- Today’s main news: dv01 partners with Upgrade. U.S. lawmakers try to stop sale of Chicago Stock Exchange to Chinese buyers. PayPal hires ex-Amazon exec to head lending. LendingClub expands Opportunity Fund partnership. Revolut raises $66M, adds bitcoin. Yirendai lawsuit dismissed. International RegTech Association launches.
- Today’s main analysis: 5 reasons fintech consolidation is inevitable.
- Today’s thought-provoking articles: Real estate investing vs. stocks. 2017 is a boom year for European VC investment. The dark side of digital finance.
- dv01 partners with Upgrade. AT: “dv01 already has similar partnerships with other online lenders. This partnership is a feather in the cap for Renaud Laplanche, who is making a nice comeback with Upgrade after last year’s fall out.”
- U.S. lawmakers try to stop Chinese from buying Chicago Stock Exchange. AT: “I’m curious as to whether the Trump Administration will weigh in on this considering that one of the president’s major talking points on the campaign trail was how the Chinese are beating the U.S. on the business front. If the Chinese do succeed in buying the stock exchange, it would be an interesting rebranding effort to see CHX go from Chicago Stock Exchange to Chinese Stock Exchange, not a far-fetched idea considering the plan to list Chinese companies on the exchange.”
- PayPal hires ex-Amazon exec for lending business. AT: “This signals PayPal’s intent to get serious about online lending. Played right, the company could become a major powerhouse in digital lending. They have the financial clout.”
- LendingClub expands access to business credit with Opportunity Fund.
- Real estate investing vs. stocks. AT: “I see no reason not to invest in both.”
- Why PayPal could join the payments buying spree. AT: “If PayPal doesn’t start making plays soon, they could be left in the dust. They need to expand and diversify. Buying up Klarna would be a huge feather in the cap and give the company a foothold in Europe and other parts of the world where hardly anyone knows they exist. As big as PayPal is, it’s disheartening that they haven’t expanded very far internationally.”
- LendingTree builds the 200 millionth predictive model on DataRobot. AT: “Predictive modeling has been around for a long time, but using machine learning tools to perform the tasks is picking up speed. Kudos to LendingTree for this milestone. AI is becoming an essential tool in financial services.”
- Orchard CEO Matt Burton has raised $44M. AT: “Congratulations.”
- Silicon Valley honors Munich Re U.S., Mozeika for insurtech leadership.
- Roostify, Financial Resources Federal Credit Union team up on mortgages.
- Even Financial opens marketplace for financial services advertisers.
- Western Union executive says Brexit, U.S. politics has hurt fintech.
- VirtualAdvisors.com launches new fintech tool.
- Advisor Group, Jemstep launch platform for financial advisors, retail investors.
- Financial advisors debate Consumer Finance Protection Bureau’s fiduciary rule.
- Cross River appoints SVP, GM of payments.
- Home Point Financial names executive managing director-chief strategy officer.
- Ascentium Capital sets record Q2 originations.
- Revolut raises $66M, adds bitcoin. AT: Congratulations! And it appears that other cryptocurrencies will soon follow.”
- Curve raises $10M in Series A.
- P2P wholesale ban sends business to other crowdfunding sectors.
- Victory Park Capital CEO buys 60K GBP stock.
- Darktrace valued at $825M.
- Will blockchain build a better finance industry?
- Green energy cries out for more investment.
- 5 reasons why fintech consolidation is inevitable. AT: “The focus is on challenger banks, but it’s a very good read.”
- 2017 a booming year for VC investment.
- Shine completes 2.8M Euro round.
- Legend Holdings may buy Banque international à Luxembourg.
- Bank rivals see disruption in PSD2.
- International RegTech Association launches in Switzerland. AT: “I can’t think of a better place for an international association of any kind to be than in Switzerland. On another note, I’m glad to see an international association for RegTechs. It will be interesting to see which companies, and which nations, support it the most.”
- The dark side of digital financial services. AT: “Some very interesting ideas brought out in this piece. A must-read.”
