- Today’s main news: Aspire Fintech is closing. Navient buys Earnest for $155M. Schwab creates robo-advisor, hires ex-Betterment GM to run it. Atom Bank nears 1B GPB in deposits. SoFi’s plan to become a bank isn’t going so well. Rubique has issued 50K credit cards. Reserve Bank of India (RBI) issues P2P lending platform directions.
- Today’s main analysis: Nutmeg sees losses widen.
- Today’s thought-provoking articles: How tough can Schwab get with digital upstarts? Fintech lenders, banks take note. The 8 biggest European startups by funding. RBI directions for nonbank financing companies (a must-read).
- SoFi’s plans to become a bank isn’t going so well. AT: “This is starting to sound like a broken record, and it will soon be nothing more than stating the obvious. If it isn’t already. But Bloomberg goes into a little deeper analysis than most folks making this pronouncement, and they bring up one very good, interesting point: The next CEO will have his own vision. Where will that take SoFi?”
- SoFi readies 1st student loan bond after management shakeup.
- SoFi hosts party at Front & Palmer.
- Navient buys Earnest. AT: “Navient wants to get into student loans. Evidently, purchasing Earnest will help them do that more efficiently and effectively.”
- Schwab creates robo-exec slot and fills it with ex-Betterment GM. AT: “Traditional investment advisors are following the market. It’s a smart move to hire someone who helped create that market to begin with.”
- How tough can Schwab get with digital upstarts? AT: “This is the nature of competition and the downside of being an upstart. Legacy players with money can rely on their financial strength. When you have capital, you don’t have to be first.”
- Fintech lenders, bank take note. AT: “An excellent analysis of the Upstart No-Action Letter and what it means for other alternative lenders and banks.”
- Roofstock raises $35M in Series C. AT: “Roofstock is on the rise and has a lot of potential to dominate the single-family rental market.”
- LendingTree study finds mortgage process getting faster.
- Congress is attempting to modernize the IRS.
- RealtyShares’ new small balance multifamily program.
- What to watch for in alternative investing opportunities.
- Elevate to release Q3 earnings results on October 30 2017.
- Citi’s latest mobile enhancements.
- Atom Bank close to 1B GBP in deposits. AT: “Congratulations.”
- Nutmeg sees losses widen.
- P2P lending on target for 20% jump.
- 8 biggest startups in Europe by funding. AT: “Klarna is at #4 and Adyen at #6.”
- DBRS approves Trelix as third-party due diligence provider.
- InvoiceFinance raises 6M Euro.
- New10, Mambu partner on SME lending.
- collectAI manages 25M Euro in receivables.
- Fraud in lending: Papering the cracks.
- Rubique issues 50K credit cards.
- Reserve Bank of India issues directions for P2p lenders.
- RBI’s directions for nonbank financial companies (NBFCs). AT: “The actual directions as posted on RBI’s website. A must-read for all NBFCs.
- Finance Ministry welcomes RBI directions for P2P lending.
- RBI to observe P2P lending, invest in security frameworks.
- RBI to allow mobile wallet transfers.
- What startup entrepreneurs can learn from sports.
- Aspire Fintech is shutting down. AT: “Sometimes a good business model doesn’t work for lack of funding. We’re sorry to see them go.”
