- Today’s main news: SoFi CEO: why Ethereum is worth more than Bitcoin. Affirm has 1,000 retail partners. Wells Fargo joins digital mortgage revolution. AutoGravity has half a million users. LendInvest launches retail bond offering. N26, Lydia support Apple Pay in France. Borrowell raises $57M in Canada.
- Today’s main analysis: RateSetter moves to protect users.
- Today’s thought-provoking articles: Takeaways from acting comptroller’s OCC fintech charter comments. Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act How SoFi develops its financial service offerings. Yirendai’s growth and valuation trajectory.
- SoFi CEO: why Etherium is worth more than Bitcoin. GP:”The Crypto and blockchain spaces have been on fire for the last few months. Like in many spaces and in p2p lending at first people first think it’s nothing new, then it is exuberant, and finally the space pops and it becomes reasonable. I think we are in the exuberant phase. I do find it very interesting how the CEO of a multi billion dollar company has clearly done his homework on ETH vs BTC and is very knowledgeable and interesting in using cryptos in their business.”AT: “An interview with SoFi’s Mike Cagney reveals why the company is betting on Ethereum instead of Bitcoin for minting its title insurance plans. I hope it catches on because I’d really like to see mass adoption of public ledger technology.”
- How SoFi is developing its financial services offerings. AT: “Mostly a rehash of what readers have learned about SoFi, with some updated information regarding distributed ledger technology and other latest plans.”
- Affirm now has 1,000 retail partners. GP:”Affirm raised in total $420mil and started in 2012. This means roughly $420k/retail partner. A great data point given the money they raised and the time in the market. “AT: “Congratulations. I’m looking forward to the day when they can say they have 10,000 partners.”
- Affirm’s challenge to retailers. AT: “Max Levchin hits the proverbial nail on the head. Millennials aren’t the only ones who’d like to see financial services become more transparent. But they’re a powerful enough consumer bloc to make it happen.”
- Wells Fargo gets on board with digital mortgage. GP:”Wells Fargo already made waves when they started their own online small business lending solution which is growing very nicely. I think this move makes a lot of sense. “
- AutoGravity has more than 500,000 users. AT: “Congratulations. This is an incredible achievement. SoFi has only 250,000 members. These mobile auto lending pioneers expect to see 1 million downloads of their app by year’s end, and I’d like to see that happen.”
- Fundrise announces new eFunds.
- PayPal completes acquisition of TIO Networks.
- LendKey announces Series C funding. GP:”$8 million in equity and $5 million in debt financing”
- Acorns on track to do 1B trades this year.
- Unifund CEO cautions to stop getting lost in averages. AT: “The message is that consumers look at credit differently than they did 50 years ago. For that reason, subprime consumers shouldn’t be viewed as less than worthy of credit, or bad risks. I agree that judging credit risk should change along with consumer attitudes towards credit.”
- BoA goes mobile on credit lines, business loans.
- Consumers fared well under 2016 fed rate hike.
- Banks that don’t invest in tech risk falling behind permanently. AT: “I would say they risk becoming obsolete.”
- A banker says let SoFi join the club. GP:”I think the bank club has no choice but to let SoFi in one way or another.”
- Georgia banks are less stressed but worried about lending slowdown.
- James closes $2.7M funding round. GP:”Formerly known as CrowdProcess, a New York-based credit risk startup, closed a $2.7M funding round.”
- The generation gap among investors.
- Takeaways from acting comptroller’s OCC fintech charter comments. GP:”Acting Comptroller of the Currency, Keith Noreika, came strong to the mic, roundly stating the charter is a “good idea””
- Blend intros mobile app for loan officers.
- Should financial advisers offer SRI?
- Mastercard acquires Brighterion to enhance AI ability.
- Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act GP:”The ability for banks to sell loans to non-banks is vital to the capital markets ecosystem in general, and to consumers in particular who are getting hurt as access to credit is made more difficult and more expensive.”
- LendingTree promotes Sam Mischner to chief sales officer, head of mortgage.
- LendInvest launches retail bond offering. GP:”I personally think that making investment simpe, a guaranteed 5.25% return, is the way to go. I think the US entities like Lending Club and Prosper should consider a similar product where they offer retail investors a bond at x% fixed that is in line with their existing returns and make it extremely simple to invest in what is now private debt and not p2p lending anymore.”
- RateSetter protects investors with its own money. AT: “A little more detail on RateSetter’s situation with its provision fund.”
- Monzo rolls out current account.
- TransferWise cofounders swap CEO role again. GP:”CEOs burn out. It is wise to bring fresh blood, while there are obvious risks (how many companies fail because the new CEO drives them in the wrong decision). The calcualtion is: will the old experienced and proven CEO make the company fail because they burn out and run out of energy or is it riskier to try with somebody different?”
- Aire raises $5M in Series A. GP:”Aire is next-gen Credit Scorer . “
- The lines are blurring between alternative, traditional SME finance.
- Permira invests in Klarna.
- Bank of England opens up payments.