- United States
- dv01 Launches Strategic Reporting Partnership With Upgrade (Cision), Rated: AAA
- US lawmakers are trying to stop the sale of the Chicago Stock Exchange to Chinese buyers (Business Insider), Rated: AAA
- PayPal hires ex-Amazon exec for lending business (MarketWatch), Rated: AAA
- Expanding access to credit, one small business at a time (LendingClub), Rated: AAA
- Real Estate Investing versus Stocks: Returns and How to Get the Best of Both Worlds (Equities.com), Rated: AAA
- Why PayPal Could Join the Payments Buying Spree (Barrons), Rated: A
- LendingTree Builds the 200 Millionth Predictive Model Delivered on the DataRobot Cloud (BusinessWire), Rated: A
- Orchard CEO Matt Burton Started Off Running Fintech Meetups; Now He’s Raised $ 44 Million (Benzinga), Rated: A
- Silicon Valley Honors Munich Re US and Mozeika for Insurtech Leadership (Insurance Journal), Rated: A
- Financial Resources Federal Credit Union Teams with Roostify to Create Better Online Mortgage Experience (BusinessWire), Rated: A
- This Programmatic Marketplace Is Just For Financial Services Advertisers (Ad Exchanger), Rated: A
- Impact of Brexit, US politics being felt by fintech firms, says Western Union’s head of partnerships (CNBC), Rated: A
- VirtualAdvisors.com launches new FinTech tool (Sys-Con), Rated: A
- Advisor Group, Jemstep Launch Fintech Platform For Financial Advisors, Retail Investors (Benzinga), Rated: A
- CFP Board’s proposed rule changes prompt heated debate online (Financial-Planning), Rated: A
- Cross River Appoints SVP and General Manager of Payments Division (Cision), Rated: B
- Home Point Financial Names Chad Patton Executive Managing Director-Chief Strategy Officer (Marketwired), Rated: B
- Ascentium Capital Announces Record Second Quarter in Originations (Ascentium Capital), Rated: B
- United Kingdom
- UK fintech start-up Revolut raises $66 million, adds bitcoin (Reuters), Rated: AAA
- London fintech Curve raises $ 10M Series A (TechCrunch), Rated: AAA
- P2P wholesale ban boosts business for wider crowdfunding sector (P2P Finance News), Rated: A
- Victory Park Capital CEO buys £60k of fund’s stock (AltFi), Rated: A
- Darktrace valued at $ 825m as fintech firm Revolut secures new funding (The Telegraph), Rated: A
- Will blockchain be the building blocks of a better finance industry? (Elite Business Magazine), Rated: A
- Green energy “crying out” for investment, says F&P Sponsors (Bioenergy Insight), Rated: B
- Lawsuit Against P2P Lender Yirendai Dismissed (Crowdfund Insider), Rated: AAA
- The CEO of LeTV Financial Resigned. (Xing Ping She), Rated: A
- European Union
- 5 Reasons Why Consolidation of Fintech Ecosystem May be Inevitable (The Financial Brand), Rated: AAA
- 2017 ‘a storming year’ for venture capital investment (EuropeanCEO), Rated: AAA
- French fintech startup Shine completes a €2.8 million financing round (Tech.eu), Rated: A
- LEGEND IN TALKS TO TAKE OVER BIL: REPORT (Delano), Rated: B
- Bank rivals see a disruptive force in PSD2 (Payments Source), Rated: B
- International RegTech Association Launches, Lists Executive Board Members (Crowdfund Insider), Rated: AAA
- The Dark Side of Fintech: Navigating the Hidden Risks of Digital Financial Services (Chipin), Rated: AAA
- Melbourne invoice funder Timelio hits nine digits (AltFi), Rated: AAA
- How online lender Tic:Toc can approve a home loan in just 22 minutes (TechGuide), Rated: A
- A Better Deal (Business Today), Rated: AAA
- Online Bank’s Loans and Deposits Soar Past W1.2 Trillion (Chosun), Rated: AAA
- Lending potential in Africa (Biz Community), Rated: A
- The repackaging of U.S. fintech loans comes to Canada (Financial Post), Rated: A
dv01 Launches Strategic Reporting Partnership With Upgrade (Cision), Rated: AAA
dv01, the reporting and analytics platform that offers institutional investors transparency and insight into lending markets, today announced a partnership with Upgrade, Inc., the new consumer credit platform, whose founding team is led by Renaud Laplanche.
Under this partnership, all Upgrade investors will initially receive complimentary access to Upgrade data through dv01’s reporting and analytics platform, including use of dv01’s Portfolio Management solution. Investors will have a full suite of visualization tools at their disposal, making it simple to gain a high level portfolio overview or gather answers to complex questions involving loan composition, performance metrics, and credit metrics.
dv01 will also act as loan data agent for Upgrade’s securitizations, providing investors access to its Securitization Explorer, which includes loan level performance and composition details of upcoming deals, as well as reporting and analytics tools for use after a deal closes. Upgrade expects to access the securitization market on a quarterly basis.
US lawmakers are trying to stop the sale of the Chicago Stock Exchange to Chinese buyers (Business Insider), Rated: AAA
Eleven members of Congress asked the U.S. Securities and Exchange Commission on Monday to stop the sale of the Chicago Stock Exchange to a group led by China-based investors, saying the regulator lacks the ability to monitor the foreign buyers.
The proposal to sell privately owned CHX for an undisclosed amount to a consortium led by Chongqing Casin Enterprise Group (CCEG) has drawn attention because it would be the first time a U.S. exchange has been bought by Chinese investors. There are also U.S. investors in the group.
