- Today’s main news: Funding Circle tops 2bil GBP. Landbay launches IFISA. Lending Works re-opens IFISA to investors.
- Today’s main analysis: Is automated advice the way to go?
- Today’s thought-provoking articles: Real Estate Crowdfunding and secondary market in focus. China regulators warn 90% of P2P lenders could fail in 2017.
- 3 trends to watch for RECF in 2017. GP:” Real Estate Crowd Funding continues to grow and is become a non trivial size. I would like them to diversify beyond property flippers on average. Note that the unsecured personal market while focused on credit card refinancing was able to grow and has plenty of growth space left as well” AT: “These are certainly reasonable expectations. I am totally looking forward to seeing what new opportunities arise for non-accredited investors.”
- Is automated advice the way to go? AT: “It’s hard not to see robo-advice picking up speed as millennials grow older and older investors wanting to cut fees.”
- Orchard weekly online lending snapshot. GP:” Not much new.”
- SoFi acquisition of Zenbanx either signals first mega neo-bank or a unicorn losing the plot. GP:” I personally don’t think it’s neither a Neobank nor losing focus. It’s diversification and some trial and error for cheap. SoFi is doing an experiment for cheap to see if this works and if so it will scale this effort. But this is not a bank, far from that. ” AT: “I’m going to go with neo-bank.”
- There’s a simple reason percentage of people owning homes is at historic low. GP:” Regardless of the cause, the effects of this trend are also very interesting and worth thinking about.”AT: “The simplest explanation is usually the best.”
- Payday loan alternatives for side hustlers who have lost a job. AT: “I love seeing P2P at the top of all the recommendation lists.”
- TRN report highlights secondary markets in RECF. GP:” This is very interesting because real estate by definition usually lacks liquidity and this could solve that main issue making RECF the market to focus on.”
- Funding Circle tops 2bib GBP mark. GP:” Congratulations ! Way to go !” AT: “Such milestones are not only celebratory for the company, but for the entire MPL industry. Congratulations!”
- Landbay launches IFISA offer. GP:” Landbay is a very innovative, fast growing company and the IFISA offering will be like an adrenaline shot.” AT: “The floodgates for ISAs are opening wider and wider.”
- Lending Works re-opens IFISA to investors.
- Assetz Capital hires Santander man for push into Northern Ireland.
- New Isa offering tax-free returns of 12%. GP:” Perhaps sounds a little too good to be true.”
- These investment trusts could help you retire early.
- Alternative investing: Inbound marketing is the new cold calling. GP:” I get plenty of cold calling robotic calls on my cell. I wish this was true.”
- Harmoney launches in Australia with $200M. GP:” Harmoney needs to grow beyond the great but limited kiwi market.”
- 90% of P2P lenders could fail in 2017. GP:” While they could fail, will they fail, and should they fail? Chinese authorities want stability beyond everything else. 90% failure could lead to unrest.” AT: “I’m growing more and more skeptical of anything coming out of China. Is this what regulators predict or what they hope for? Will the regulators themselves be instrumental in those failures?”
- United States
- TRN Report Highlights Secondary Markets in the Real Estate Crowdfunding Space (MENAFN.com), Rated: AAA
- Real Estate Crowdfunding: 3 Trends to Watch in 2017 (Forbes), Rated: AAA
- Is Automated Advice The Way To Go? (The Market Mogul), Rated: AAA
- Weekly Online Lending Snapshot – February 17, 2017 (Orchard Platform), Rated: AAA
- SoFi buying Zenbanx either signals the first Mega NeoBank or a unicorn losing the plot (Daily FinTech), Rated: A
- There’s a simple reason the percentage of people owning a home is at a historic low (Business Insider), Rated: A
- PAYDAY LOAN ALTERNATIVES WHEN YOU HAVE A SIDE HUSTLE AND YOU LOST YOUR JOB (Axcess News), Rated: B
- United Kingdom
- Marketplace lender Funding Circle tops £2bn mark (altfi), Rated: AAA
- Landbay Launches IF ISA Offer Today (P2P-Banking), Rated: AAA
- Lending Works re-opens to IFISA investors (P2P Finance New), Rated: AAA
- Assetz Capital hires Santander man Andrew Fraser for Northern Ireland push (Finextra), Rated: A
- A new Isa is offering tax-free returns of 12% – so what’s the catch? (The Guardian), Rated: A
- These investment trusts could help you to retire early (AOL), Rated: A
- Alternative Investing: Inbound marketing is the new cold calling (Redd-Monitor), Rated: B
- European Union
- Real Estate Crowdfunding Campaign Raises €1.8M to Construct Building in Madrid (Spanish News), Rated: A
- Harmoney’s $ 200million Australian launch (Stuff), Rated: AAA
- China regulators warn that 90 pc of peer-to-peer lenders could fail in 2017 (South China Morning Post), Rated: A
- PAYPAL IS LAUNCHING A FINTECH SCHOLARSHIP IN SINGAPORE (SMU), Rated: A
TRN Report Highlights Secondary Markets in the Real Estate Crowdfunding Space (MENAFN.com), Rated: AAA
CFX secondary market is one of these secondary markets that allow RECF investors to transfer their private shares into multiple asset classes. This secondary market was launched by Chicago’s CFX Markets and is owned by PeerRealty, an RECF platform. The market is open and secure, allowing sellers to display their shares so that buyers can scrutinize them before making a decision. The entire transaction takes place on the secondary market. Besides its owner, other RECF platforms that are already using the market include American Homeowner Preservation, PropertyStake and CrowdFranchise.