- No existential crisis for banks says HSBC digital chief. GP:”New approaches and new technology are always a threat. Ignoring it is probably the biggest mistake somebody can do. Does anybody know what a Blackberry is? No, not the fruit.”
- Is crowdfunding the stable option in 2017?
- Receipt Bank secures $50M in funding. GP:”More funding today! It is raining funds in fintech.”
- Alternative lending for Scottish property borrowers.
- Zopa says a new kitchen increases ROI by 50%.
- Opinion split on best P2P marketing techniques.
- N26, Lydia support Apple Pay in France.
- Crowdfunding and crowdlending. AT: “A podcast interview with Kameo’s CEO, in German.”
- United States
- Why Ethereum Is Much More Valuable Than Bitcoin (Fortune), Rated: AAA
- How SoFi is developing its financial services offerings (Tearsheet), Rated: AAA
- Affirm now has 1,000 retail partners (TechCrunch), Rated: AAA
- Affirm Challenges Retailers, FIs To Practice ’Honest Finance‘ (PYMNTS), Rated: AAA
- Nation’s largest lender finally hops on digital-mortgage bandwagon (Mortgage Professional America), Rated: AAA
- AutoGravity Now Has Over 500,000 Users (Crowdfund Insider), Rated: AAA
- Fundrise Officially Announces New eFunds (Crowdfund Insider), Rated: A
- PayPal Completes Acquisition of TIO Networks (BusinessWire), Rated: A
- LendKey Announces Series C Funding (PR Newswire), Rated: A
- Mobile savings and investment service Acorns is on track to do 1 billion trades in 2017 (TechCrunch), Rated: A
- Unifund CEO Consumer Credit Caution: “Time To Stop Getting Lost In The Averages” (PYMNTS), Rated: A
- Bank of America Unveils New Mobile Capability to Apply for Business Advantage Term Loans and Credit Lines (BusinessWire), Rated: A
- December 2016 Fed Rate Hike: Most Consumers Fared Well, But It’s a New Dynamic for Consumers and Lenders Alike (TransUnion), Rated: A
- Banks That Don’t Invest in Technology Risk Falling Behind Permanently (Forbes), Rated: A
- I’m a banker and I say let SoFi into the club (American Banker), Rated: A
- Ga. banks less stressed, but lending slowdown a worry (myAJC), Rated: A
- Credit Risk Startup James Closes $ 2.7M Funding Round (Finsmes), Rated: A
- Investors Approach Investing Differently Across Generations (Plan Adviser), Rated: A
- OCC FinTech Charter in Trump Administration Cards (JD Supra), Rated: A
- Access Anytime, Anywhere Powers Better Consumer Lending (Blend), Rated: A
- Robos are offering SRI, so shouldn’t live advisers? (Investment News), Rated: A
- Mastercard Enhances Artificial Intelligence Capability with the Acquisition of Brighterion, Inc. (BusinessWire), Rated: A
- Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act (H.R. 3299) (Factory Email), Rated: B
- LendingTree Announces Promotion of Sam Mischner to Chief Sales Officer and Head of Mortgage (PR Newswire), Rated: B
- United Kingdom
- Fintech lender LendInvest to launch retail bond offering (AltFi), Rated: AAA
- RateSetter moves to protect its investors (Business Insider), Rated: AAA
- Monzo gently rolls out current account (Banking Tech), Rated: A
- TransferWise’s cofounders have swapped the CEO role between themselves again (Business Insider), Rated: A
- Next-gen Credit Scorer Aire Raises $ 5m in Series A Funding from Deep-tech VCs (Fintech Finance), Rated: A
- The Lines Are Blurring Between Alternative, Traditional SME Finance (PYMNTS), Rated: A
- Permira Joins Payments Rush by Buying Into Sweden’s Klarna (U.S. News), Rated: A
- Bank of England opens up payments systems to spur fintech (Tribune), Rated: A
- There is no ‘existential crisis’ challenge for banks from fintech, HSBC’s digital chief says (CNBC), Rated: A
- Crowdfunding: the stable option in 2017? (The C Suite), Rated: A
- Boost for UK fintech as Receipt Bank secures huge $ 50 million in funding (Business Insider), Rated: A
- Perfect storm for Scots property borrowers (Scotsman), Rated: A
- Zopa’s Home Improvement Index Reveals: A New Kitchen Can Deliver Over 50% ROI (Crowdfund Insider), Rated: A
- Opinion split on best P2P marketing techniques (P2P Finance News), Rated: B
- Yirendai Limited: A Growth Play At Deeply Discounted Valuations (Seeking Alpha), Rated: AAA
- European Union
- N26 and Lydia announce Apple Pay support in France, but major banks are still missing (TechCrunch), Rated: AAA
- Crowdfunding and Crowdlending (Soundcloud), Rated: A
- Finstar commits $ 150m to fintech investment (Finextra), Rated: A
- Baloise invests in insurtech company Trov (Baloise), Rated: A
- Factor in the robo-advice (The Australian), Rated: A
- Online Lender Prospa is NSW State Winner in 2017 Telstra Business Awards (Crowdfund Insider), Rated: B
- How Fintech Revolution Is Making Way For A Potential $ 5 Bn Online P2P Lending Empire In India (Inc42), Rated: A
- Singapore Based Bridge Data Centres Looks To Pour $ 500 Mn Into India (Inc42), Rated: B
- Borrowell raises $ 57M in New Funding to Expand Credit Education and Lending (GlobeNewswire), Rated: AAA
Why Ethereum Is Much More Valuable Than Bitcoin (Fortune), Rated: AAA
As lending startup SoFi expands from student loans to full-service banking, it is also venturing into one of the trendiest areas among big Wall Street banks at the moment: blockchain.
