- Today’s main news: Lending Club Q4 results: the banks are back. NatWest and Royal Bank of Scotland set to launch digital lending platform. Auswide Banks takes control of MoneyPlace. Indonesia allows on-balance-sheet lending for FinTech startups.
- Today’s main analysis: Lending Club Grows Auto Refinance. Lend Academy proud to have banks back at LC.
- Today’s thought-provoking articles: BondMason responds to RBS direct lending launch.
- LC Q4 earnings review — the banks are back. GP:” Lending Club’s banks being back on the platform are a great sign of trust and comfort. I think everybody can now claim the Lending Club crisis was over. So now that the crisis was over, it wasn’t that bad, wasn’t it? If this is the types of crisis our industry will face I would be comfortable saying that it is safe to invest in our industry.” AT: “Lending Club has made a nice comeback. 2017 looks very promising, as Lend Academy points out.”
- How the CFP Board is court next generation of planners. AT: “Since Millennials are the largest living generation and have very different attitudes about saving and investing than previous generations, it only makes sense to encourage more of them to enter into the financial planning field.”
- How investors can cash in on soaring student debt. AT: “Not a whole lot new here, this article is geared toward investors not familiar with student loan investing.”
- Why lending startups like Float want to ditch FICO. GP:” The only reason not to look at FICO in my eyes is cost. Otherwise why not use an indicator that is correlated? Perhaps once can use more then FICO but ignoring it completely all the time seems unwise.” AT: “As the article points out, not all alternative lenders are ditching FICO, but those that are do so for practical reasons.”
- Lending Club grows auto refinance gradually. GP: “We continue to look for ways for Lending Club to resume growth. Auto Lending was their best bet until the crisis hit. I hope this turns into a valid channel and it allows them to diversify beyond credit card debt refinancing. As we learned with the capital sources it’s not healthy to be concentrated in one market segment.”
- NatWest unveils online lending platform for SMEs. GP:” As predicted, nothing is really stopping the banks from competiting except…internal politics, budgets, difficulty to execute in technology, fear of the unkown and more. When the reward is big enough and there are enough templates to follow like OnDeck and Kabbage, the banks will eventually get in the game. And they have strong advantages: cost of capital, distribution, branding, scaling…”
- LendInvest completes first official auction finance loan in five days.
- Five steps to manage business borrowing.
- RBS offers fast digital lending. GP:” And yet another bank entering online lending.” AT: “Banks entering the direct lending space is good for the industry. Competition should spur P2P lenders to up their A-game.”
- BondMason responds to RBS direct lending launch. GP:” The move by the banks also supports the growth of what is becoming a mainstream asset class, demonstrating that P2P lending is now recognised and being embraced by the traditional banking and finance sector.”
- Interview with co-founder of Mozzeno.
- Crowdlending, a trend among large companies. AT: “Article in Spanish. Let Google translate it for you.”
- United States
- Lending Club Q4 Earnings Results Review – The Banks Are Back (Lend Academy), Rated: AAA
- How the CFP Board is courting the next generation of planners (On Wall Street), Rated: AAA
- How Investors Can Cash In On Soaring Student Debt (Forbes), Rated: A
- Why Lending Startups Like Float Want To Ditch The FICO Score (Fast Company), Rated: A
- Lending Club Grows Auto Refinance Gradually (Auto Finance News), Rated: A
- United Kingdom
- NatWest unveils online lending platform for SMEs (Finextra), Rated: AAA
- LendInvest completes its first official auction finance loan in five days (Bridging&Commercial), Rated: AAA
- Five Steps To Manage Business Borrowing (Minute Hack), Rated: B
- European Union
- RBS offers fast lending (Herald Scotland), Rated: AAA
- Market response to RBS direct lending launch (BondMason), Rated: AAA
- Interview with Frédéric Dujeux, Co-Founder of Mozzeno (P2P-Banking), Rated: A
- Crowdlending, a trend among large companies (Impulsando Pymes Digital), Rated: A
- Auswide Bank Takes Over Controlling Majority of P2P Lending Service MoneyPlace in Australia (P2P-Banking), Rated: AAA
- Business lender narrows in on brokers (TheAdviser), Rated: A
- Indonesia authority to allow on-balance-sheet lending for fintech startups (e27), Rated: AAA
- M360 Advisors Registers Fund with South Korea Financial-Industry Regulator (Benzinga), Rated: AAA
- P2P LENDING: PEAKS TO PITFALLS (BFM), Rated: A
- Cambridge Centre for Alternative Finance, Monash Business School & Tsinghua University Partner On Asia Pacific Alt Finance Study (Crowdfund Insider), Rated: B
Lending Club Q4 Earnings Results Review – The Banks Are Back (Lend Academy), Rated: AAA
Lending Club has released their Q4 2016 and 2016 year-end results. The company originated $1.987 billion in loans, up 1% from Q3 2016 of $1.972 billion. The most significant news of the earnings release was that bank participation totaled 31% of the platform in Q4 2016, up 18% from the previous quarter which shows that the banks are back. In the Q & A section of the earnings call, CEO Scott Sanborn stated, “We’ve got back on a bank by bank level all of the people we were hoping to have back.” This also happened quicker than Scott had expected. Also worth noting is that the company achieved this goal without investor incentives in Q4 unlike in Q2 and Q3 2016 where loans were offered to investors at a discount.