Casin Group, a privately held company that invests in real estate development and financial holdings, said its long-term goal is to list Chinese companies in the United States through CHX, which has locations in Chicago and New Jersey.
PayPal hires ex-Amazon exec for lending business (MarketWatch), Rated: AAA
PayPal Holdings Inc. said Tuesday it has hired Mark Britto, a financial-technology entrepreneur and a former executive at Amazon.com Inc., to lead its lending business.
Mr. Britto, 53, joins PayPal from Boku Inc., a company he founded that lets consumers buy goods and services using their mobile phones and pay for them alongside their usual bill from their telecommunications provider. He replaces Steve Allocca, who left PayPal in May to become the president of online lender LendingClub Corp.
The company currently uses cash to fund the $5.1 billion of consumer loans and around $600 million of small business loans it has on its balance sheet.
The unit has bolstered PayPal’s bottom line in recent years: the consumer-credit portion accounts for around 13% of PayPal’s annual operating profit, or roughly $280 million, according to analysts at J.P. Morgan Chase & Co.
Expanding access to credit, one small business at a time (LendingClub), Rated: AAA
Access to credit has long been a challenge for small businesses, often a chicken and egg scenario where owners need capital to grow, but can’t get the loan they need until they’ve grown. And, while access to capital has a key role in fueling economic mobility, job creation and the health of the middle class, traditional banks aren’t meeting small business’ needs, especially as it relates to minority communities and women entrepreneurs.
To help, we’ve expanded our partnership with Opportunity Fund, combining the best of high-tech and nonprofit lending, to provide underserved small businesses the loans they need to flourish. Now, small business owners living in California, Florida, Georgia, Illinois, Michigan, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, and Washington will have access to affordable credit.
Already this partnership has helped many entrepreneurs access capital and by 2020 Opportunity Fund plans to invest $400 million in over 10,000 small businesses.
Real Estate Investing versus Stocks: Returns and How to Get the Best of Both Worlds (Equities.com), Rated: AAA
The decision to invest in real estate or stocks doesn’t necessarily have to be either-or and there’s good reason to choose both.
Stocks offer advantages as well with higher liquidity and lower transaction costs. It’s difficult to build a diversified portfolio of property types and regions without several hundred thousand dollars in real estate investments. Not so with stocks where you can invest easily across the major sectors for less than $100 in commissions.
Despite the steep drop in property prices when the bubble burst in 2008, real estate has still outperformed stocks over the last 20 years.
Real estate has benefited from historically low interest rates over the past decade, providing cheap money on highly leveraged properties. Stocks have also benefited from lower rates but not to the extent as property investors.
The downside to REIT investing is that you don’t get the control or tax benefits you get in direct property ownership. I still own several rental properties as well as equity ownership in some real estate crowdfunding deals to benefit from the tax shelter of real estate investing.
Why PayPal Could Join the Payments Buying Spree (Barrons), Rated: A
PayPal has a strong presence in the U.S. and the U.K., but it’s less well-known in the rest of the world, Ellis notes. Given the fast pace of evolution in the digital-payments industry, “the window is closing rapidly on PayPal’s ability to expand organically into new markets,” she tells Barron’s Next. Rather than build up a user base and merchant base from scratch in new areas, which could take years, PayPal might decide to buy a company that has already done the heavy lifting.
Ellis thinks a European acquisition makes the most sense. She points to a number of attractive candidates in Europe, including payment processors Adyen and Wirecard. PayPal could also buy Klarna or outbid Vantiv for Worldpay. On a practical level, PayPal’s cash is mostly sitting in Europe.
And the company has a good deal of cash: it could have about $10 billion by the end of the year once it sells off its credit receivables business, Ellis notes.
LendingTree Builds the 200 Millionth Predictive Model Delivered on the DataRobot Cloud (BusinessWire), Rated: A
DataRobot today announced a new milestone in AI adoption: since January 2015, customers have run more than 200 million predictive analytics models in the DataRobot Cloud. LendingTree, the online loan marketplace that connects consumers with multiple lenders, banks, and credit partners, achieved this milestone for the company.
Using DataRobot, companies quickly deploy machine learning models to uncover hidden opportunities and predict future outcomes from vast amounts of data. Previously deployed by expensive and elusive data scientists, these sophisticated models have the ability to learn without being explicitly programmed, making them fundamental to big data strategies.
Orchard CEO Matt Burton Started Off Running Fintech Meetups; Now He’s Raised $ 44 Million (Benzinga), Rated: A
What’s true in real estate is true in fintech—location, location, location is everything. Matt Burton, CEO of Orchard Platform, a technology and data analysis provider for online lending platforms, is living proof of that.