An upstart cryptocurrency, Ethereum’s price has surged so dramatically in recent months that it now commands nearly as much market share as Bitcoin itself. Driving that rise is excitement about the way Ethereum allows its blockchain technology to be used to develop myriad other projects, as Cagney described.
In particular, SoFi, which is valued at more than $4 billion, is exploring a way to use blockchain to revolutionize title insurance, a standard requirement for many home buyers.
How SoFi is developing its financial services offerings (Tearsheet), Rated: AAA
SoFi has always been as much about culture and brand before product and tech. Now that it’s postponed its initial public offering in December (it raised $500 million in private funding shortly after) it has the luxury of time to develop its financial services offerings.
“While we run positive contribution margins around our credit products… it pales in comparison to what the lifetime value of that relationship is worth,” CEO Mike Cagney said at Fortune’s Brainstorm Tech conference in Aspen, Colorado Wednesday morning. “Not having that deposit product means that the bank, if it has that deposit product, is going to constantly try to cross sell [customers] and pull them back to the bank. That introduced this vulnerability in the business.”
There are also no branches planned for the non-bank financial services company, he confirmed, citing that in the 40 SoFi events he’s hosted and attended almost all other attendees have said they haven’t walked into a branch in the last five years, he claims.
SoFi is also in the exploratory stages of how to use alternative data like cell phone data for credit scoring as well as distributed ledger technology for title insurance.
U.S. banks are valued at between $2,000 and $100,000 per customer. SoFi currently has 250,000 members today and anticipates 500,000 by end of year. Cagney said it’s not unrealistic to get two million customers at “$25,000 to $50,000 per customer, which gets us in the $50 to $100 billion valuation range.”
Affirm now has 1,000 retail partners (TechCrunch), Rated: AAA
Today Affirm has announced it has more than 1,000 merchants signed up to offer its financing options at checkout, helping to reduce the friction around making large purchases and, by extension, increasing sales for its partners.
While promoting its most recent milestone, Affirm is also trying to get across the message of how it’s different — and frankly, better — than point-of-sale financing options of the past. As a result, the company is pushing a marketing campaign around “honest finance” to enumerate the ways in which Affirm helps consumers by providing more access and better terms for big-ticket items.
Affirm Challenges Retailers, FIs To Practice ’Honest Finance‘ (PYMNTS), Rated: AAA
“Finance is pretty broken.”
So started Affirm’s Co-Founder and CEO Max Levchin’s remarks at his firm’s first-ever AFFIRMation conference for its retail partners in San Francisco yesterday.
He’s on a mission to fix a system that he believes doesn’t really serve anyone’s long-term interest nearly as well as it could or should. When it comes to the extension of credit, Levchin says that customers often lose out, retailers end up with angry customers who frequently feel ripped off and FI’s alienate their customer base.
Broken by the Numbers
“Sixty percent of Americans fear credit cards,” Levchin noted.
“[Most consumers] think getting involved with using a card will cost them a lot more than they bargain for. A third fear they will overspend. And they are right; that’s what happens, and the industry does very little to help them create necessary guardrails.”
In fact, Levchin noted, the industry doesn’t want to create guardrails, because a lot of players have literally built products that bet against the consumer.
Deferred interest — the “dirty little secret” of consumer credit that bears a retailer’s logo and accompanies those too good to be true offers — means that even one day late on a payment 59 months into a 60-month loan, means interest gets calculated back to day one.
Bad Long-Term Thinking
Last quarter, on the occasion of its one millionth consumer installment loan, Affirm reported a 75 percent increase in purchase value on purchases made using Affirm, a 20 percent lift in POS conversion and a repeat rate of 25 percent of borrowers returning.
And Affirm’s net promotor score: It’s 82, slightly trailing Starbuck’s 85, but not by much.
Affirm is looking to retailers across the country to join in pledging to abandon “predatory consumer credit practices” and has also challenged the nation’s financial institutions to do the same.
Nation’s largest lender finally hops on digital-mortgage bandwagon (Mortgage Professional America), Rated: AAA
Wells Fargo CEO Tim Sloan said that the bank expects to launch a digital mortgage application tool by the end of next year, according to a report by the Charlotte Business Journal. Sloan made the announcement during an earnings call on Friday.
