- Today’s main news: Prosper performance update for July 2017.Top Mozido executives quietly left company.White House OKs delay of fiduciary rule.Funding Circle kicks off 12M marketing campaign with TV ad.LATTICE80 to open London fintech hub.Klarna profits up 130%+.RateSetter hits 2,000 broker milestone.
- Today’s main analysis: Millennials prefer auto, personal loans to credit cards.
- Today’s thought-provoking articles: There is a major Chinese tech IPO boom happening.Klarna launches ‘Smoooth’ brand.Australian SMEs turning to alternative funding sources.Should established banks fight or assimilate?
- Prosper’s July 2017 performance.
- Top execs at Mozido have quietly left the company. AT: “This either spells the nearing of the end for Mozido or the beginning of another comeback story.”
- Factors that push millennials toward auto, personal loans instead of credit cards. AT: “The larger story could be that digital lending is so disrupting credit card usage that we could be witnessing the decline of bank cards altogether. It’s still too early to tell, but Gen Z is coming up behind Gen Y (millennials) and they were born the year the World Wide Web went commercial. That means Gen Z is the first truly digital native, and who knows where they will stand on credit cards? The future of bank cards may be the mobile app. In fact, I would say it is likely the mobile app.”
- White House OKs fiduciary rule delay. AT: “Not a surprise.”
- Banks send warning signs for the economy. AT: ” ‘After a period of strong lending, it is also typical for defaults to start ticking up as levels of indebtedness rise and bills come due.’ Naturally.”
- ‘Madden fix’ bills are recipe for predatory lending. AT: “Those with a will and a financial motive will always find a way around the law. Such fixes are a game of cat and mouse.”
- Better options for recovering non-performing loans.
- Ten-X partners with Money360 on financial services for commercial real estate transaction marketplace.
- Non-prime boomers struggle financially, but less than other generations. AT: “This study is a nice complement to TransUnion’s study on millennials and Gen Xers. It follows, of course, that non-primes of any generation will struggle more than primes, and I would expect that older generations have figured out some way to cope with their financial struggles more so than younger generations, so I’m not sure we learn much from this research.”
- How Gen Z will affect the future of the P2P economy. AT: “Beyond P2P lending, this touches on many aspects of the sharing economy. Gen Z could be a greater economic force to reckon with than the millennials, but they are just becoming of age so it remains to be seen exactly how they will impact the economy and how they will use financial services technology. My guess is that Gen Z will accelerate what Gen Y started, but by how much?”
- Public companies making ICO-related claims. AT: “We very well could many more negative enforcement actions on ICOs in the near future.”
- RealtyShares raises $10.3M for industrial real estate deals in San Francisco, Boston.
- Westlake Financial Services embraces Clarity Services’ Clear Fraud to enhance auto lending.
- AirFox closes $6.5M AirToken pre-sale ahead of schedule.
- Banks get a wake-up call with loan disbursements.
- PitchBook Q3 MPL analyst note.
- Online lenders gain traction by partnering with incumbents.
- Funding Circle kicks off 12M GBP marketing campaign with TV ad.
- LATTICE80 to expand into London with fintech hub. AT: “We typically see expansions going the other way. Singapore is stretching its fintech muscle.”
- The evolution of the UK receivables market.
- The funding pitfalls a small business owner must know.
- The major tech IPO boom is happening in China.
- Zhushang raises millions of RMB in Series A.
- On ICO pyramid schemes.
- Net mass transfer of US IPO.
- Klarna’s profits up 130%+. AT: “Klarna is huge in Europe, but only getting started in the U.S. I’ll be anxious how they butt heads with Affirm.”
- Klarna celebrates year-over-year sales, profit gains.
- Klarna launches ‘Smoooth’ brand.
- Get your PitchIt application ready.
- Dianrong, FinEx Asia launch first fintech asset management platform in Asia.
- Regulating P2P lending to SMEs.
- Royal Bank of Canada wants to give financial advice with artificial intelligence.
- IOU Financial releases results for periods ending June 30, 2017.
