18-month period.
PeerIQ Announces Agreement with Freedom Financial Network (Yahoo! Finance), Rated: A
PeerIQ, a leading provider of data and analytics for the online lending sector, today announced that Freedom Financial Asset Management, a subsidiary of Freedom Financial Network and one of the fastest growing marketplace lending platforms offering unsecured consumer debt, has adopted the PeerIQ Analytics Platform for enhanced loan data management, reporting, and portfolio analysis—for use by both Freedom’s capital markets team and institutional buyers of Freedom loans.
By adopting PeerIQ’s platform, Freedom Financial will leverage PeerIQ’s full suite of tools: investor dashboards, loan surveillance, portfolio benchmarking, automated reporting, credit facility monitoring, cash flow analytics, and loan performance modeling. Moreover, PeerIQ will offer the same tools for institutional investors to streamline diligence of Freedom’s loan data and monitor existing loan portfolios.
Finally, Freedom has tapped PeerIQ to serve as the independent “fair value” valuation provider for its asset management arm. Drawing upon its deep experience in credit and lending, including its strategic data partnership with TransUnion, PeerIQ launched its valuation service last year.
Braintree hires former Lending Club exec as chief technology officer (Chicago Tribune), Rated: A
Braintree, the Chicago-based mobile payments company, has hired Lending Club’s former chief technology officer.
In his role at Braintree, John MacIlwaine will lead all aspects of product development, the company’s general manager, Juan Benitez, wrote in a blog post announcing the move Tuesday.
FT Partners’ CEO Monthly FinTech Market (FT Partners), Rated: A
* Heartland Payment Systems Sells to Global Payments for $4.5 billion (FT Partners advised)
* CardConnect Sells to FinTech Acquisition Corp. for $438 million (FT Partners advised)
* Ant Financial Acquires MoneyGram for $880 million (see also FT Partners’ Money Transfer Report)
* EVO Acquires Sterling Payments
* LiquidPoint (a division of Convergex) and Dash Financial have Agreed to Merge
* PropTiger and Housing.com Merge and Secure $55 million in Financing
* GreenSky Raises $50 million in Minority Financing from Fifth Third (FT Partners advised)
* Nav Raises $25 million in Series B Minority Financing Led by Experian (FT Partners advised)
* Riskalyze Raises $20 million in Growth Equity Financing (FT Partners advised)
* Funding Circle Raises $100 million in Financing Led by Accel
* iZettle Raises $63 million in Debt and Equity
Industries Where FinTech Is Changing The Game (NASDAQ), Rated: B
The first area where FinTech has made a serious impact is lending.
Loans are happening faster than ever before and the use of technology has improved both business efficiencies and is making headway on lowering risk, thereby also lowering rates for borrowers while still maintaining healthy profit margins.
RedFin has taken a stand against inefficient real estate transactions and the traditional 6% fees. They understand that most of the home search process now takes place online and by streamlining the transaction process with technology, they can lower costs.
Taking changes a step further, startups like RealtyShares are taking the marketplace lending model to real estate investors. Now real estate developers and project managers can look to the marketplace for lending instead of banks.
The payments industry is another area where startups are disrupting the norm.
SoFi Ranks Fordham Law Graduates No. 15 In Average Salary (The Fordham Ram), Rated: B
Fordham University claimed a spot on SoFi.com’s released 2017 rankings of highest average graduate salary rates. At No. 15 with an average graduate salary of $160,590, Fordham comfortably ranks in the top 20 law schools for graduate salaries. Average debt of Fordham Law graduates is $151,406, giving Fordham a 1.1 salary to debt ratio, according to SoFi.
Zopa gives insight into its borrowers (Business Insider), Rated: AAA
The numbers point to a solid borrower base. The press release indicated that the top three types of loans on Zopa’s platform are car loans at 34% of the total origination volume; debt consolidation at 31%; and home improvement at 20%. This indicates that debt consolidation loans, the riskiest loan type Zopa offers, account for less than a third of Zopa’s total origination volume.
In addition, the platform disclosed that the average income of its borrowers is £30,000 ($38,000). Combined, these factors strongly suggest that Zopa does not rely heavily on lending to customers in urgent need of credit to get out of debt.
Lewis: Peer-to-Peer Lenders Expect Higher UK Rates (Bloomberg), Rated: A
The Bank of England would want to get ahead of spiking inflation, says Rhydian Lewis, CEO of peer-to-peer lender RateSetter. He told Daybreak Europe’s Markus Karlsson that customers on his platform expect interest rates to rise.
Anthony Hilton: Let’s be positive as peer-to-peer pain looms (EveningStandard), Rated: A
However, even in these benign conditions and despite Zopa’s obvious progress, some peer-to-peer firms are showing signs of strain. And most of those that appear successful have moved a long way from the original concept, under which people with surplus funds met via a platform on the internet people looking to borrow. Superficially, the industry still strives to be swanlike in its grace and stability, but under the water the paddling is in some cases increasingly frenzied.