Despite his vision of building an electronic market for loan trading, Burton started Orchard without any network in the financial services space, he said in a fireside chat discussion at the 2017 Benzinga Global Fintech Awards.
Orchard has raised $44.7 million to date, Burton said at the event.
Silicon Valley Honors Munich Re US and Mozeika for Insurtech Leadership (Insurance Journal), Rated: A
Plug and Play presented Munich Re and Mozeika with one of 10 Corporate Innovation Awards to those it calls its “most engaged partners” in various accelerators that in addition to insurtech include fintech, health and wellness, food and beverage, mobility, new materials and packaging, brand and retail, travel and hospitality, and Internet of Things (IoT).
Some of the insurtechs Munich Re has invested in and/or partnered with include Trov, Lemonade, Root, Next, Slice, Bunker, Bought By Many and Helium.
Financial Resources Federal Credit Union Teams with Roostify to Create Better Online Mortgage Experience (BusinessWire), Rated: A
Roostify, a provider of automated mortgage transaction technology, today announced that Financial Resources Federal Credit Union (FRFCU) has implemented Roostify’s mortgage technology platform in order to create a better online experience for its members applying for or refinancing a home loan.
Financial Resources members are now able to complete their entire mortgage application online, including using a mobile device or tablet. They can upload their financial information directly into the platform and communicate with a loan officer during every step of the process. When they are on the go, they can easily upload and sign documents without a trip to the bank, saving precious time in the closing process.
This Programmatic Marketplace Is Just For Financial Services Advertisers (Ad Exchanger), Rated: A
The data just isn’t there, said Phillip Rosen, CEO and co-founder of Even Financial, an ad tech provider for financial marketers.
On Tuesday, the company added a programmatic marketplace offering to its existing supply-side API to help connect app owners and financial institutions with specific targeting needs.
Rather than paying on a cost-per-click basis, Even Financial’s programmatic marketplace operates on a real-time pricing model that rewards publishers at the top of the funnel when offers are served to pre-approved consumers.
Impact of Brexit, US politics being felt by fintech firms, says Western Union’s head of partnerships (CNBC), Rated: A
Financial technology (fintech) has felt the impact of Brexit, U.S. politics and a perceived direction towards protectionism, Western Union’s partnerships lead has said.
Christina Hamilton, head of partnerships and international expansion at the global payments and transfers company, said that protectionism and a populist surge against globalization was a serious concern for the fintech industry.
She said that her views should not necessarily be regarded as the views of Western Union, but was clear that her business had been affected.
VirtualAdvisors.com launches new FinTech tool (Sys-Con), Rated: A
VirtualAdvisors.com announces the launch of its first artificial intelligence (AI) powered market intelligence campaign.
The Newport Beach FinTech startup wants to scrape all the data on the web to put it into a structured format, with the intent to specifically make it useful to the financial service industry for many different business purposes.
The platform offers free access for family offices as well as retail and institutional investors who can use it as an educational and due diligence tool for various asset classes and specific products.
The market intelligence campaigns will be periodically launched and focus on specific alternative investment niches, starting with 1031 exchanges.
Advisor Group, Jemstep Launch Fintech Platform For Financial Advisors, Retail Investors (Benzinga), Rated: A
Advisor Group has partnered with Invesco Ltd.’s Jemstep to launch an onboarding, advice and data aggregation platform for both financial advisors and retail investors.
The new platform is expected to offer fintech solutions to challenges commonly faced by independent financial advisors, according to Advisor Group.
They include a paperless process for opening new client accounts, and a web portal where clients can monitor their accounts.
The transferring of client assets to brokerage and advisory accounts will be handled using a paperless, e-signature based process, according to the announcement by Advisor Group and Jemstep. The platform is integrated with Pershing for brokerage accounts and Envestnet for advisory solutions.
CFP Board’s proposed rule changes prompt heated debate online (Financial-Planning), Rated: A
Richard Feight (adviser)
I applaud the CFP Board for the proposed new standard for delivering all financial advice under a fiduciary standard. This is clearly a move towards establishing more credibility in the eyes of the public, media and practitioners. It’s also a move towards establishing financial planning as a true profession.
Thomas Mayo (adviser)
I mostly like the new CFP rules as explained on the site. The problem is that I now have too many government and professional groups telling me their view of what is best for my clients…. Sorry, but the odd person out may be the CFP Board. The government agencies carry more oomph! No one in the past 20 years has hired me because of my CFP credentials!… If the DOL Rule is enacted in January 2018 as it is, there is a good chance I will cancel my CFP certification.
Genti Cici (adviser)
I don’t believe [the proposed standards] go far enough. They could even backfire and give false hope that now (with the new standards) ALL CFPs are fiduciaries, at ALL TIMES, which is what I first thought. But if we read carefully at part B, we see that while the standards call for a fiduciary duty, the CFP has room NOT to use the standards.… The CFP can still be paid commissions and not be a fiduciary at certain times. Thus clients will still be confused.