- United States
- Prosper Performance Update: July 2017 (Prosper), Rated: AAA
- The Top Executives Of Former Fintech Unicorn Mozido Have Quietly Left The Company (Forbes), Rated: AAA
- Digitalization Among Factors Pushing Millennial Credit Preferences Toward Auto and Personal Loans (NASDAQ), Rated: AAA
- White House OKs DOL Fiduciary Rule Delay (Financial Advisor IQ), Rated: AAA
- Banks Send Warning Signs for Economy (WSJ), Rated: A
- ‘Madden fix’ bills are a recipe for predatory lending (American Banker), Rated: A
- Recovering Non-Performing Loans: Better Options (Lend Academy), Rated: A
- TEN-X PARTNERS WITH MONEY360 TO OFFER FINANCING SERVICES FOR COMMERCIAL REAL ESTATE TRANSACTION MARKETPLACE (Money360), Rated: A
- Non-Prime Boomers Struggle Financially, but Less So Than Other Generations (BusinessWire), Rated: A
- How Gen Z Will Affect The Future Of The Peer To Peer Economy (Forbes), Rated: A
- PUBLIC COMPANIES MAKING ICO-RELATED CLAIMS (Investor.gov) Rated: A
- RealtyShares Reports: $ 10.3 Million Raised for Industrial Real Estate Deals in San Francisco and Boston MSA (Crowdfund Insider), Rated: A
- Westlake Financial Services Embraces Clarity Services’ Clear Fraud to Enhance Its Auto Lending Nationwide (BusinessWire), Rated: A
- AirFox Closes $ 6.5 Million AirToken Pre-Sale Weeks Ahead of Schedule (News BTC), Rated: A
- FinTechs Give Banks A Wake-Up Call With Loan Disbursements (PYMNTS), Rated: A
- 3Q 2017 PitchBook Fintech Analyst Note: Marketplace Lending (PitchBook), Rated: B
- Online Lenders Gain Traction By Partnering With Incumbents (ValueWalk), Rated: B
- United Kingdom
- Funding Circle is kicking off a £12 million marketing bonanza with a Great British Bake Off TV ad (Business Insider), Rated: AAA
- Singapore Fintech Hub LATTICE80 Announces UK Expansion (Crowdfund Insider), Rated: AAA
- The evolution of the UK receivables market (AltFi), Rated: A
- The funding pitfalls a small business owner needs to know (RealBusiness), Rated: A
- There Is a Major Tech IPO Boom Happening, Just Not in the United States (TheStreet), Rated: AAA
- Embracing Auto Finance Wave, Zhushang Financial Raised Tens Million RMB in Series A (Xing Ping She), Rated: A
- sources said the SFC on the ICO advice Jianzhao pyramid schemes (Yicai), Rated: A
- Net mass transfer will go to the US IPO official response (01Caijing), Rated: B
- European Union
- Profits Up More Than 130 percent In Klarna’s Half-Year Report (PYMNTS), Rated: AAA
- Klarna Celebrates Year-Over-Year Sales, Profit Gains (Finovate), Rated: A
- Swedish Tech Bank Klarna Launches ‘Smoooth’ Brand (PR Newswire), Rated: AAA
- PitchIt @ LendIt Europe 2017 (LendIt), Rated: B
- NEW REPORT: Faster Disbursement Services From Alt-Lending Players Put Banks On Notice (PYMNTS), Rated: A
- Australian SMEs are turning to alternative sources of funding (Finder.com.au), Rated: AAA
- P2P lender reaches 2,000 brokers (Broker News), Rated: AAA
- ‘Future-ready’ Industrial Policy to be out in October (The Hindu), Rated: A
- Dianrong and FinEX Asia Launch Asia’s First Fintech Asset Management Platform (PR Newswire), Rated: AAA
- Seminar: Regulating Peer-to-Peer Lending to SMEs (Asian Development Bank), Rated: B
- South America
- Top VC funds in Fintech in Argentina (TechFoliance), Rated: A
- RBC WANTS TO USE AI TO GIVE CUSTOMERS FINANCIAL ADVICE (Betakit), Rated: AAA
- IOU Financial Inc. Releases Financial Results for the Three and Six Month Period Ended June 30, 2017 (Newswire), Rated: A
- Should established banks fight or assimilate to tech? (African Business Magazine), Rated: AAA
Prosper Performance Update: July 2017 (Prosper), Rated: AAA
Today we are sharing performance data from the Prosper portfolio for July 2017.
Our risk team implemented a credit tightening in July aimed at removing certain populations of borrowers from originations on a go-forward basis. As a result of this credit tightening, the overall distribution of the book shifted slightly towards lower risk loans. This slight shift resulted in an overall portfolio coupon decrease of 45bps and an overall return estimate decrease of 26bps.
Additional highlights from the July Update include:
- Charge-off levels in 2016H2 vintages continue to show meaningful improvement compared to 2016H1 vintages.
- Periodic delinquencies moved higher for 2016 and 2017 vintages.
The Top Executives Of Former Fintech Unicorn Mozido Have Quietly Left The Company (Forbes), Rated: AAA
The top two executives of Mozido, a financial technology company that raised some $300 million to develop a mobile payments business, have quietly left the company.
On its web site, Mozido currently lists Todd Bradley as its CEO, but Bradley said in a brief interview that he left the company in June. Bradley’s departure appears to have left Mozido without a chief executive officer. Bradley has also left Mozido’s board but the company’s web site still lists Bradley as a director.
Scott Ellyson, Mozido’s chief financial officer who is listed on Mozido’s web site as its second-most senior executive, has also left the company, according to Bradley. Ellyson’s LinkedIn page currently does not mention his time at Mozido. He did not respond to a request for comment.
Three weeks ago, Michael Liberty, the founder of Mozido, was sentenced to four months in prison and a $100,000 fine by a federal judge. Liberty pleaded guilty in November 2016 to making illegal campaign contributions.
Digitalization Among Factors Pushing Millennial Credit Preferences Toward Auto and Personal Loans (NASDAQ), Rated: AAA
As the first generation to be fully immersed in mass-market digitalization, Millennials are slowing their credit card usage while increasingly using other credit products such as personal loans. A just-released TransUnion (NYSE:TRU) study found that Millennials are carrying on average two fewer bankcards and private label cards than Generation X (“Gen X”) consumers at the same respective ages. Conversely, Millennials’ appetite for new auto and personal loans has grown at a faster rate than Gen X borrowers at the same age points.