Another secondary market is the Investor exchange. This is an automated secondary market owned by Acquire Real Estate. The market also allows RECF investors to sell their private shares to willing buyers. The sellers can locate prospective buyers, create required documents and consents, establish value of their shares, and sell the shares via an auction process. This market is currently available to Acquire Real Estate subscribers only.
Real Estate Crowdfunding: 3 Trends to Watch in 2017 (Forbes), Rated: AAA
Real estate crowdfunding continues to be a dynamic and ever-evolving industry, growing to an estimated $3.5 billion in 2016.
Institutional capital takes center stage
These accredited investors hold approximately 70 percent of all private wealth in the U.S., but account for only around 8.25 percent of all households.
When comparing an individual investor, who may have $50,000 or $100,000 to invest to an institutional investor that may be bringing $50 or $100 million to the table, it becomes apparent what makes institutional capital an attractive choice. Making the shift to institutional capital makes sense for real estate crowdfunding platforms that have a desire to accelerate growth by better servicing the supply side of the equation.
Non-accredited investors and eREITs gain steam
The SEC’s finalization of Title III of the JOBS Act opened the doors of real estate crowdfunding to non-accredited investors but online marketplaces have thus far been slow to utilize this new regulation. Instead, Title IV of the JOBS Act has been the more widely used regulation and in real estate, that has resulted in the creation of Reg A+ eREITs from some of the more well-known platforms.
Fundrise, for example, is reportedly on track to raise $250 million with its five eREIT options. If these, and other eREIT offerings continue to generate that kind of volume, I foresee other platforms following suit and taking advantage of Reg A+ availability to attract non-accredited investors to real estate. While individual non-accredited investors may have a lower degree of liquidity compared to their accredited counterparts, they greatly outnumber accredited investors so there’s a vast swath of opportunity that online marketplaces are positioned to tap into.
Consolidation allows the key players to emerge
I believe very strongly that tech is going to play an important role in determining which marketplaces make the cut and which don’t. Tech and its various applications, whether it’s through automation of manual processes or the incorporation and application of data for underwriting, will be a significant component in determining which companies are marked for success.
By the end of 2017, I predict that we’ll see no more than five platforms taking a spot in the top tier and collectively, it’s reasonable to estimate that those companies will have a transaction volume that’s measured in billions.
Is Automated Advice The Way To Go? (The Market Mogul), Rated: AAA
With Royal Bank of Scotland set to join the robo-advisory industry later this year, the world of robo advisors is starting to heat up. Joining the likes of leading asset managers such as BlackRock and Vanguard, the day when finance is taken over by technology is not as far away as one may think. With the leading asset managers driving this charge for automated advisory platforms, is robo-advisory really the way forward?
The head of HSBC’s Asset Management arm, Sridhar Chandrasekharan, makes a very crucial point: in a world of low returns, investment advice is in demand, but the appetite for fees is low. In the UK itself, a study by the Financial Conduct Authority (the Financial Advice Market Review) conducted early last year found that 69% of advisors have rejected clients in the past year as they were not perceived as “wealthy enough”.
These sentiments are supported by a survey conducted by PwC which found that, currently, more than 55% in the 18-35 age group in Italy are willing to receive investment recommendations from an automated advisory platform. In ten years time, this group of individuals will form the bulk of the working population.
However, in all its glory, robo-advisory still faces its biggest challenge: the regulators.
Weekly Online Lending Snapshot – February 17, 2017 (Orchard Platform), Rated: AAA
SoFi buying Zenbanx either signals the first Mega NeoBank or a unicorn losing the plot (Daily FinTech), Rated: A
Save, send and spend has a nice ring to it. It describes quite simply why we use a bank. Oh and borrow and that is what SoFi already enables.