Robert Burns (adviser)
I adamantly protest the proposal. When does it get to be too much bureaucracy? We have FINRA, the SEC, the IRS and the Department of Labor all seeing who can out-regulate whom. It is getting ridiculous …. By your heaping more onto us, you end up increasing the cost of our doing business. Because you all want it make it easy for us to be sued, the cost of our insurance will go up. Let the regulators regulate. You stay out of it. …. Ninety-nine percent of us are good people intent on doing the best possible job for our clients. Now get out of our way!
Cross River Appoints SVP and General Manager of Payments Division (Cision), Rated: B
Cross River announced today the appointment of Ben Isaacson as SVP and General Manager of its Payments Division. With 20 years of experience and a sophisticated understanding of the payments industry, Isaacson will be responsible for managing and growing Cross River’s full suite of payments products and clients.
Isaacson joins Cross River after six years at JPMorgan Chase and , most recently as Product Executive within Treasury Services, where he was responsible for the product development, commercialization and industry development for Real Time Payment services. Prior to this role, Isaacson led the Wholesale Payments Strategy team at JPMorgan Chase, and was responsible for long-term growth initiatives, such as business-to-business payments strategy and FinTech engagement. Before JP Morgan Chase, Isaacson spent seven years at MasterCard in the Strategic Planning and MasterCard Advisors’ Payments Strategy group, focusing on growth strategies and opportunities for MasterCard and its bank clients.
Home Point Financial Names Chad Patton Executive Managing Director-Chief Strategy Officer (Marketwired), Rated: B
Home Point Financial Corporation (“Home Point”), a national, multi-channel mortgage originator and servicer, today announced that Chad Patton has been named Executive Managing Director-Chief Strategy Officer. In this role, he will focus on funding and capital planning, business intelligence and strategic initiatives.
Mr. Patton has over 20 years of experience in the mortgage and financial industry. Prior to joining Home Point, he served as Executive Vice President at Nationstar Mortgage, overseeing production, capital markets and business development activities. Previously, he was Managing Director at Lone Star Funds, where he oversaw financial services private equity investments, including the formation and growth of Caliber Home Loans.
Ascentium Capital Announces Record Second Quarter in Originations (Ascentium Capital), Rated: B
Ascentium Capital LLC, a leader in small business financing, announced a record quarter in origination volume, reaching $255.7 million. This represents a 14.0% increase quarter-over quarter.
UK fintech start-up Revolut raises million, adds bitcoin (Reuters), Rated: AAA
The “global banking alternative” Revolut has raised $66 million in a fund-raising round, the start-up said on Wednesday, in the latest sign that London is so far weathering Brexit to remain a global financial-technology center.
Led by Europe- and San Francisco-based venture capital fund Index Ventures, the fund-raising round was one of the biggest ever Series B rounds in Europe. It should provide some comfort to the British capitol as it jostles to hold onto its reputation as Europe’s leading hub for the nascent fintech sector.
Revolut also announced that it is adding digital currency bitcoin BTC=BTSP to its app in response to high demand from customers. Users will now be able to hold, exchange, spend and transfer bitcoin the same way they use other currencies. Rival cryptocurrencies Ether and Litecoin will soon be added.
London fintech Curve raises $ 10M Series A (TechCrunch), Rated: AAA
Curve, the London fintech startup that offers a platform that lets you consolidate all your bank cards into a single Curve card and manage your money, is on the verge of closing $10 million in Series A funding.
According to sources, the round, which could be announced as soon as this week, is being led by Connect Ventures, with participation from Santander Ventures, the venture arm of Spain-headquartered bank Santander Group.
Investors are banking providers Santander InnoVentures, Investec, Connect Ventures, Speedinvest, Oxford Capital, Breega Capital, and Samos Investments. Individual investors include: Henry Ritchotte (ex Deutsche Bank COO), Gael de Boissard (ex Credit Suisse board member), Alessandro Hatami (The Pacemakers; ex Lloyds, Paypal, GE Capital), Paul Townsend (Vitesse PSP, Barclays, WorldPay), Emilian Popa (Rocket Internet, Naspers, Groupon), Rohan Haldea (Apax Partners)
P2P wholesale ban boosts business for wider crowdfunding sector (P2P Finance News), Rated: A
THE FINANCIAL CONDUCT AUTHORITY (FCA)’s clampdown on peer-to-peer wholesale lending activities is pushing lenders towards other types of crowdfunding platforms to obtain finance.
P2P platforms have had to stop lending to other lenders after the City watchdog confirmed its position on the practice earlier this year, warning that it could be in breach of the rules.