Even big firms such as RateSetter have had pause for thought. From the beginning, it has used a small levy on borrowers’ interest payments to endow a compensation fund to be used to reimburse any lenders whose loans go sour. The problem that emerged last year was that RateSetter’s bad-debt experience was significantly worse than expected even in these good times. This briefly threatened to overwhelm the fund and, although some neat juggling meant disaster did not materialise, it did prompt a rethink about the scheme.
What all this means is that the honeymoon is over, the shake-out is beginning and what survives may bear little relationship to what set out on this journey. The bigger firms are gaining market share at the expense of the smaller, the venture capitalists are becoming much more choosy about whom they back, and a lot of the smaller poorly branded businesses will wither away.
This is inevitable and part of the usual cycle. Rather than be negative about it, it is worth remembering that — even if peer-to-peer lending is less innovative than originally hoped — it has still changed ideas about what is possible and how customers can be served.
So would you invest in Folk-2-Folk for 6.5% interest? (This is Money), Rated: A
Almost every other peer-to-peer firm is online only, but Folk2Folk is slightly unusual in that it has high street branches. Currently these are just in the West Country, but the firm is set to open a branch in Harrogate in February 2017, with others planned around the country.
Folk2Folk is also authorised by the Financial Conduct Authority. This is a good sign as it means that they have met a strict set of lending criteria and will be allowed to provide an innovative finance Isa in the future, meaning investors can earn interest tax-free on up to £15,240 in the tax year 2016/17.
Some peer-to-peer lenders let you invest with as little as £10 but Folk2Folk currently has a minimum investment level of £25,000 – this means the type of investors it would be suitable for are more likely to be reasonably wealthy.
All of its loans are backed by property, which can be repossessed and sold by Folk2Folk if a borrower were to default, helping creditors to recover at least part of the loan.
Belgian P2P lending startup Mozzeno launches (Finextra), Rated: A
The Belgian fintech startup mozzeno is launching the first digital platform to enable private individuals to participate indirectly in financing loans to other private individuals.
For investors, an accessible investment with returns of up to 5.79% gross and 3.91% net.
Investment Protection: mozzeno works with the loan insurer Atradius ICP which insures loans granted via mozzeno. Depending on the class of risk, this insurance covers from 60% to 100% of the payment of three late instalments and of the remaining amount of the loan.
Yirendai: Leaked Internal Emails Raise Much Deeper Concerns (Seeking Alpha), Rated: AAA
The P2P lending space in China is something akin to a Ponzi scheme which is rife with fraud. This is NOT an overstatement.
During 2016, YRD continued to report loan growth which was downright explosive. (But so did every other P2P player in China’s rapidly booming P2P space). Accordingly, the headline metrics for YRD looked temptingly good. YRD appeared to present a low P/E ratio, strong revenue growth, huge return on equity, etc. This began to attract a number of US quant funds (shown below) to take numerous small positions based on their “factor models”.
Ahead of the Ppdai IPO, the SCMP article quite clearly comes across as a warning to US investors who might be tempted to invest in a Chinese P2P. The SCMP makes clear what Chinese investors have known all along. Here are a few quotes from SCMP, which again came out just last week:
- In China, “P2P lending… has been mired in a slew of scandals amid runaway investment and fraud since late 2015.”
- “Beijing will heighten requirements for P2P players… The intention of the heightened regulation is partly to shut down some firms that purport to be P2P lenders.”
- “dozens of unscrupulous players raised funds from depositors and then channeled the loans to corporate clients such as property developers.”
- “In 2015, Beijing-based Ezubao was found to have defrauded more than 1 million investors of about 100 billion yuan.”
A large number of small Chinese retail investors (in this case, it was around 13,000 investors) log on with their smartphones and opt to make small investments in some sort of P2P loan product. There is no research and no due diligence. They just click on their smartphone and then “poof” they have invested in something which is supposed to provide some attractive level of returns. Their money is transferred out of their bank account immediately and automatically.
The reality as I see it is that YRD has largely been set up as a dumping ground for terrible subprime paper, foisting the future losses on oblivious US investors who are relying on superficial factor models.
P2P platform i-lend eyes pan-India expansion, fresh capital (India Times), Rated: AAA
Online peer-to-peer lending platform i-lend is preparing itself for a pan-India expansion and looks to raise Rs 4-5 crore from investors to finance it, founder director Shankar Vaddadi told ET.
Dubai To Open Up To Crowdfunding Platforms, As Part Of Fintech Push (Forbes), Rated: AAA
The regulator of offshore financial hub the Dubai International Financial Centre (DIFC) is preparing to license loan-based crowdfunding platforms for the first time.
The consultation, which was launched on January 31, is the first in what is promised to be a series of initiatives covering crowdfunding and the financial technology (fintech) industry more broadly.
According to the local Khalifa Fund, around 70% of SMEs in the UAE have had their applications for funding from conventional banks rejected and loans to SMEs account for just 4% of outstanding bank credit in the country.