Credit Cards Out of Fashion; Cars and Personal Loans in Style
The study found that, in addition to carrying fewer credit cards than Gen X consumers, Millennials also are maintaining lower balances on those cards. TransUnion analysts believe that this is partly driven by the CARD Act of 2009, which limited the marketing of credit cards on college campuses. The increased use of debit cards also plays a role in this shift. The study pointed to recent Federal Reserve data, which found that debit card transactions grew from 8 billion in 2000 to 60 billion in 2015. In contrast, credit card transactions only increased from 16 billion to 34 billion in that same timeframe.
Millennials and Mortgages
Among all major credit products, the mortgage market has been the slowest to recover from the Great Recession, with home ownership rates still below levels observed in 2009. Overall, homeownership is down 0.8% since the Recession, but this number grows to -1.6% for 35-44 year olds and -2.1% for those under 35.
As a result of credit access being limited and, per the U.S. Census Bureau, affordability being affected by income gaps between the two generations, TransUnion’s study found the percentage of Millennials opening mortgages between the ages of 21-34 (5%) is nearly half of the Gen X group (10%) when they were that age. TransUnion observed a smaller but still material gap (13% for Millennials vs. 16% for Gen X) within the Super Prime risk tier, suggesting that this dynamic is not driven solely by credit supply.
TransUnion’s study found that access to mortgages has declined dramatically for 21-34 year olds. In 2000, 39% of mortgage originations in this age range were comprised of non-prime borrowers. In 2016, non-prime borrower originations declined to 20%.
Further impacting mortgage originations to Millennials are lower income levels. Per the U.S. Census Bureau, median household income of consumers ages 25-34 declined from $60k in 2000 to $57k in 2015. The impact can be seen in the housing status of these consumers: a larger portion of younger adults ages 25-29 are living with their parents, rising from 15% in 2000 to 25% in 2014.
Despite these challenges, a TransUnion survey of 1,340 consumers in July 2017 found that nearly 75% of Millennials ages 23-37 said they plan on purchasing a home in the future.
White House OKs DOL Fiduciary Rule Delay (Financial Advisor IQ), Rated: AAA
The Office of Management & Budget of the White House has approved the Department of Labor’s request to push back the final implementation date of its fiduciary rule — originally scheduled for January — to July 2019, the Wall Street Journal reports.
Banks Send Warning Signs for Economy (WSJ), Rated: A
Being a key transmission mechanism for savings, investment and spending, the banking sector is worth watching as a barometer for the health of the overall economy. Lately it has been acting as one would expect toward the end of an expansion phase.
Most glaringly, after strong lending growth for several years, momentum clearly is slowing. In its quarterly report on the sector, the Federal Deposit Insurance Corp. found that total loans and leases by banks and other insured institutions rose by just 3.7% from a year earlier at the end of June. That is the third consecutive quarterly deceleration and is down from a 6.7% pace of growth a year ago.
After a period of strong lending, it is also typical for defaults to start ticking up as levels of indebtedness rise and bills come due. This is indeed happening, at least among consumers. Credit-card charge-offs soared by 24.5% in the second quarter, according to the FDIC, marking the seventh straight increase. Charge-offs on loans to commercial and industrial borrowers, however, declined by 9.7%, possibly due to a recovering energy sector.
‘Madden fix’ bills are a recipe for predatory lending (American Banker), Rated: A
Currently pending in both houses of Congress are versions of the Protecting Consumers Access to Credit Act of 2017 — bills that would “fix” the 2015 appellate court decision in Madden v. Midland Funding LLC. Unfortunately, these so-called legislative solutions are based on a faulty reading of case law.
The Madden case held that National Bank Act preemption of state usury laws applies only to a national bank, and not to a debt collector assignee of the national bank. The decision has potentially broad implications for all secondary markets in consumer credit in which loan assignments by national banks occur: securitizations, sales of defaulted debt and rent-a-BIN lending.
Unfortunately, the “Madden fix” bills are overly broad and unnecessary and will facilitate predatory lending.
The actual “valid-when-made” doctrine provides that the maker of a note cannot invoke a usury defense based on an unconnected usurious transaction. The basic situation in all of the 19th-century cases establishing the doctrine involves X making a nonusurious note to Y, who then sells the note to Z for a discount. The discounted sale of the note can be seen as a separate and potentially usurious loan from Y to Z, rather than a sale. The valid-when-made doctrine provides that X cannot shelter in Y’s usury defense based on the discounting of the note. Even if the discounting is usurious, it does not affect the validity of X’s obligation on the note. In other words, the validity of the note is a free-standing obligation, not colored by extraneous transactions.
Recovering Non-Performing Loans: Better Options (Lend Academy), Rated: A
A small business lender knows that a certain percentage of loans will become NPLs and typically has parameters the business must stay within to remain profitable. The lender may pursue NPLs on an in-house basis indefinitely past the charge-off date or turn them over to a collections agency at some point. Both options create problems in the fintech business model.
The best recovery option for online small business lenders is to manage NPLs in-house until they become charge-offs, then use the services of a reputable commercial debt buyer. This is how it works.
- The lender works with the commercial debt buyer on a one-time basis, periodically, or in a forward-flow relationship where NPL information is sent regularly to the buyer.
- A non-disclosure agreement (NDA) is signed and the lender provides information to the buyer on the pool of non-performing assets. This includes the number of accounts and amount of outstanding balances.
- Buyer assigns a value to the NPLs and offers a price.