“The recent changes in the P2P sector effectively pushed that type of company to the crowdfunding space,” said Andrew Adcock, chief marketing officer at Crowd for Angels.
The bond- and equity-based lending platform has recently launched a fundraising for The Asset Exchange, an asset-backed lender operating in the car finance market.
Victory Park Capital CEO buys £60k of fund’s stock (AltFi), Rated: A
Richard Levy, a director of the £351m VPC Speciality Lending Investment Trust, has increased his holding in the fund.
Levy is founder and CEO of the trust’s investment manager Victory Park Capital as well as a board member of the fund. He bought 71,916 shares at an average price of £0.8275, totalling £59,510.
Darktrace valued at $ 825m as fintech firm Revolut secures new funding (The Telegraph), Rated: A
Darktrace, a cyber security firm backed by Mike Lynch, the Autonomy founder, has received $75m (£58m) in a funding round that values the company at $825m.
Darktrace, created by mathematicians from the University of Cambridge, claims to use artificial intelligence software that mimics the characteristics of the human immune system to detect and counter cyber threats.
Darktrace’s funding round, which brings it close to the $1bn “unicorn” valuation that represents success to many start-ups, was led by Insight Venture Partners, a New York group that has previously backed Twitter and Alibaba. Its biggest shareholder remains Invoke Capital, which was set up by Mr Lynch after Autonomy was sold to HP for $11.7bn in 2011.
Will blockchain be the building blocks of a better finance industry? (Elite Business Magazine), Rated: A
In fact, a study in 2016 by Accenture, the management consultancy, found that just 29% of respondents thought banks were trustworthy. But perhaps instead of trusting banks, people might be willing to place their faith in code instead. Blockchain has been around for some time now but it’s only relatively recently that people have started to speak of it as a sort of truth serum for the way transactions are recorded. If things keep progressing as they are, it could seriously disrupt financial services companies – or perhaps even restore people’s confidence in them.
Many of these innovations were inspired by a frustration with the status quo: Nuggets, a service that allows people to make payments or log in without having their data stored, was born out of founder Alastair Johnson’s discomfort with the way personal information was traditionally being handled by brands.
In fact, Santander has estimated that blockchain could save banks up to $20bn each year in administrative costs. However, it could also herald the start of a peer-to-peer lending regime that’s cheaper and more appealing to consumers.
Green energy “crying out” for investment, says F&P Sponsors (Bioenergy Insight), Rated: B
Green energy businesses are “crying out” for investment, according to P2P lending specialists F&P Sponsors, and are increasingly turning to the alternative financing sector to get the money they need.
Recently, the P2P lending specialists secured funding for BioDynamic UK, which owns and operates an AD plant in Colwick, Nottinghamshire. BioDynamic UK had been rejected 25 times in attempts to win funding, before F&P secured them £1.5 million in just two weeks.
Lawsuit Against P2P Lender Yirendai Dismissed (Crowdfund Insider), Rated: AAA
Yirendai (NYSE:YRD), a China based peer to peer lender that is a sister company of CreditEase, has shared that a lawsuit filed against it in 2016 has been completely dismissed. The putative class action lawsuit was brought by multiple law firms pertaining to the decline in the share price. Ostensibly, the legal action was taken in part due to actions by the Chinese government and not Yirendai as the government was in the midst of issuing new rules to regulate the exceptionally large P2P lending industry. Yirendai has facilitated approximately RMB 32.3 billion (USD $ 4.75 billion) in loans from March 2012 through December 31, 2016.
Shares in Yirendai have moved higher on the news. The American Depository Shares (ADS) were priced at $10 per share when they went public in 2015. Today they stand at over $27/share.
Read the order here.
The CEO of LeTV Financial Resigned. (Xing Ping She), Rated: A
Recently, Wang Yongli, the CEO of Letv Financial, confirmed that he has resigned from Letv. When it comes to his next stop, Wang only said he would take a break and hasn’t revealed too much. Wang joined Letv Financial in August 2015, acting as the CEO and vice president of financial service sector. Before that, he had worked in Bank of China (BOC) for over 26 years, and playing the role of vice president for about 10 years.
Since the Letv funding crisis broke out from the end of last year, senior executives from different business sectors of Letv ecosystem left in session, now it spread to financial sector. Now, the parent company Letv Holdings is in trouble again. According to a civil decision made by the court, three companies held by Jia Yueting couple and deposit asset amounted to $182.21million have been applied for a freeze by banks. Under the heavy crisis, how long could Letv finance sustain for is remains to be seen.
5 Reasons Why Consolidation of Fintech Ecosystem May be Inevitable (The Financial Brand), Rated: AAA
1. Challenger Banks Need to Achieve Scale
This model will increasingly make it difficult for any individual challenger bank to achieve significant scale and to compete effectively with large traditional banks. Burnmark’s primary research also showed that challenger banking users are not fully loyal yet – most will stay with the challenger bank until their customer service expectations are met.