What you’ll also notice looking at the chart below is that the Other Institutional category dropped 5% sequentially, from 18% to 13%. This category of investor includes investment banks, hedge funds and fund managers who typically seek higher yields. Lending Club has tightened credit and adjusted pricing which has had an effect on these investors.
Now the question is whether they can spur some growth in 2017 on the borrower side of the equation. The company also provided guidance for the first time in several quarters which should give investors some idea of what to expect going into 2017.
How the CFP Board is courting the next generation of planners (On Wall Street), Rated: AAA
Amid growing worries that there are not enough new advisers to replace those who are retiring, the CFP Board’s Center for Financial Planning is rolling out a host of new initiatives aimed at expanding and diversifying the workforce.
In the coming weeks, the center will launch an internship program aiming to place workforce re-entrants at planning firms, and a social media campaign geared for students highlighting the diversity of the profession.
The center is also looking expand and solidify financial planning as an academic discipline.
Why Lending Startups Like Float Want To Ditch The FICO Score (Fast Company), Rated: A
Last year Social Finance, or SoFi, started using its own proprietary underwriting score in place of FICO when evaluating applications for its student loan, personal loan, and mortgage products.
And now they’re joined by Float, a Los Angeles-based lending startup, whose founders also say they have no plans to use FICO. The platform is launching today, and a look at its business model reveals why it thinks it can survive without it. Float is an app designed for lending small amounts of cash to customers in a pinch. If you’re facing the possibility of an overdraft, for example, a Float credit line, ranging from $50 to $1,000, can help you stay in the black. As with a classic American Express charge card, repayment is due in full the following month. Float also levies a flat 5% transfer fee.
Instead of pulling a FICO score, Float looks at two years’ worth of transaction history in an applicant’s bank account.
It’s also cheaper: Pulling credit reports adds enormous expense to the underwriting process.
Float has also noticed that customers who arrive via Instagram are better borrowers than those who arrive via Facebook.
Lending Club Grows Auto Refinance Gradually (Auto Finance News), Rated: A
Lending Club continues to grow its newly-launched auto refinance product and is investing $5 to $10 million in its expansion, Chief Financial Officer Tom Casey said during the company’s fourth quarter earnings call yesterday.
Early customer feedback has been positive, and refinancing is saving consumers an average of 2.5% off of their rate, or $1,200 in savings over the life of the loan, Sanborn added.
NatWest unveils online lending platform for SMEs (Finextra), Rated: AAA
UK bank NatWest has launched a digital platform that lets small and medium sized businesses quickly apply for and obtain unsecured loans of up to £150,000.
LendInvest completes its first official auction finance loan in five days (Bridging&Commercial), Rated: AAA
It is the first loan that has been completed since the online mortgage lender launched its auction finance proposition in December last year after a significant proportion of the deals that brokers brought to LendInvest were for purchases agreed at auction.
LendInvest’s loan is based on 75% gross LTV and lasts for nine months with an interest rate of 0.94% per month.
Five Steps To Manage Business Borrowing (Minute Hack), Rated: B
Our advice at Hudson Weir is:
- Releasing equity – Selling a stake in your business is an effective, yet often overlooked, method of raising cash.
- Alternative methods of finance – Asset-based lending or invoice factoring can be helpful ways to release funds and gain a cash injection. Peer-to-peer lending has also gained momentum and popularity and gives business owners a way of raising funds on their own terms. Platforms like Funding Circle also allow SMEs access to loans and funding from a marketplace of investors – and the process is quick and simple.
- Talking to your suppliers – Even if the price your supplier charges looks competitive, never be afraid to ask if they can do better.
- Looking into your lease – Do not be afraid to negotiate with your landlord as they’re unlikely to want a vacant property – they may accept a reduced offer on the rent.