Sloan told investors that Wells Fargo doesn’t currently have as many online loan products as it would like, the Charlotte Business Journal reported. He said that employees are currently testing the online mortgage tool, and that the bank plans to run a test with customers this year before a full rollout in 2018.
AutoGravity Now Has Over 500,000 Users (Crowdfund Insider), Rated: AAA
AutoGravity says it has now surpassed 500,000 in just one year. AutoGravity is an App-based online lender targeting the auto financing space. Pick the car and request a loan all on your smartphone. It’s that simple.
Additionallly, AutoGravity shares that more than $500 million in financing has been requested through the AutoGravity platform.
Fundrise Officially Announces New eFunds (Crowdfund Insider), Rated: A
Fundrise, a leading online marketplace for real estate investing, has officially announced the availability of their new eFunds.
The “featured” eFund starts with the Los Angeles market. The LA eFund aims to provide housing for the underserved millennial homebuyer.
Fundrise has also launched a DC eFund.
PayPal Completes Acquisition of TIO Networks (BusinessWire), Rated: A
PayPal Holdings, Inc. (NASDAQ:PYPL) and TIO Networks Corp. (TSXV:TNC) today announced that PayPal has completed its previously announced acquisition of TIO Networks. In accordance with the terms of the Arrangement announced on February 14, 2017, PayPal acquired all of the outstanding shares of TIO for $3.35 CDN ($2.64 USD) per share in cash or an approximate $302 million CDN ($238 million USD) equity value.
LendKey Announces Series C Funding (PR Newswire), Rated: A
LendKey, the leading lending-as-a-service solution for banks and credit unions, today announced $13 million in Series C funding, $8 million in equity and $5 million in debt financing. North Atlantic Capital, based in Portland, ME, led the round with participation from each of LendKey’s existing investors including DFJ, Updata Partners, Gotham Ventures, and TTV Capital.
The Series C funding will enable the company to expand its services and staffing. LendKey plans to grow its regional office in Cincinnati, Ohio and expand its account development and sales teams.
Mobile savings and investment service Acorns is on track to do 1 billion trades in 2017 (TechCrunch), Rated: A
The company now boasts more than 2 million investment accounts (with 600,000 opened in 2017 alone) and is on track to do 1 billion trades in 2017 through the proprietary broker-dealer that it created.
Still, the numbers were impressive enough to attract Bain Capital Ventures to commit another $35 million to the company, bringing Acorns total Series D financing to $70 million. Previous investors PayPal, Greycroft Growth Fund, e.Ventures Growth Fund, NYCA, Capital Group, Rakuten, Point72 and Ashton Kutcher’s Sound Ventures also participated in the round.
Fifty years ago, when customers thought about using credit, it was in the context of buying something expensive that they really needed — a refrigerator, a washer/dryer, a car — with the intention to pay off that loan balance quickly.
Credit as a Currency
For super-prime customers — those for whom credit cards are basically payment cards because those consumers pay them in full monthly and never accrue any interest — Rosenberg said that card “borrowing” is an incentive-driven system. The customer gets cash back, rewards points, airline miles, hotel stays — and those incentives have very successfully attracted consumers to use them to buy things. Rosenberg noted that for a large segment of consumers, buying something without using a credit card is almost a foreign concept because the card offers them access to a more valuable form of currency.
But a more artificial intelligence-driven, machine learning system, Rosenberg said, will allow those customers who are locked out of the credit market today to be seen more clearly by creditors, and to be given incentives that are more explicitly tailored to their wants.
A Better Subprime Experience
The problem with the categorizations of “prime” and “sub-prime” borrower is that they are somewhat less hard and fast than people like to think they are. Rosenberg explained that there aren’t simply two classes of buyers — those who pay their bills and those who don’t.
But, Rosenberg said, the truth is most people pay bills in the order of absolute necessity, and when things get bad financially because a job was lost or an economic catastrophe has happened, that order gets very utilitarian. Car payments get paid, because car companies have no sense of humor and will repossess a car. But eviction from a house takes longer, which means a person with a more pressing need would rather skip their mortgage for a few months than not buy medication they need. And credit card bills? Those quickly fall to the bottom of a pile.
Bank of America Unveils New Mobile Capability to Apply for Business Advantage Term Loans and Credit Lines (BusinessWire), Rated: A
Bank of America today announced enhancements to its mobile app experience that add on-the-go convenience to small business banking and lending. With the suite of updates, Bank of America small business clients can now apply for a Business Advantage Term Loan or Business Advantage Credit Line from any Bank of America digital platform – including the Bank of America mobile banking app, and bankofamerica.com.
More than 1.3 million small business clients are active users of the Bank of America mobile banking app, an increase of 14 percent over the past year.
December 2016 Fed Rate Hike: Most Consumers Fared Well, But It’s a New Dynamic for Consumers and Lenders Alike (TransUnion), Rated: A
TransUnion (NYSE:TRU) released an analysis today showing that most borrowers were able to absorb their increased monthly payment obligations after the Federal Reserve Board rate hike last December.