2. Traditional Banks Need to Improve Customer Experience
The most interesting strategies from challenger banks involve targeting the banking needs of traditionally under-served, niche segments like students, freelancers, small businesses, refugees and immigrants.
Challenger banks are proving that there is viable and commercial sense in targeting niche segments that were not traditionally profitable for the big banks.
3. Challenger Banks Lack Product Diversity
Roughly half of challenger banks today offer only basic products like savings and checking/current accounts – and this is a gap that can be successfully filled with collaboration within the space.
4. Challenger Banks Redefine Operational Structures
The biggest challenge any large banking operation faces today is costs – finding operational efficiency in its decades’ worth of legacy systems and non-strategic investments in outdated IT systems. The biggest desire for a traditional bank in today’s world of heavy fintech competition is to build digital technology from scratch, focusing on openness, transparency, efficiency, low costs and with the ability to future-proof disruption.
5. The Importance of Digital Banking
Both traditional banks and challenger fintech banks are using digital technology as an important component of their operational strategies. Digital technology is used to acquire and retain customers as well as to find cost efficiencies.
One way or the other, most challenger banking start-ups will be in a better competitive position with larger banks as partners, and vice versa. With the number of partnership announcements made around Money2020 Europe, the industry is clearly turning to maturity and scalability through collaboration.
2017 ‘a storming year’ for venture capital investment (EuropeanCEO), Rated: AAA
2016 was a record year for venture capital investment in Europe. Businesses raised €16.2bn – up 12 percent on 2015. Freddie Achom, founder and CEO of Rosemont Group, takes a look back at the trends of the last 12 months, and suggests where the UK and Europe may be heading. You can watch more of our conversation with Freddie, where he discusses how crowdfunding is disrupting the venture capital industry, and how Rosemont Group is innovating in the private equity space.
French fintech startup Shine completes a €2.8 million financing round (Tech.eu), Rated: A
Shine, a company that provides an administrative and financial management platform for freelance workers, raised €2.8 million from Daphni, Kima Ventures, and several business angels in a recent financing round.
Shine offers freelancers a multitasking solution platform that combines online banking with contract and invoice management, streamlining administrative and financial tasks for those who work independently.
LEGEND IN TALKS TO TAKE OVER BIL: REPORT (Delano), Rated: B
Legend Holdings is in talks with Precision Capital, the Luxembourg-based Qatari investment vehicle that owns the Bil shares, Reuters reported on 11 July.
The deal is valued between €1bn-€1.5bn, according to Reuters.
Bank rivals see a disruptive force in PSD2 (Payments Source), Rated: B
Information sharing is about to get much different in Europe, giving bank alternatives such as Klarna more to work with as they compete against the financial services establishment.
“In northern Europe most countries have only around five banks that dominate the entire market after 20 years of consolidation,” said Jim Lofgren, CEO of Klarna in North America.
International RegTech Association Launches, Lists Executive Board Members (Crowdfund Insider), Rated: AAA
The non-profit International RegTech Association (IRTA), incorporated in Switzerland in May, has launched to provide a united community of individuals and organizations, with a shared vision to innovate, advance, and influence the future of Regulatory Technology (Regtech).
The IRTA’s objectives include:
- Operate in key markets and economies, internationally
- Support the entire Regtech ecosystem
- Represent the interests of Regtech providers and consumers globally – including
technology firms, service providers, professional advisers, and financial institutions
- Engage and liaises with the most influential financial regulators and academics
- Promote the advancement of the Regtech profession, through Regtech research,
innovation initiatives, and standards development
- Support Regtech accelerators, and delivers professional education, and certification
- Work in collaboration with existing industry Associations, Agencies and other
The Dark Side of Fintech: Navigating the Hidden Risks of Digital Financial Services (Chipin), Rated: AAA
On one end of the risk spectrum are the risk-taking fintech startups. These fast technology adopters are disrupting traditional financial services and their delivery. Circumventing regulation is part of their cost advantage, but also their weakness. Lacking strong credit and capital adequacy standards, P2P lenders have loaned to terrorists, money launderers and hundreds of fictitious companies. Without deposit insurance, hacked cryptocurrency exchanges have gone out of business, leaving depositors high and dry. More digital disruptions are being introduced. New lending platform SALT is using cryptocurrencies as collateral for loans.
Despite the credit risks, these fintech businesses are taking market share from traditional financial services firms.
Over 50 percent of bank customers are now asking for similar low-cost online lending (P2P lending), wire transfer (P2P transfers) and investment management (robo-advisor) services.