- United States
- SoFi’s Plan to Become the Bank of the Future Isn’t Going So Well (Bloomberg), Rated: AAA
- SoFi readies 1st student loan bond post-management shakeup (Asset Securitization Report), Rated: A
- SoFi hosts party at Front & Palmer (Metro), Rated: B
- Earnest, An Online Student Lender, Bought By Navient For $ 155 Million (Forbes), Rated: AAA
- Schwab creates robo-exec slot and fills it with ex-Betterment unit chief (RIABiz), Rated: AAA
- How tough can Schwab get with digital upstarts? (FinancialPlanning), Rated: AAA
- FinTech Lenders and Banks Take Note (VedderPrice), Rated: AAA
- Online housing investment platform Roofstock raises $ 35M in Series C (The Real Deal), Rated: A
- From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (Business Insider), Rated: A
- Congress is Trying to Get the IRS to Modernize (Lend Academy), Rated: A
- RealtyShares – New Small Balance Multifamily Program (RealtyShares), Rated: A
- What to Watch for When It Comes to Alternative Investing Opportunities (Madison.com), Rated: A
- Elevate to Release Third Quarter 2017 Earnings on Monday, October 30, 2017 (Financial Times), Rated: B
- Citi FinTech’s Customer-Driven Journey: Our Latest Mobile Enhancements (Citi), Rated: B
- United Kingdom
- App-only bank Atom nears £1 billion in deposits (Business Insider), Rated: AAA
- UK’s biggest robo-advisor Nutmeg sees losses widen (Business Insider), Rated: AAA
- P2P lending on course for 20 per cent jump (FT Adviser), Rated: A
- European Union
- The 8 Biggest Startups in Europe by Funding (Nanalyze), Rated: AAA
- Trelix Approved as a Third-Party Due Diligence Provider by DBRS (Business Insider), Rated: A
- Dutch fintech company InvoiceFinance raises €6 million in funding (Tech.eu), Rated: A
- New10 Partners With Mambu To Redefine Dutch SME Lending (Bob’s Guide), Rated: A
- collectAI manages 25m Euro in Receivables (Otto Group), Rated: A
- Papering Over the Cracks (LendIt), Rated: A
- BitProperty Announces Upcoming Token Sale, Beta Release of Real Estate Investment Platform (Bitcoinist), Rated: AAA
- Rubique crosses over 50,000 credit cards customers (India.com), Rated: AAA
- RBI issues directions for peer-to-peer lending platforms (India Times), Rated: AAA
- NOTIFICATIONS (Reserve Bank of India), Rated: AAA
- Finance Ministry Welcomes RBI Move On P2P Lending (Bloomberg Quint), Rated: A
- RBI To Observe P2P Lenders As Well As Invest in Security Frameworks (Industry Daily News), Rated: A
- RBI To Allow Funds Transfer Among Mobile Wallets (Bloomberg Quint), Rated: A
- What startup entrepreneurs should learn from sports (MoneyControl), Rated: B
- Aspire FinTech is closing down (Aspire Email), Rated: AAA
SoFi’s Plan to Become the Bank of the Future Isn’t Going So Well (Bloomberg), Rated: AAA
Now, with Cagney felled by a flurry of sexual harassment allegations, the question is whether SoFi has any chance of building the financial supermarket he envisioned. This was always going to be a tall order given the intense competition from entrenched players and fintech startups alike, but now the SoFi brand has been tarnished as well.
“There are a lot of question marks,” says Alois Pirker, research director at advisory firm Aite Group. “The new CEO will need to find his or her bearings there and that will tell which direction they’ll be going.”
Some members of the board consider the moves into life insurance and wealth management Cagney “pet projects,” according to a person familiar with their thinking. Directors prefer to focus on more mature businesses such as personal loans and mortgages that are more predictable and established, said the person, who requested anonymity to discuss a private matter.
The firm reported revenue of $134 million in the second quarter, according to an email from Cagney to investors in August. It had adjusted earnings before interest, taxes, depreciation and amortization of $61.6 million and extended over $3.1 billion in student loans, personal loans and mortgages during that time frame. Personal loans are the most profitable, the person said, followed by student loans and then mortgages.
The wealth management unit had just $12 million in assets under management as of early September, according to a filing. This is far short of the more than $100 million the firm had set as an internal goal, people familiar with the matter have said.
SoFi readies 1st student loan bond post-management shakeup (Asset Securitization Report), Rated: A
Social Finance is returning to the securitization market with $626.4 million of bonds backed by loans used to refinance the student debt of borrowers with advanced degrees and high incomes.
The transaction, SoFi Professional Loan Program 2017-E (internal link; not in original source article), comes just weeks after the marketplace lender experienced a management shakeup; its chief executive officer and chief financial officer both resigned.
SoFi hosts party at Front & Palmer (Metro), Rated: B
Recent college grads were invited to attend for free and to gain admittance, only needed to bring a proof of their student loan debt.
Earnest, An Online Student Lender, Bought By Navient For $ 155 Million (Forbes), Rated: AAA
Financial technology start-up Earnest has agreed to be acquired by student loan servicing giant Navient for $155 million in cash, the companies said on Wednesday.
Earnest, an online lender that has focused on refinancing student loans, will remain a distinct brand and will continue to be led by its current management team, including founder and CEO Louis Beryl.
The acquisition will be a launching pad for Navient to begin originating its own student loans.
Schwab creates robo-exec slot and fills it with ex-Betterment unit chief (RIABiz), Rated: AAA
As its robo-assets soar to seemingly effortless heights, Charles Schwab & Co. is hiring an intriguing ex-Betterment talent to ensure that its good fortune holds.