So we expect a number of full stack global Neobanks to be successful. So both N26 and SoFi can be success stories, albeit with different strategies. As can Neobanks incubated within an incumbent such as BBVA and ING. Whether the starting point is a VC backed startup or a legacy bank, the end game is the same. This is the convergence thesis we first outlined here.
There’s a simple reason the percentage of people owning a home is at a historic low (Business Insider), Rated: A
The homeownership rate in the US has hit a historic low, and a big part of that is a significant drop in ownership among younger Americans.
A part of that decline is related to demographics. The 45-and-over population has increased, and older people are more likely to have a house.
However, younger people are also now less likely to own a home than they were 10 or 20 years ago, as the chart above highlights.
PAYDAY LOAN ALTERNATIVES WHEN YOU HAVE A SIDE HUSTLE AND YOU LOST YOUR JOB (Axcess News), Rated: B
If you’re in dire straits, here are a few payday loan alternatives to consider:
There are several different places where you can apply for a personal loan, including:
- Credit unions
- Peer-to-peer lending sites
Of those options, peer-to-peer lending sites are the most flexible regarding minimum lending requirements, but you’ll still need a decent credit score and steady income.
Like payday loans, title loans should only be used as a last resort, because they almost always have very high interest rates and short terms, with the standard term on a title loan being 30 days.
Marketplace lender Funding Circle tops £2bn mark (altfi), Rated: AAA
Funding Circle, the world’s largest online marketplace for small business loans, has now lent more than £2bn to small businesses in the UK. The firm is only the second marketplace lender in the UK to have accomplished the feat, with consumer lender Zopa hitting the milestone in late January.
After lending just £60m in August, Funding Circle set a monthly origination record in October, with £95m lent. The firm then lent more than £100m in November (becoming the first UK peer-to-peer lender to do so), and has lent around £100m in both December and January too.
Landbay Launches IF ISA Offer Today (P2P-Banking), Rated: AAA
Today secured by property p2p lending marketplace Landbay launches its Innovative Finance ISA (IFISA). The IF ISA offer carries an interest rate of 3,69%. The minimum investment amount for this product offer at Landbay is 5,000 GBP. There is no account opening fees, no ongoing fees and no transfer-in fee. There is a 50 GBP transfer-out fee.
Lending Works re-opens to IFISA investors (P2P Finance New), Rated: AAA
LENDING Works has re-opened its Innovative Finance ISA (IFISA) to investors, after experiencing “unbelievable demand” following this month’s launch.
The peer-to-peer lender had set an internal investment cap of £1m, which was filledwithin 24 hours due to an influx of new customers eager to take advantage of tax-free earnings before the end of the tax year.
Lending Works has now increased the cap to £5m due to increased loan volumes.
Assetz Capital hires Santander man Andrew Fraser for Northern Ireland push (Finextra), Rated: A
Assetz Capital, one of the UK’s largest and fastest growing peer-to-peer finance platforms, today committed to expansion in Northern Ireland under the guidance of recently appointed Regional Relationship Director, Andrew Fraser.
Fraser joins Assetz Capital from Santander UK Corporate and Commercial.
Assetz Capital has become known for its secured lending model where every loan is backed with property, and/or other realisable security in order to reduce the risk of actual loss for investors. As a result, the company has one of the lowest loss rates in the market.
A new Isa is offering tax-free returns of 12% – so what’s the catch? (The Guardian), Rated: A
It’s the new type of Isa offering returns of up to 12% – or perhaps even 20% in future. But are rates like this simply too good to be true?
Also, this is a lot more risky than sticking your cash in the bank or with National Savings & Investments. Your capital is at risk and, crucially, peer-to-peer isn’t covered by the official Financial Services Compensation Scheme, though many of the websites have their own safeguards in place.
There are three types of Isa: the cash Isa, the stocks and shares Isa, and now the innovative finance Isa, which allows investors to earn tax-free interest on their peer-to-peer loans when they are held within the Isa “wrapper”. Late last year the rules were extended so that these new products can also include debt-based crowdfunding, thereby allowing investors to lend money to things such as renewable energy projects and enjoy tax-free returns.
During the current tax year you can save up to £15,240 in one type of Isa or split the allowance across two or all three types. For example, you could save £10,240 in a cash Isa, £2,000 in a stocks and shares Isa and £3,000 in an innovative finance Isa. From this April, the total amount you can save each year into all Isas will increase to £20,000.