- Lender signs the purchase agreement. Typically, buyers in forward-flow relationships will send payment within 24 hours.
- Reputable buyers then work to collect the debts over time, without using the lender’s name and in a sensitive manner, and without reselling the debt.
TEN-X PARTNERS WITH MONEY360 TO OFFER FINANCING SERVICES FOR COMMERCIAL REAL ESTATE TRANSACTION MARKETPLACE (Money360), Rated: A
Ten-X Commercial, the nation’s leading online real estate transaction marketplace, today announced that it has partnered with Money360, a technology-enabled direct lender focused on commercial real estate (CRE), to offer financing for properties available for sale. The partnership will expand the investor pool for commercial properties listed on Ten-X by giving prospective buyers assurance they will be able to procure the necessary financing to fill the deal’s capital stack, while providing sellers and their brokers increased confidence that once terms are agreed upon, buyers will be able source a loan and close the deal.
Under the agreement, Money360 will work with Ten-X to determine which commercial properties listed on the Ten-X platform are appropriate for pre-arranged financing, and will then pre-underwrite bridge and/or permanent loans for qualifying properties. The lender’s offers will be listed on the Ten-X property detail page, informing prospective buyers about the available financing terms. After the property trades, Money360 will work with buyers to underwrite, process and close the loans to facilitate the transaction.
Non-Prime Boomers Struggle Financially, but Less So Than Other Generations (BusinessWire), Rated: A
Despite the widespread perception that Baby Boomers (ages 51-64) are struggling to make ends meet more than any other generation, new research from Elevate’s Center for the New Middle Class has found that Baby Boomers are actually struggling the least. In fact, Baby Boomers are the most likely to have steady employment and run out of money less often, compared to data from previous studies.
“These findings come as a surprise, as they are counter-intuitive to many of the trends we have seen widely covered around Baby Boomers,” said Jonathan Walker, executive director of Elevate’s Center for the New Middle Class. “Recently, it was reported by the Federal Reserve that Baby Boomers are leaving the workforce in such large droves that they are skewing employment numbers, but we’ve found that 60 percent of non-prime Boomers have had no employment change in the last 12 months, compared with 59 percent of Gen-X and 43 percent of Millennials.”
But even though they struggle less than other non-prime generations, they are still facing challenges in the new economy, especially when compared to their prime counterparts. Non-prime Boomers are more likely to hold more than one job and are 10 times more likely to run out of money every month.
Additional key findings include that – compared to their prime cohorts – non-prime Boomers are:
- 2.2x as likely to say that their finances cause them significant stress
- 4x as likely to live paycheck to paycheck and 1 in 6 use payday loans
- 14x as likely to express difficulty predicting monthly income and are 2.5x more likely to overdraft on bank account
- 3x as likely to take a loan against their 401k
- 46 percent less likely to go on vacation
- More likely to be living in households with 3 or more working adults
How Gen Z Will Affect The Future Of The Peer To Peer Economy (Forbes), Rated: A
Born in the mid-1990s to late 2000s, Gen Z accounts for one-quarter of the U.S. population. They are considered the most diverse and most multicultural generation the U.S. has ever seen. The highly influential Gen Zers are the first digital native generation. They are already impacting the current peer-to-peer (P2P) economy and will have an enormous effect on how this economy evolves.
A Gallup study found that about 8 in 10 students in grades 5 through 12 reported that they wanted to be their own boss rather than work for someone else.
Additionally, a millennial branding studyreported that 72% of high school students and 64% of college students want to start their own business.
PUBLIC COMPANIES MAKING ICO-RELATED CLAIMS (Investor.gov) Rated: A
The SEC may suspend trading in a stock when the SEC is of the opinion that a suspension is required to protect investors and the public interest. Circumstances that might lead to a trading suspension include:
- A lack of current, accurate, or adequate information about the company – for example, when a company has not filed any periodic reports for an extended period;
- Questions about the accuracy of publicly available information, including in company press releases and reports, about the company’s current operational status and financial condition; or
- Questions about trading in the stock, including trading by insiders, potential market manipulation, and the ability to clear and settle transactions in the stock.
The SEC recently issued several trading suspensions on the common stock of certain issuers who made claims regarding their investments in ICOs or touted coin/token related news. The companies affected by trading suspensions include First Bitcoin Capital Corp., CIAO Group, Strategic Global, and Sunshine Capital.
RealtyShares Reports: $ 10.3 Million Raised for Industrial Real Estate Deals in San Francisco and Boston MSA (Crowdfund Insider), Rated: A
Online real estate marketplace RealtyShares announced on Tuesday the closing of two industrial real estate financing transactions in San Francisco and Boston MSA. The amount raised between the deals was $10.3 million.
RealtyShares stated it secured $8.7 million industrial debt loan for a San Francisco located mixed-use, industrial warehouse and office space in the city’s South of Market (SoMa) neighborhood.
Westlake Financial Services Embraces Clarity Services’ Clear Fraud to Enhance Its Auto Lending Nationwide (BusinessWire), Rated: A
Following impressive results using Clear FraudTM to mitigate losses in targeted auto lending transactions, Westlake Financial Services has expanded its relationship with Clarity Services to strengthen its auto portfolio nationwide.