TransUnion’s study identified these 63 million consumers because they carried debts for which the minimum monthly payment due was tied to the market interest rate, such that a rise in rates from the December rate hike could cause an increase in payments required. TransUnion used its CreditVision® aggregate excess payment (“AEP”) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to identify 10.6 million of these consumers who were at elevated risk of not having the capacity to absorb a rate increase of 0.25%.
Banks That Don’t Invest in Technology Risk Falling Behind Permanently (Forbes), Rated: A
Wack points to a new study of mortgage lending, Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks, co-written by business school professors at the University of Chicago, Columbia Business School and Stanford Graduate School of Business.
The researchers found that some banks find themselves trying to play catch-up to competitors that long ago allowed borrowers to apply for mortgages online. The institutions that have been slow to adopt online applications for mortgage lending are losing market share to their competitors. Meanwhile, non-bank lenders have grabbed a substantial piece of the market; so-called “shadow banks” lend money but don’t use bank deposits to finance the transactions. They now write 38% of all home loans — almost triple their share in 2007. Further, the shadow banks now originate three-fourths of all loans to low-income borrowers insured by the Federal Housing Administration (FHA).
I’m a banker and I say let SoFi into the club (American Banker), Rated: A
As the president of a small community bank, I feel the need to respond to certain misleading comments that have been made by banking industry representatives and community activistsrecently in opposition to the Social Finance application to charter an industrial bank.
I feel the need in particular to respond to comments as reported in the press by a representative of the Independent Community Bankers of America, an industry trade association I support. In essence, this individual stated opposition to SoFi’s recent application based on his assertion that industrial banks don’t follow the same rules as other banks. This assertion is not accurate.
The banking industry is evolving. Doesn’t it make more sense to focus on how to evolve with it rather than how to reduce competition?
Ga. banks less stressed, but lending slowdown a worry (myAJC), Rated: A
Across the nation, bank lending has slowed for most types of loans since the presidential election. Business lending declined in the first quarter and is still crawling at close to its slowest pace since 2011, according to Federal Reserve data.
Overall loan growth is a bit better, but across the board, lending has slowed for debt ranging from auto loans to credit cards to financing for factories, office buildings and small businesses, according to the Fed.
That has made for stiff competition for bankers hunting for loan customers, and because interest rates are still low, banks’ profit margins on their total loan portfolios remain tight.
Last week, Columbus-based Synovus Corp., the second largest bank headquartered in the state, with $31 billion in assets, said its total loans grew by $314 million in the second quarter, up 5.2 percent compared to the first quarter. Synovus banked a $73 million profit during the quarter, 27 percent higher than a year ago.
Synovus’ consumer loans grew at a 16 percent annual pace during the recent quarter, accounting for $2 out of $3 of Synovus’ new loans.
Credit Risk Startup James Closes $ 2.7M Funding Round (Finsmes), Rated: A
James (formerly known as CrowdProcess), a New York-based credit risk startup, closed a $2.7M funding round.
The round was led by Gaël de Boissard with participation from Henry Richotte and BiG Start Ventures. As a result of this deal, Mr. de Boissard has joined James’s Board of Directors.
Investors Approach Investing Differently Across Generations (Plan Adviser), Rated: A
The Dreyfus study found that investors tend to take different approaches to investing based on age. Sixty-one percent of investors 55 years of age or older indicated they have not, or will not, reevaluate their investment approach in today’s existing investing environment. Meanwhile, 65% of Millennials, defined in the study as people between the ages of 21 and 34, had already evaluated their investment approach at the time of the survey. These actions are reflected among 51% of those between the ages of 35 and 54, as well as for 39% of those at least 55-years-old.
OCC FinTech Charter in Trump Administration Cards (JD Supra), Rated: A
In his remarks to the Exchequer Club in Washington, D.C., President Trump’s Acting Comptroller of the Currency, Keith Noreika, came strong to the mic, roundly stating the charter is a “good idea” and flatly saying “yes”, the OCC has the authority to grant the FinTech charter in the face of legal challenges by the New York Department of Financial Services and the Conference of State Bank Supervisors.
Here are three other takeaways from the Acting Comptroller’s remarks:
- The FinTech charter promotes the dual banking system.
- The OCC is having informal meetings with interested FinTech companies.
- Existing OCC bank charters may be an option now.
Access Anytime, Anywhere Powers Better Consumer Lending (Blend), Rated: A
That’s why we’re harnessing the power of technology to bring consumers closer to their loan officers (LOs) and launching Blend Mobile, the first native mobile application allowing LOs to manage their businesses, including borrower requests and applications, anytime and anywhere.
Robos are offering SRI, so shouldn’t live advisers? (Investment News), Rated: A
“SRI has been one of the most consistent personalization requests we’ve had,” said Dan Egan, Betterment’s director of behavioral finance and investments. “It allows people who want to buy a better world to put their money where their mouth is.”