Two of the best-known are ethical investment platform Abundance, which allows people to get a return on their cash by funding renewable energy projects, and peer-to-peer platform Lending Works.
Others offering Isas include LandlordInvest, which lets people invest in residential buy-to-let mortgages and bridging loans, and is holding out the prospect of returns of “up to 12% per annum”; and LendingCrowd, which matches investors with small and medium-sized businesses seeking loans, and is offering a “target rate of return of 6% a year”.
Crowdfunding platform Crowd2Fund has an Isa and is quoting an estimated average return of 8.7% before fees and bad debts, while fellow crowdfunding site Money & Co, founded by City “superwoman” Nicola Horlick, says it aims to launch its Isa by early March.
Other firms that have been fully authorised but don’t appear to be marketing Isas yet include Folk2Folk, Peer Funding Limited, Crowd for Angels, British Pearl, Crowdstacker, Octopus Choice and CapitalStackers.
These investment trusts could help you to retire early (AOL), Rated: A
Investing in peer-to-peer lending can be a great way to boost your returns. But for investors who don’t want to go through the trouble of setting up their own account with a peer-to-peer lending platform, P2P Global Investments(LSE: P2P) offers an alternative route to gain access to the sector.
The investment trust, which focuses on buying peer-to-peer loans, offers investors exposure to the much larger US market, in addition to the UK, European and Australasian markets. This also adds diversification, which can help to reduce overall investment risk. In addition, the trust owns equity stakes in the lending platforms, which may offer investors potential capital gains on top of the steady income generated by its portfolio of loans.
Alternative Investing: Inbound marketing is the new cold calling (Redd-Monitor), Rated: B
The small print at the bottom of the alternative-investing.uk website explains that anyone wanting to hand over their cash to alternative-investing.uk has to declare themselves to be a Sophisticated Investor or High Net Worth Individual.
Anyone else should “exit the Website immediately”. Investors may lose the right to complain to the Financial Conduct Authority, or to the Financial Ombudsman Scheme. They may also have “no right to seek compensation from the Financial Services Compensation Scheme”.
According to Six & Flow (the company previously known as Grain that ran the media campaign), Heron Global Partners managed to raise £10.8 million in investments between January and October 2016. It’s odd (to say the least) that a company that has raised so much money is running its operations from two virtual offices and a co-working office.
Heron Global Partners is not registered with the Financial Conduct Authority. The company claims that it “does not provide investment tax or pension advice”. The company’s twitter account suggests otherwise:
Real Estate Crowdfunding Campaign Raises €1.8M to Construct Building in Madrid (Spanish News), Rated: A
The crowdfunded real estates platform, Housers has raised €1.8 million to construct their second building in Spain.
The crowdfunding campaign raised €1.2 million from 1,278 investors within 54 days.
Another €600,000 will be financed with a mortgage, to completed the investment.
Harmoney’s $ 200million Australian launch (Stuff), Rated: AAA
New Zealand’s largest peer to peer lender has opened its doors in Australia with A$200 million to lend.
Harmoney launched in New Zealand in late 2014, and since then has made over $410m of loans, with some of the money coming from ordinary investors seeking a better return on their money than they can get at the bank.
Now the peer to peer (P2P) lender has begun lending to Brisbanites, in a launch that’s more than a year later than Harmoney had once planned.
China regulators warn that 90 pc of peer-to-peer lenders could fail in 2017 (South China Morning Post), Rated: A
Nine out of 10 of the mainland’s peer-to-peer (P2P) lending platforms will struggle to survive this year as the government rolls out tightened regulatory supervisions, according to a multi-agency report on Friday led by the Beijing Bureau of Financial Work.
About 500 P2P companies, out of the total 4,856 players across the nation, are likely to maintain their operations this year, the report said.
The mainland initiated a review on P2P lenders following the introduction of tighter regulatory requirements in late 2016, such as the appointment of a custodian bank and full disclosure of the use of deposits.
In late 2015, Ezubao, one of the country’s largest P2P players, was found to have defrauded more than 1 million investors of about 100 billion yuan (US$14.57 billion).
PAYPAL IS LAUNCHING A FINTECH SCHOLARSHIP IN SINGAPORE (SMU), Rated: A
PayPal has announced that it will partner with SMU to roll out a fintech scholarship in Singapore worth S$180,000. Six undergraduates from the SMU School of Information Systems (SMU SIS) will receive S$30,000 through this scholarship over the next three years. They will also intern at PayPal, and gain access to the company’s business leaders, employees and resources.
The first scholarship is expected to be awarded to two undergraduates in the first half of this year.