A recent default on an Alipay-facilitated investment has highlighted the laxer credit standards. Investors who crowdfunded Chinese mobile phone maker Cosun (via Alipay on their mobile phones) face a loss of $45 million following a bond default. AliPay’s rapid expansion through parent Ant Financial into a suite of digital financial services for its 400 million registered users is the model of the future. But the default has raised concerns as China’s consumer e-finance leader integrates its P2P lending, insurance and investments starting at 1 renminbi with global wire transfer stalwart MoneyGram and its 350,000 agencies worldwide.
Even with digital credit information easily accessible, the increase in competition in fintech – China alone has 5,000 peer-2-peer (P2P) lenders — is pushing financial services firms to relax credit rules to compete for customers. Industry leader the Funding Circle has maintained a default rate under 2% on £2.3 billion in loans originated since 2010, averaging 5% returns, but for the broader P2P loan market, default rates are rising .
Melbourne invoice funder Timelio hits nine digits (AltFi), Rated: AAA
Melbourne-based peer-to-peer lender Timelio has hit the nine-digit mark, having successfully funded A$100 million in invoices through its platform since it was launched two years ago.
Like Qupital in Hong Kong and Capital Match in Singapore, Timelio provides a two-way marketplace for invoices and offers SMEs an easy online solution for working capital problems.
How online lender Tic:Toc can approve a home loan in just 22 minutes (TechGuide), Rated: A
Thanks to this connected world we live in, Tic:Toc can give you an answer on one of the biggest financial decisions of your life in 22 minutes, not 22 days.
Tic:Toc is based in South Australia and offers the world’s first complete online home loan platform.
The online business is backed by Bendigo and Adelaide Bank after being awarded a $900,000 grant from the South Australian government.
To be offered a loan, a customer must have at least 20 per cent deposit for the property they want to buy as well as the fees and charges.
The property you’re purchasing must be in a major capital city which, at this stage, excludes Tasmania and the Northern Territory.
Tic:Toc performs a credit check and can even check the value of your current property.
A Better Deal (Business Today), Rated: AAA
As a business model, P2P lending is still at a nascent stage in India. According to Tracxn, there are 63 pure-play companies in this domain such as Faircent, Lendbox, Capital Float, Indifi Technologies and i-Lend.
P2P is a simple concept, but its very nature mandates a robust system for assessing the creditworthiness of borrowers. To make that cut, i2i gathers as much information as possible about people looking for loans (yes, it looks at their social media profiles as well), collects all relevant documents and verifies them. Each profile is then automatically analysed and put under one of the three tabs – Accepted, Rejected and On border. Next, its underwriters manually go through the borderline cases and ask for more information to give them a specific status. They also list the strengths and concerns regarding each ‘Accepted’ borrower, taking into account factors such as incomes, liabilities and CIBIL scores. The company receives an average of 4,000 loan applications every month, out of which only 50-60 per cent people complete the entire application process and out of that, only 60-70 applications get accepted, says Singh.
The start-up has also initiated a ‘One loan, One Interest’ policy for every risk category.
The company currently makes money from the fees paid by its registered users. While investors pay a one-time registration fee of `500, potential borrowers just need to pay `100. Additionally, an investor has to pay a service fee, which is 1 per cent of the total amount invested on the platform. Again, based on the risk profile, a borrower has to make an upfront payment of 3-6 per cent of the loan.
Online Bank’s Loans and Deposits Soar Past W1.2 Trillion (Chosun), Rated: AAA
Korea’s first online lender K-Bank said Tuesday that the amount of loans extended and deposits collected has exceeded W1.2 trillion just 100 days after its launch (US$1=W1,152).
The online bank has racked up 400,000 customers so far.
Lending potential in Africa (Biz Community), Rated: A
According to the Africa and Middle East Alternative Finance Benchmarking Report, Kenya and South Africa are leading the P2P business lending market in Africa. However, 90% of online alternative finance originated from platforms headquartered outside of Africa.
Furthermore, the East Africa region has the largest market share of the African alternative finance market. In 2015, East Africa accounted for 41% of total African market share, while West Africa accounted for 24% and Southern Africa accounted for 19%.
The repackaging of U.S. fintech loans comes to Canada (Financial Post), Rated: A
But the news that fixed income manager Kilgour Williams Capital has, after about two years of due diligence, launched a credit fund that will buy high interest consumer loans from U.S. fintech companies funded with capital from Canadian high net worth and institutional investors, is significant for other reasons as well.
And for KiWi Credit Fund — which has nothing to do with fruits or birds — the concept makes enough sense that a well known asset manager has anted up $30 million to become the lead investor.
But to our knowledge we are the first Canadian-managed fund to invest in this space,” said Colin Kilgour, a founder at Kilgour Williams, a firm best known for managing the program put in place after the $30 billion asset-backed commercial paper froze a few years back.