Westlake, which has a network of more than 50,000 new and used auto and motorcycle dealers throughout the United States, began testing Clear FraudTM a year ago in select markets. The California-based finance company has enhanced its profitability by using Clear FraudTM to provide loan terms that are more attractive to both consumers and dealers.
By incorporating Clarity’s credit data, Westlake is able to more accurately price and structure deals with profitable loan terms, and determine down payment requirements. Westlake’s use of Clear FraudTM helps the lender evaluate subprime applicants with credit scores below 600. Clear FraudTM also makes it easy to integrate scores into Westlake’s existing scorecard.
AirFox Closes $ 6.5 Million AirToken Pre-Sale Weeks Ahead of Schedule (News BTC), Rated: A
AirFox, the company making mobile data and the internet more affordable for millions of people, today announced it closed its $6.5 million ICO pre-sale weeks earlier than scheduled. The ICO will open at 10 a.m. ET on September 19, 2017. AirFox will use the ICO funds raised to further develop and launch its new blockchain consumer platform, AirToken (AIR), in order to tokenize mobile access by unlocking mobile capital from the smartphone for the underserved and underbanked prepaid mobile subscribers in emerging markets.
FinTechs Give Banks A Wake-Up Call With Loan Disbursements (PYMNTS), Rated: A
Not too long ago, when small- to mid-sized business (SMB) Orion First, a business credit ratings firm, needed a loan, its only option was to visit a local bank, fill out myriad application forms and wait several weeks or months to (maybe) get approved. Fast forward to today, and the small business lending process has undergone a significant overhaul.
With a growing number of FinTech players competing in the lending space, small businesses now have improved access to a range of loan options — and, in most cases, funds are disbursed in as little as 24 hours.
New services that can expedite the lending process for companies like Orion First are already gaining popularity with SMBs and consumers who need short-term loans. The Innovative Lending Platform Association (ILPA), a trade organization representing several companies in the space — including prominent players like small business loan provider Kabbage and financial consultant and insights provider PayNet — says its member companies have distributed more than $14 billion in capital loan disbursements to small businesses to date.
The millennial population is estimated at roughly 83 million, and a recent survey found almost half of millennials (49 percent) plan to start their own businesses within the next three years.
A recent survey by YouGov found 81 percent of both retail consumers and SMBs who turned to digital lenders said the ease and speed of completing a loan application were the reasons they made the switch. In the same survey, 77 percent of respondents cited the rapid pace of loan decision making as the key appeal for these platforms.
3Q 2017 PitchBook Fintech Analyst Note: Marketplace Lending (PitchBook), Rated: B
Key takeaways & highlights:
- Online lenders have faced increased competition from other more established fintech companies. Furthermore, banks such as Goldman Sachs have started their own lending arms
- Publicly traded firms have made great strides in improving financials; the analyst consensus has Lending Club moving into positive GAAP earnings by year end in part driven by securitizations as a lower-cost source of capital
- SoFi has made strides towards becoming more bank-like after adding mortgage loans, wealth management services and acquiring (and subsequently shuttering) online bank and money transfer service Zenbanx
Online Lenders Gain Traction By Partnering With Incumbents (ValueWalk), Rated: B
As the latest PitchBook fintech analyst note points out, some of the most notable companies are becoming more like banks, with SoFi the most prominent example, as it expands from student loan refinancing into unsecured consumer credit, wealth management and more. Yet as some online lenders establish a foothold, there are still significant hurdles to overcome.
Funding Circle is kicking off a £12 million marketing bonanza with a Great British Bake Off TV ad (Business Insider), Rated: AAA
Online lender Funding Circle is kicking off a £12 million ($15 million) marketing campaign with a prime-time TV advert during the Great British Bake Off.
A 30-second TV spot of a woman drumming will run during the premiere of the smash hit baking show on Channel 4 on Tuesday evening.
Singapore Fintech Hub LATTICE80 Announces UK Expansion (Crowdfund Insider), Rated: AAA
LATTICE80, a fintech hub owned and operated by Singapore-based private investment firm Marvelstone Group, announced on Monday it is set to open a fintech hub in London as part of its global expansion. The organization revealed that as of August 2017, its UK entity has been registered, but a suitable hub space remains to be found. It is currently in talks with relevant parties in the private and public sectors, with plans to secure and open a hub by 2018.
The evolution of the UK receivables market (AltFi), Rated: A
In particular, the UK market has lots of new entrants (now in excess of 100 providers) but the number of clients seems to be static at about 40,000-45,000. In order to remain competitive, lenders are required to compete on price and terms, which increases their risk and often reduces their return.
Customers also have more choice in the market, in that they have access to working capital both from banks and alternative lenders such as peer-to-peer (P2P) platforms. Consumers are becoming increasingly aware of the non-traditional players in the market that are harnessing technology. The new generation of borrowers is more tech-savvy and more comfortable embracing P2P capabilities, which makes new players more attractive.
The funding pitfalls a small business owner needs to know (RealBusiness), Rated: A
Richard Spielbichler, ABL director North West, Independent Growth Finance
“The main pitfall to consider is whether the business has a USP that will protect their position in the market. Many businesses suffer from ‘me too’ syndrome, where their USP is very similar to an existing organisation.”
Angelika Burawska, COO, Startup Funding Club
“It depends on the type of financing. In the case of loans and various types of trade finance, the main pitfalls lie in payment terms, such as how much and when, late payment fees and what happens if a company fails to pay.