- Keeping on top of your payments – As obvious as it sounds, this is the difference between successfully financing your business in order to see it grow and becoming entrenched in a level of borrowing you can no longer afford to honour. Once you have found ways to keep your outgoings to a minimum during lean times, you must make sure that your monthly repayments are a priority.
RBS offers fast lending (Herald Scotland), Rated: AAA
ROYAL Bank of Scotland is set to launch a digital platform that it said would allow small and medium sized businesses to quickly obtain unsecured loans of up to £150,000.
Market response to RBS direct lending launch (BondMason), Rated: AAA
by Stephen Findlay, BondMason CEO
It is encouraging to see that banks are rolling out direct lending services to their customers, whether it be via an in-house offering or through a collaboration with an established P2P platform. This is especially good news for borrowers, particularly SMEs as it enables them to access much-needed investment more easily.
We’ve seen the direct lending market grow in leaps and bounds since its inception, as volatile stock markets and declining returns on ‘go-to’ investment products has led to an influx of investors looking for the middle ground between high risk and low returns.
Banks are responding to this investor demand and evolving their traditional models so they can take advantage of the direct lending space. We see this as the continuation of a trend towards the blurring of boundaries across the direct lending landscape – encompassing both traditional financial companies and more recent start-ups.
At BondMason, we don’t view this as negative competition to the P2P platforms already in this space, or vice versa. Rather, we think these different offerings will complement the industry and encourage improved standards and better self-regulation as more participants enter the market – a ‘flight to quality’ which we certainly welcome.
The move by the banks also supports the growth of what is becoming a mainstream asset class, demonstrating that P2P lending is now recognised and being embraced by the traditional banking and finance sector.
As this move by the banks comes some 10 years after the commencement of P2P lending, it is a great example of how innovation in established industries, such as banking, is often best done by smaller, new entrants. This further supports the requirement of the regulator to ensure, through its programmes such as the Innovation Hub and Regulatory sandbox, that SMEs and innovative companies are supported and fostered, and that barriers to entry are kept low for new, emerging business models.
Interview with Frédéric Dujeux, Co-Founder of Mozzeno (P2P-Banking), Rated: A
mozzeno is a Belgian fintech founded in December 2015. We have just launched the first digital platform to enable private individuals to participate indirectly in the funding of loans to other private individuals. Loans are granted by mozzeno, acting as a regulated lender. mozzeno then finances or refinances these loans thanks to the issuance of Notes (financial instruments).
The company has been initially founded and funded by my partner, Xavier Laoureux, and me.
Some fintech business angels and W.IN.G (a Belgian seed fund) have taken part to a seed round in Q2 2016. A further funding round should take place in the course of 2017.
Well, actually p2p lending as such is forbidden by law in Belgium. On one hand, the European prospectus law has been adapted locally very strictly, preventing individuals to raise funds publicly, even through an intermediary platform. This means that a borrower candidate cannot invite other people publicly to lend him money. On the other hand, one needs to be a regulated lender to grant loans and to get access to the Central Individual Credit Register. There is a new regulation as from November 2015, this regulated lender status now being supervised by FSMA.
Our regulatory model is then two-sided. We were the first Belgian regulated lender approved by the FSMA as per the new regulation, and this allows us to grant loans for Belgian residents. We also published a base prospectus, also approved by the regulator, allowing us to issue Notes on a continuous basis. These Notes are the financial instruments subscribed by the investors, similar to bonds, and mimicking the repayment behaviour of the underlying loan.
Crowdlending, a trend among large companies (Impulsando Pymes Digital), Rated: A
The profile of companies that rely on crowdlending to obtain financing has been changing considerably since this alternative financing method landed in Spain in 2013. The companies financed by Arboribus are solvent companies that could be financed with other banking entities, on average have about 20 years of life and most have experienced sales growth in recent years. We are talking about the segment of audited companies that resort to crowdlending to finance and that has grown 160% in 2016.
Not only is the profile of companies looking for financing alternatives changing, but there is also a growth in the volume of companies financed and their volume of loans requested. This is indicated by data provided by Arboribus, a crowdlending platform pioneering companies in Spain, which has financed 90 companies with more than 130 loans in 2016, reaching a total of 5.8 million euros funded in a year, 65% More than in 2015.
However, the most relevant data linked to these figures is the increase in audited companies with invoices in excess of 10 million euros, a figure that reaches 15 percentage points of the total portfolio of the platform, including some invoicing more than 20 Million and have a team of more than 200 workers.