The nation’s largest robo adviser, Vanguard Personal Advisor Services, which has $80 billion in assets, offers clients a proprietary fund on its digital platforms that tracks a benchmark that screens companies on social, human rights and environmental criteria. Schwab Intelligent Portfolios, which has $19.4 billion in AUM, does not offer an SRI option.
Commentary on the Reintroduction of the Protecting Consumers’ Access to Credit Act (H.R. 3299) (Factory Email), Rated: B
Passing the Protecting Consumers’ Access to Credit Act into law is critical for the consumer lending industry. We are pleased that forward looking legislators aim to remove the regulatory and capital markets uncertainty caused by court cases such as Madden vs. Midland.
Led by the Second Circuit Court’s decision, other state regulators are attempting to erode a core tenet of our federal banking system. “Both the ‘valid when made’ doctrine and the exportation of usury rate have facilitated nationwide lending for over a century by allowing the rate of interest on certain loans to remain unchanged after transfer of the loan,” said Gilles Gade, President and CEO of Cross River, an FDIC insured New Jersey State chartered bank and leader in marketplace leading origination. “The ability for banks to sell loans to non-banks is vital to the capital markets ecosystem in general, and to consumers in particular who are getting hurt as access to credit is made more difficult and more expensive. The perenniality of this tenet hinges on a healthy secondary market, increased liquidity, and the securitization of debts ranging from mortgages to credit cards, all of which help facilitate emerging innovations and provide capital that makes credit more accessible and affordable for millions of Americans. We applaud the bipartisan reintroduction of this bill and look forward to its expeditious review and passage.”
Comment by Gilles Gade, president and CEO of Cross River Bank.
LendingTree Announces Promotion of Sam Mischner to Chief Sales Officer and Head of Mortgage (PR Newswire), Rated: B
LendingTree® (NASDAQ: TREE), the nation’s leading online loan marketplace, today announced that Sam Mischner has been promoted to Chief Sales Officer and Head of Mortgage. Previously, Mischner served as SVP, Sales and GM, Mortgage.
Fintech lender LendInvest to launch retail bond offering (AltFi), Rated: AAA
LendInvest, a leading alternative lender in the property space, is launching a retail bond. The bond will offer investors a fixed rate of 5.25 per cent, due 2022.
It is expected to be listed on the London Stock Exchange once the subscription period closes. LendInvest is targeting an initial raise of £50m, and the company expects this to be the first of a number of bond issues over the coming years. The bond has a minimum investment amount of £2,000.
Interest from the bond will be paid semi-annually on 10 February and 10 August each year. The net proceeds will be used to fund the origination and/or purchase of loans which satisfy the company’s eligibility criteria.
RateSetter moves to protect its investors (Business Insider), Rated: AAA
UK marketplace lender RateSetter has given more details on a series of interventions it has made to protect the company’s 50,000 retail investors from adverse consequences related to its lending decisions in the last two years.
Here are the three measures RateSetter has now explained in greater detail:
- Buying two subsidiaries in a motor finance company.
- Wholly buying Adpod, an advertising company.
- Ending its partnership with George Banco, a consumer lending platform. RateSetter is withdrawing from the partnership, remaining only as a passive investor, after reviewing the strategy more closely. RateSetter added that George Banco is still repaying its £32 million ($42 million) loan.
Monzo gently rolls out current account (Banking Tech), Rated: A
The bank, which received its full UK banking licence in April, says it’s been using the current account internally and today (17 July) is now inviting some of its customers to join and “help put it through its paces”.
Its aim is to offer a current account to all existing customers by the end of the year. Towards that goal, over the next three months it will roll out between 10,000 and 20,000 current accounts to existing customers. As you probably guessed, users can register their interest on its site. Investors get priority access.
TransferWise’s cofounders have swapped the CEO role between themselves again (Business Insider), Rated: A
Kristo Kaarmann is taking over from Taavet Hinrikus as the boss of the international money transfer business, according to a blog post on Medium that was written by Hinrikus and published on Tuesday.
Next-gen Credit Scorer Aire Raises $ 5m in Series A Funding from Deep-tech VCs (Fintech Finance), Rated: A
Aire today announces the closing of a $5m Series A funding round, led by Sunstone Capital alongside White Star who previously led Aire’s Seed round in 2016.
Aire today announces the closing of a $5m Series A funding round, led by Sunstone Capital alongside White Star who previously led Aire’s Seed round in 2016.
The Lines Are Blurring Between Alternative, Traditional SME Finance (PYMNTS), Rated: A
Alternative lending has shifted from a competitor of traditional FIs to a collaborator, often lending a digital hand to banks in need of upgrading their systems to provide faster, more agile financing to SMEs. A new report from the state-backed British Business Bank (BBB), however, suggests alternative lenders are becoming an increasingly important part of its operations in a different way, highlighting how the lines between alternative finance (AltFin) and traditional finance continue to blur.
The annual report said the BBB facilitated more than $930 million in SME loans last year, and, according to the data, every year more of that money is landing at small businesses thanks to collaboration with alternative lenders like RateSetter and Funding Circle. According to reports, in 2014 the percentage of BBB funds that went through a P2P platform was 79 percent; in 2015, it was 90 percent.