“In the case of equity funding, businesses have to pay attention to the valuation they raise which may be too high or too low; and the control rights they give to investors.”
There Is a Major Tech IPO Boom Happening, Just Not in the United States (TheStreet), Rated: AAA
In the first half, a total of 59 Chinese technology, media and telecommunication (TMT) companies sold shares through initial public offerings (IPOs), a surge from 10 a year ago.
In value, the firms raised a combined 25.8 billion yuan (US$3.9 billion) in the first six months, five times the amount a year earlier, said the accounting firm in Shanghai.
The trend is a continuation of a boom that began in the second half of 2016, when there were 58 IPOs of such companies raising a total of 33 billion yuan.
Embracing Auto Finance Wave, Zhushang Financial Raised Tens Million RMB in Series A (Xing Ping She), Rated: A
On 25th August, Zhushang Financial, a P2P lending platform specialize in providing auto financing services, announced the closing of Tens million RMB in series A funding. Toulang Capital led the round, with participation from Cailang Capital. The “Zhushang Financial” brand has been upgraded from the “Zhushang Dai” brand and announced with this round of financing.
Zhushang Financial is based in Chengdu, a developed city in west China, providing P2P auto financing services for small companies and individuals. Currently, it has established branches in many western cities, including Chongqing, Guizhou Province, Kunming, Xi ‘an, Taiyuan and Lanzhou. Also, the company has signed agreements on depository with both Zhejiang Mintai Bank and Hunan Rural Commercial bank (Youxian Branch). Up to now, the total volume of the platform has reached over 500 million RMB.
According to the report of Central Bank, China’s auto financing market reached 700 billion RMB in 2016 and may exceed 1.85 trillion RMB in 2018. Its rapid growth comes not just from the wave of “car service”, but also from the policy support. Actually, according to the policy issued last year, the net loan assets must be small and dispersed, and since then auto finance has become a new hotspot of P2P lending industry.
sources said the SFC on the ICO advice Jianzhao pyramid schemes (Yicai), Rated: A
August 29, the first financial reporter from a block chain technology business executives were informed that the China Securities Regulatory Commission recently to some of the block chain enterprises on the ICO (Initial Coin Offering, virtual currency initial public offering) for advice, the current In the stage of collecting comments and discussions, the SFC expressed particular concern about ICO projects for pyramid schemes in the name of virtual currency.
Net mass transfer will go to the US IPO official response (01Caijing), Rated: B
According to Bloomberg News, Fintech Quantifiers currently selected JP Morgan and Morgan Stanley as US financial adviser to the US IPO, the IPO size of about 200 million US dollars.
Profits Up More Than 130 percent In Klarna’s Half-Year Report (PYMNTS), Rated: AAA
Klarna, the online payments firm based in Sweden, and one of the unicorns that came of age with a more than $1-billion valuation, posted results Friday detailing growth for the first half of the year.
The company said that net profit came in at 228 million crowns, or about $28.4 million, up 138 percent year over year, on sales of 2.05 billion crowns. Sales were up 21 percent.
Klarna Celebrates Year-Over-Year Sales, Profit Gains (Finovate), Rated: A
On Friday the company reported sales and profit results for the first half of 2017 that represented gains of 21% and 138%, respectively. The strong financials come amid a series of headlines that show the Swedish payments company making strides on a number of fronts. This includes rumors that Klarna is partnering with Stripe to better access the U.S. market. Such a partnership would make Klarna the only non-credit card option available on the platform, and enable customers to take advantage of Klarna’s signature “pay after delivery” service. A deal between Klarna and Stripe also would provide what an anonymous source quoted in Nordic Business Insider referred to as “potentially an important piece of the puzzle” of Klarna’s plan for expansion in the U.S.
Swedish Tech Bank Klarna Launches ‘Smoooth’ Brand (PR Newswire), Rated: AAA
Last year, Klarna launched the “Smoooth” campaign with a series of award winning and critically praised advertisements showing just how smooth payments should be. Now Klarna takes the next step by fully implementing the concept of “Smoooth” across all aspects of the brand. This includes not only a new logo, graphic identity and checkout touch-points but towards a completely new user experience – transforming rational payment transactions into an emotional shopping experience for consumers.
Ice-cream melting on warm car hoods, shampooed long-haired dogs and pencils being pushed into huge jelly pastries. Klarna`s new identity is definitely not your average bank speaking.
“We are on a journey to transform Klarna from a traditional payment provider to a stronger consumer brand. Our new identity is more modern and expresses our focus on the consumer experience, innovation and simplicity in payments. It’s time for a new kind of bank.” Sebastian Siemiatkowski, CEO of Klarna
This is not only an update of the visual identity of Klarna but also changing the way consumers interact with the company. The concept of “Smoooth” will be evident when watching an ad or pushing a button to pay in the Klarna app. Every Klarna touchpoint has a new unique graphic and will be smarter and more intuitive. That will ensure a better user experience for consumers, but will also support in driving growth, conversion and consumer loyalty for all Klarna merchants.
There are three intuitive ways to shop with Klarna:
- Pay now. – Pay directly at checkout. No credit card numbers or passwords to remember.
- Pay later. – Try first, pay later. Klarna lets you have 14 days or more to decide if you want to keep your goods or not.
- Slice it. – Get all your payments on one invoice and choose how much to pay each month.