Auswide Bank Takes Over Controlling Majority of P2P Lending Service MoneyPlace in Australia (P2P-Banking), Rated: AAA
Auswide Bank Ltd (ASX:ABA) is increasing its equity stake in peer-to-peer lender MoneyPlace Holdings Pty Ltd (MoneyPlace). Auswide Bank will have a controlling interest of at least 51% in MoneyPlace with the prospect of increasing that interest up to 75% dependent on the final take up of other MoneyPlace shareholders in a capital raising initiative being undertaken by MoneyPlace.
Business lender narrows in on brokers (TheAdviser), Rated: A
The appointment of Michael Burke as national sales manager this week coincides with OnDeck announcing a partnership with the Commercial Asset Finance Brokers Association of Australia (CAFBA).
Mr Burke joins OnDeck with over 20 years of sales and leadership experience in the banking and financial services industry. Most recently, he held the position of general manager – consumer and commercial finance at Flexigroup.
Senior officials at the Indonesian financial services authority (OJK) announced on Tuesday that the agency is preparing a regulation that would allow local fintech companies to lend money directly to their customers, a practice known as on-balance-sheet model.
Fintech companies offering on-balance-sheet model are required by regulation to convert into the P2P lending scheme.
M360 Advisors Registers Fund with South Korea Financial-Industry Regulator (Benzinga), Rated: AAA
A commercial real estate debt fund managed by Money360-affiliate, M360 Advisors, successfully registered with the South Korea Financial Supervisory Service (FSS), Money360 announced today.
FSS registration allows South Korean hedge funds, corporations, pension funds, insurance companies and other institutional investors to participate in the fund. Since becoming registered, the fund has received more than $65 million to date from one of South Korea’s oldest and largest financial institutions, and M360 anticipates receiving more than $250 million in aggregate throughout the first half of 2017.
“FSS registration opens M360 Advisors to an entirely new country of institutional investors, which will allow us to substantially increase our assets under management,” said Evan Gentry, M360 Advisors CEO. “This gives us a considerable competitive advantage that has been heightened significantly with an anticipated $250 million investment in our fund from one of South Korea’s most reputable financial institutions.”
M360 Advisors currently works with foreign investors from South Korea, China, Singapore, South Africa, Europe, Canada, the Netherlands and Kuwait, with further expansion underway.
South Korea is the latest in the company’s strategic business plan to bolster its global reach, with an intensified push into South Africa and China planned in the near future.
The fund provides investors with a short-duration, high-yield fixed-income alternative to traditional fixed-income investments. The fund invests in bridge loans collateralized by U.S. commercial real estate property secured with a first-priority lien at conservative loan-to-value ratios.
Gentry said the level of scrutiny going into the application process for FSS registration is high, and Money360 is one of the only marketplace lending platforms with an affiliated private debt fund to be sanctioned by the FSS.
“The registration of the fund with the FSS speaks to its institutional caliber,” Gentry added.
“The fund was designed for universal appeal to various types of investors throughout the world with significant consideration given to international tax efficiency,” added Money360 COO and M360 Advisors President Dan Vetter.
Vetter cited the extended period of low interest rates throughout the world caused by unprecedented central bank intervention as an impetus for launching the fund.
“Equity markets are overvalued and traditional fixed income investments offer minimal yield, making this type of private debt fund attractive relative to more traditional asset classes,” he added.
P2P LENDING: PEAKS TO PITFALLS (BFM), Rated: A
P2P lending has emerged as a new source of financing and may soon emerge as its own asset class. We speak to Kristine Ng, CEO of Fundaztic, about the pitfalls of the P2P system and how Securities Commission-approved lenders could help you enhance your short-term returns.
Cambridge Centre for Alternative Finance, Monash Business School & Tsinghua University Partner On Asia Pacific Alt Finance Study (Crowdfund Insider), Rated: B
The Cambridge Centre for Alternative Finance at University of Cambridge Judge Business School, Australian Centre for Financial Studies at Monash University and Tsinghua University Graduate School at Shenzhen have teamed up to launch the 2016-2017 Asia-Pacific Region Alternative Finance Industry Survey. The consortium has gained the support of more than 20 major industry organizations across the region. The Cambridge Centre for Alternative Finance (CCAF) says this is the largest regional study to date focused on crowdfunding, peer-to-peer lending & other forms of alternative finance.
This benchmarking survey, opening today (February 15, 2017) aims to capture the key trends including the development, size, transaction volume and growth of alternative finance. The study will also gauge the impact of changing regulations on innovative finance in markets across Asia in 2016 – building on last year’s inaugural study.
The research will be made publicly available in Q2 of this year.