Permira Joins Payments Rush by Buying Into Sweden’s Klarna (U.S. News), Rated: A
Private equity group Permira has bought a stake of at least 10 percent in payments firm Klarna, one of Europe’s most highly valued tech startups, the companies said on Friday.
Permira will acquire the Klarna stake from existing shareholders General Atlantic and DST Global, and the Sweden-based firm’s co-founder Niklas Adalberth.
General Atlantic and DST Global will cease to be shareholders in Klarna after the deal, they added in a statement.
Bank of England opens up payments systems to spur fintech (Tribune), Rated: A
The Bank of England has widened access to Britain’s interbank payments system to increase competition from new fintech firms in the financial system, where the “Big Four” high street banks have long dominated.
The changes, which in practice will come into effect in 2018 once legislative changes have been completed, will enable such non-bank payments services providers (PSPs) to compete better with banks, the BoE said.
There is no ‘existential crisis’ challenge for banks from fintech, HSBC’s digital chief says (CNBC), Rated: A
The idea that big banks are facing an “existential crisis” from financial technology (fintech) challengers is “overblown”, the digital chief of HSBC told CNBC.
Crowdfunding: the stable option in 2017? (The C Suite), Rated: A
Research conducted by Beauhurst on 2016 UK funding deals for non-listed high-growth businesses concluded that crowdfunding outperformed private equity and venture capital. Whilst 2016 saw a decline in the total number of deals financed by equity investors, activity on the leading crowdfunding platforms increased. Crowdcube (launched in 2011) and Seedrs (launched in 2012) accounted for 21% of such equity investment in the UK last year.
According to Beauhurst’s research, Q1 of 2017 has seen a small increase of 2.7% in equity funding in non-listed, high-growth companies. However deal numbers are still 6.72% lower than the same quarter in 2016. The growth has primarily been driven by crowdfunding platforms, with an 11% growth in deal numbers.
Boost for UK fintech as Receipt Bank secures huge $ 50 million in funding (Business Insider), Rated: A
Accountancy software startup Receipt Bank has raised $50 million (£38.4 million) in a Series B funding round led by a New York venture capital firm.
Perfect storm for Scots property borrowers (Scotsman), Rated: A
By 2018, loans from alternative finance schemes such as crowdfunding, peer-to-peer lending and private debt, will be as cost competitive as the retail banks, blowing the finance market wide open for loans in the £500,000 to £10 million range.
Naturally, because alternative lenders such as Funding Circle, The Route and Folk to Folk are settling loans for higher loan-to-value (LTV) ranges (between 60 and 75 per cent), they absorb the risk by charging higher interest on both short- and medium-term loans – currently between 6 and 12 per cent a year.
LTVs in retail banking property loans are settled at around 55 to 60 per cent, but they offer lower loan costs of between 2.5 and 5 per cent. This is all set to change in 2018 – with increased availability of finance for lenders, such as innovative finance ISAs (IFIsa), the cost of capital is set to fall and this will encourage alternative lenders to reduce their interest rates.
Zopa’s Home Improvement Index Reveals: A New Kitchen Can Deliver Over 50% ROI (Crowdfund Insider), Rated: A
On Wednesday, peer-to-peer lender Zopa released its latest Home Improvement Index that indicated a quart of British homeowners looking to improve their homes this summer are choosing to renovate their kitchens and are seeing a 51% return on investment as a result. According to research, 25% of British homeowners undertaking a home improvement are opting for a new kitchen, with the renovation boosting the value of a home by an average of 10%.
Zopa noted that the research found that the average home improvement would increase the value of a home by 9% or nearly £24,000 (£23,837) – based on homeowner’s estimates. The average return on investment was 50%, based on the total amount spent by homeowners.
Opinion split on best P2P marketing techniques (P2P Finance News), Rated: B
Property P2P platform Lendy has recently announced sponsorship of the Cowes Week sailing regatta, while business lender Ablrate has been announced as a sponsor of the PGA EuroPro Tour’s £100,000 Shoot-Out competition.
Other firms such as RateSetter have used adverts on the London Underground and Crowdstacker has run adverts in print publications, while Zopa and Funding Circle have used TV campaigns.
But Frazer Fernhead, founder and chief executive of The House Crowd, prefers to invest in digital marketing.
Yirendai Limited: A Growth Play At Deeply Discounted Valuations (Seeking Alpha), Rated: AAA
The ADR has returned a solid 250%+ in a year and a half since then. In comparison, Alibaba stock is up by 83% while NetEase is up by 16% and JD.com has risen just 27.5%. In other words, Yirendai has been the best performing Chinese stock/ADR ever since the company was listed in the US.
Yirendai reported quarterly revenue of $148.42 million for Q1 2017, which grew 75% year-on-year. On the earnings front, the company reported earnings per ADR (EPADR) of 84 cents, a 147% improvement over 34 cents EPADR in Q1 2016. On a trailing twelve month (NYSE:TTM) timeframe, the revenue has grown from $265.2 million in Q1 2016 to $544.6 million in Q1 2017, a 105% year-on-year growth.