As of today, Klarna has released all touchpoints that can be updated automatically, and over the coming months will continuously roll out “Smoooth” updates to the touchpoints of all merchants.
PitchIt @ LendIt Europe 2017 (LendIt), Rated: B
Submit your application to PitchIt, a competition for fintech startups, taking place at LendIt Europe–one of the largest international lending and fintech conferences in Europe. This exclusive programme will nurture emerging talent throughout the competition, provide selected finalists with unparalleled access to industry expertise as well as invaluable exposure, branding and more at the event.
Deadline for applications is 4 September 2017.
NEW REPORT: Faster Disbursement Services From Alt-Lending Players Put Banks On Notice (PYMNTS), Rated: A
The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.
The August edition of the PYMNTS.com Disbursements Tracker™, powered by Ingo Money, highlights several notable developments that explain the waning influence of the paper check, and how new disbursement tools could impact the workplace, pension systems and mobile payment options.
Hike recently added a digital payments wallet to its app, allowing money transfers between customers using the country’s United Payments Interface (UPI) service. Skype is another messaging service helping users quickly send money to one another using popular payment option PayPal. The partnership between Skype and PayPal enables users to send money to fellow Skype users in 22 countries, including the U.S., Canada and more than a dozen nations in Europe, through PayPal in the Skype mobile app.
Australian SMEs are turning to alternative sources of funding (Finder.com.au), Rated: AAA
Australian businesses are turning to crowdfunding, peer-to-peer (P2P) lending and online loans for finance, according to new research from Businessloans.com.au. The Small Business Credit Survey, conducted by ACA Research, found that the most sought-after alternative funding source was equity finance (34%), followed closely by online lenders (30%) and P2P business loans(21%).
However, while small- to medium-sized enterprises (SMEs) are embracing alternative sources of capital, not all of them are receiving the loans they hope for. The survey revealed that while 84.1% of businesses were successful in their applications, less than half of those (38.9%) of those were approved for all of the credit they applied for.
It is interesting to note that the number of businesses which were declined a loan is only 1.6% of respondents. The remaining 14.3% of the “unsuccessful applicant” group was approved for less than half of the loan they had asked for. Over one-third of this group (35%) had applied for more than or equal to $250,000.
The survey found that a rejected application seriously affects a business. Respondents that did not receive the full amount applied for delayed or could not expand their businesses (34%), delayed or were not able to fulfil existing orders or contracts (27%) or did not hire new employees (17%).
P2P lender reaches 2,000 brokers (Broker News), Rated: AAA
Peer-to-peer lender RateSetter has accredited 2,000 brokers on its lending platform, amidst a rise in P2P popularity within the general public.
Lending volumes through the broker channel, especially in auto and home improvement loans, are doubling every six months, according to the lender’s most recent settlement figures.
Across the direct and broker channels, RateSetter has also passed $150m in lending facilitated since 2014. In the last five months alone, lending grew 50% across both channels, passing the $100m milestone in March.
‘Future-ready’ Industrial Policy to be out in October (The Hindu), Rated: A
The other “illustrative outcomes” are developing alternatives to banks and improving access to capital for MSMEs through ‘Peer to Peer Lending’ and ‘Crowd funding’, providing a credit rating mechanism for MSMEs to provide them easier access to funds, addressing the problem of inverted-duty structure and also balancing it against obligations under multilateral or bilateral trade agreements, studying the impact of automation on jobs and employment, ensuring minimal/zero waste from industrial activities and targeting certain sectors to radically cut emissions.
Dianrong and FinEX Asia Launch Asia’s First Fintech Asset Management Platform (PR Newswire), Rated: AAA
Dianrong and FinEX Asia today announced the launch of Asia’s first financial technology (fintech) asset management platform. FinEX Asia was established in 2017 to connect Asian investors with US consumer lending assets, such as credit card loans.
FinEX Asia combines its risk management expertise with Dianrong’s advanced fintech capabilities to give Asian investors access to a diverse and attractive portfolio of U.S. consumer lending assets. FinEX Asia’s fintech solutions offer advanced risk modeling capabilities, blockchain data security, performance monitoring, and secondary marketplace liquidity.
Seminar: Regulating Peer-to-Peer Lending to SMEs (Asian Development Bank), Rated: B
Event | 12 September 2017ADBI, Tokyo, Japan
This seminar looks at the regulation of P2P lending in the US, People’s Republic of China, Japan, and the UK, and discusses how regulators can help develop P2P as a safe and effective source of financing for SMEs.
Top VC funds in Fintech in Argentina (TechFoliance), Rated: A
Currently, Argentina has four major investment funds that have Fintech companies within their portfolios.
- Kaszek – Founded in 2011, it recently announced the release of a third fund of $200 million to be used for young technology throughout the region. To date, Kaszek has invested USD 1.4 billion in 43 companies, including Nubank, Brazil’s largest digital bank.
RBC WANTS TO USE AI TO GIVE CUSTOMERS FINANCIAL ADVICE (Betakit), Rated: AAA
Canada’s largest bank has announced that its mobile banking app will soon provide users with “actual insights about our client’s financials and a fully automated savings solution that uses predictive technology to identify money in a client’s cash flow that can be automatically saved.”
Dubbed ‘NOMI Insights’ and ‘NOMI Find and Save,’ the services are currently in a pilot release. A full launch is expected later this fall.