We believe that, based on Yirendai’s earnings history and the historical valuation multiples, the stock should easily trade in the $43.4 – $57.7 range, which represents a 65% upside at the higher end.
N26 and Lydia announce Apple Pay support in France, but major banks are still missing (TechCrunch), Rated: AAA
Apple Pay hasn’t really been a major success in France so far. France’s biggest banks still don’t plan to support Apple’s payment service. But two companies announced today that they were going to add Apple Pay support before the end of the year — Lydia and N26. Crédit Mutuel Arkea’s banks also recently announced that they were working on that feature as well.
Crowdfunding and Crowdlending (Soundcloud), Rated: A
Get a unique insight into what crowdfunding and crowdlending are and find out how you can participate in it – either as an entrepreneur or as an investor. Responsible for crowdfunding in DNB, Lars Marthinsen, and CEO of Kameo, Sebastian Martens, are guests at #pengepodden .
Finstar commits $ 150m to fintech investment (Finextra), Rated: A
Private equity outfit Finstar Financial Group is planning to pump $150 million into fintech startups over the next five years.
Factor in the robo-advice (The Australian), Rated: A
The disruption is well under way in the US, where two giant companies – Betterment and Wealthfront – have emerged, each with a valuation of more than $5 billion. In recent months Betterment has seemed to outpace Wealthfront in terms of size and growth. Betterment, which has cheaper services, now boasts a client list of 188,000 while Wealthfront has 90,000.
ANZ has put its $4.5 billion wealth advice unit on the block, in a move that followed UBS’s decision to sell its wealth management arm in Australia a year ago. And Platinum Asset Management, the one-time king of specialist overseas fund managers in the local market, has announced a dramatic cut in its fee charges.
In Australia, the SMSF Industry Association tacked a robo-advice questionnaire onto one of its recent surveys and found that 18 per cent of its members – higher than in the general population (13 per cent) – would be willing to try robo services.
Online Lender Prospa is NSW State Winner in 2017 Telstra Business Awards (Crowdfund Insider), Rated: B
Prospa said it was the first Fintech company to be awarded the accolade.
How Fintech Revolution Is Making Way For A Potential $ 5 Bn Online P2P Lending Empire In India (Inc42), Rated: A
Currently, at a nascent stage, the P2P lending landscape in India is also poised to grow into a $4 Bn-$5 Bn industry by 2023. The domain’s origin actually dates back to 2012, when the first peer-to-peer lending company i-Lend was launched. At present, the P2P lending space is populated by more than 30 players including Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, i2iFunding and many more.
One factor that has played an integral role in the rise of an alternative fintech industry is demonetisation, instated on November 8, 2016. Post the ban on INR 500 and INR 1,000 notes, bank deposits underwent a discernible slowdown. Loans to SMEs and MSMEs reached an abrupt halt, forcing many businesses to seek other methods of financing. Last year, for instance, around 34% of P2P borrowers were actually business owners looking to expand without having to rely on banks.
Bridge Data Centres is looking to invest $500 Mn in India over the next two years. As per reports, the investment will enable the Singapore-based data centre outsourcing (DCO) company to gain a stronghold of the country’s fast-growing market for data centres.
In June 2017, Alibaba revealed plans to set up two new cloud data centres in India and Indonesia, in an attempt to strengthen the company’s computing resources in Asia. Earlier in January 2017, US-based data storage and management firm NetApp launched its Global Centre of Excellence in Bengaluru, as part of a $155 Mn (INR 1,000 Cr) investment. In December last year, Amaravati-headquartered Pi DATACENTERS raised $23 Mn from Epsilon Venture Partners. It was reported that the funds would be used to roll out state-of-the-art data centres across India.
Multinational alternative investment firm Bain Capital recently infused $10 Mn in Bengaluru-based consumer leasing startup RentoMojo has raised $10 Mn in Series B funding round led by Renaud Laplanche. Existing investors Accel Partners and IDG Ventures also participated in the round.
Because the construction and maintenance of data centres is a capital-intensive activity, an increasing number of businesses in India are enlisting the help of data centre service providers.
Borrowell raises $ 57M in New Funding to Expand Credit Education and Lending (GlobeNewswire), Rated: AAA
Financial technology company Borrowell announced today it has secured $12 million (CAD) in equity funding and $45 million in new credit facilities. The Series A equity round is being led by Portag3 Ventures LP, Equitable Bank and White Star Capital, with participation by FirstOntario Credit Union and other new and existing investors, and brings the company’s total equity financing to $16.7 million. The credit facilities are being provided by Concentra and FirstOntario Credit Union for the purpose of funding ‘one click’ loans to prime consumers. This latest round of funding will allow Borrowell to provide free credit information and loans to more people.
More than 300,000 Canadians have a Borrowell account, with thousands more signing up each week.