IOU Financial Inc. Releases Financial Results for the Three and Six Month Period Ended June 30, 2017 (Newswire), Rated: A
IOU FINANCIAL INC. (“IOU” or “the Company”) (TSXV: IOU), a leading online lender to small businesses, announced today its results for the three and six month period ended June 30, 2017.
- Loan originations for the second quarter ended June 30, 2017 were US$26.2 million versus originations of US$31.8 million for the same period last year. Loan originations decreased by 17.8% due to changes made to the Company’s lending policies in response to increased delinquency levels. We anticipate that these changes will have a positive impact on our loan portfolio over the course of 2017. For the first half of 2017, loan originations amounted to $48.2 million, representing a decrease of 15.7% over the origination of $57.1 million for the same period last year.
- As of June 30, 2017, IOU’s total loans under management amounted to approximately $65.7 million as compared to $79.6 million in 2016. On June 30, 2017, the principal balance of the loan portfolio amounted to $41.6 million compared to $35.5 million in 2016. The increase is consistent with the Company’s strategy to retain more loans on its balance sheet. The principal balance of IOU’s servicing portfolio (loans being serviced on behalf of third-parties) amounted to approximately $24.1 millioncompared to $44.1 million in 2016.
- IOU recorded gross revenue during the second quarter of $4.4 millionversus $3.5 million for the same period last year, representing a 24.5% increase. The increase in gross revenues was primarily driven by a 55.3% increase in interest income from $2.4 million in 2016 to $3.7 million in 2017, as a result of an increase in the size of the loan portfolio. For the six-month period ended June 30, 2017, gross revenues improved to $8.7 million compared to $6.8 million for the same period in 2016.
- Interest expense during the three-month period ended June 30, 2017increased by 44.3% to $1.0 million, up from $0.7 million over the previous year. The increase is attributable to an increase in borrowings under the credit facility partially offset by a reduction in the cost of funds borrowed versus the previous year. For the six-month period ended June 30, 2017, interest expense amounted to $1.9 million compared to $1.3 million in 2016.
- Provision for loan losses (net of recoveries) increased to $2.4 million for the three-month period ended June 30, 2017, up from $1.2 million for the previous year. The increase is primarily attributable to an increase in defaults by borrowers and partially due to an increase in the size of the loan portfolio. To improve loss performance, IOU Financial has made changes to its lending policies and deployed its next generation proprietary IOU Risk Logic Score. In addition, the Company has implemented certain process changes to improve its servicing and collections which includes an aggressive litigation process against businesses who intentionally default on their loan obligations. For the six-month period ended June 30, 2017, IOU recorded a provision for loan losses of $4.3 million compared to $2.0 million in 2016.
- Excluding non-recurring costs, operating expenses decreased 18.1% to $2.5 million for the three-month period ended June 30, 2017 as compared to $3.1 million for the previous year. During the quarter ended September 30, 2016, the Company adopted a plan to reduce operating expenses. The Company is on track to achieve its target of quarterly operating costs of $2.0 million to $2.2 million on a normalized basis in the third quarter. In the second quarter, IOU recorded non-recurring costs of $0.5 million related to vendor contract cancellations and impairment of intangible assets. For the six-month period ended June 30, 2017, operating expenses amounted to $4.9 million, excluding non-recurring costs, compared to $6.0 million in 2016.
- IOU closed its second quarter 2017 with a net loss of $2.1 million, or $0.03per share, compared to a net loss of $1.5 million or $0.02 per share during the same period of 2016. For the six-month period ended June 30, 2017, the net loss amounted to $3.1 million versus $2.8 million in 2016.
- IOU closed its second quarter 2017 with an adjusted net loss of $1.3 million, which excludes certain non-cash and non-recurring items, compared to an adjusted net loss of $1.1 million in the second quarter of 2016. For the first half of 2017, the adjusted net loss was $1.9 millioncompared to an adjusted net loss of $1.6 million for the same period in 2016. Assuming the cost reduction plan was fully implemented on January 1, 2017, IOU’s pro forma adjusted net loss for the three-month and six-month period ended June 30, 2017 would have been approximately $0.8 million and $1.2 million, respectively.
Should established banks fight or assimilate to tech? (African Business Magazine), Rated: AAA
The same quandary that now faces established banks stood before landline telecoms operators 15–20 years ago. In terms of fintech, it seems likely that the answer will become clear over the next few years, as different banks adopt different strategies.
Global consultancy Accenture calculates that fintech threatens more than a third of traditional banks’ revenue. Due to the march of technological innovation and the emergence of more attractive investment regimes, the challenge posed by fintech is only likely to grow.
Fintech is not just a threat to established banks but also to other companies in the financial services sector. Visa, for instance, is built on technology developed during a previous financial technology revolution, and should be able to capitalise on the fintech boom.
Other attempts to integrate the two worlds include PayDunya, an online payments system that allows African e-businesses to accept payments from credit and debit cards, as well as mobile money wallets. Similarly, Yoco provides retailers with an integrated card acceptance and point-of-sale solution, incorporating a mobile app, and either wireless or plug-in card reader.
Some established banks have sought to compete by becoming incubators for fintech. Standard Bank and Barclayshave both launched startup support programmes, with the most successful companies taken under their wing at the end of their periods of support.