The San Francisco-based investments giant, with $24 billion* of assets under automated management in Schwab Intelligent Portfolios and Schwab Intelligent Advisor, hired Cynthia Loh, the ex-general manager of Betterment for Business, the division that oversees the New York-based robo‘s 401(k) unit.
The Schwab robo-launch’s differentiators were its “zero” fee, its 24/7 access to service personnel and its national advertising. Yet the look and offering of the Schwab Intelligent offering are considered plain-vanilla in scope.
How tough can Schwab get with digital upstarts? (FinancialPlanning), Rated: AAA
Outlining his firm’s strategy for battling digital disruption, Schwab CEO Walt Bettinger envisioned it would push client asset revenues lower, while relying on its brand and established market share to grow.
Reacting to his statement, industry observers expect an uphill slog for independents as the largest firms gear up for a price war on three fronts: financial advice, online trading and ETFs.
An early study by A.T. Kearney predicted incumbents would slash prices to compete with robo advice upstarts. While that never came to pass, the 2015 study still predicted industry revenues would drop by as much as $12 billion by 2020.
“[Schwab has] $3 trillion in client assets. They have very positive brand recognition and customer satisfaction scores that are the envy of most of the industry. They have demonstrated a willingness to cut price to gain market share, as seen with their recent commission cuts in online trading. So yes, they can throw their weight around.”
The wisdom of possessing a trifurcated digital advice offering — Schwab Intelligent Portfolios, a digital-only service, an institutional platform for RIAs, and the hybrid robo advisor Schwab Intelligent Advisory — also becomes clearer, McDermott notes. (Schwab’s robo now has $20 billion in AUM).
Robo advice is expected to collectively top $1 trillion in assets under management in fewer than five years, according to Boston-based consulting firm Aite Group. But micro-investing will partly feed such growth, it predicts, noting over 60% of millennials already are subscribed to such apps.
FinTech Lenders and Banks Take Note (VedderPrice), Rated: AAA
While Upstart’s No-Action Letter has narrow applicability, it may serve as a tool for other FinTech lenders in implementing innovative products and services and establishing relationships with banks.
According to Upstart, its underwriting technology uses traditional underwriting methodologies in combination with other variables that are correlated with financial capacity and “repayment propensity.” Upstart states that its model understands and quantifies risk associated with all borrowers—both those with credit histories and those without credit histories. As a result, the Upstart loan program is able to offer credit to segments of the population with limited credit or work histories at more favorable rates. In other words, it appears Upstart is underwriting consumer loans without reliance upon traditional criteria, such as credit scores and length of employment history.
- The No-Action Letter is only applicable to Upstart’s automated model for underwriting applicants for unsecured non-revolving credit, as described in Upstart’s original Request.
- The No-Action Letter will expire three (3) years after its issuance, at which time Upstart may seek to renew the No-Action Letter.
- The No-Action Letter is subject to modification or revocation at any time at the discretion of the CFPB staff for any reason, including where the CFPB’s staff determines that such modification or revocation is appropriate to protect consumers or is otherwise in the public interest.
On one hand, a no-action letter may be particularly useful for a FinTech company, utilizing innovative technology and operations, to obtain guidance concerning the permissibility of its business model under specific regulatory constructs. A no-action letter may also be useful for a FinTech company seeking to establish joint ventures with banks.
On the other hand, a CFPB-issued No-Action Letter has narrow applicability as it is only applicable to the requesting applicant, a specific regulatory issue and the facts and circumstances identified by the applicant in its request submitted to the CFPB. Should a fact or circumstance fail to be conveyed accurately, or should a fact or circumstance change, the No-Action Letter may be rendered useless.
Online housing investment platform Roofstock raises $ 35M in Series C (The Real Deal), Rated: A
Housing investment platform Roofstock raised $35 million in a Series C funding round as it looks to cash in on growing interest in single-family rental housing.
Roofstock CEO Gary Beasley said the firm will use the money to hire and to expand into new markets. The company has raised a total of $68 million from investors, according to Beasley.
From Shopping to Close, LendingTree Study Finds Mortgage Process is Getting Faster (Business Insider), Rated: A
LendingTree, an online loan marketplace, has released the findings of its study on shopping timelines for purchase mortgages. The study analyzed data from a sampling of more than 5,000 closed loans from March 2016 through May 2017 and reviews the timeline for the entire mortgage shopping experience – from first submitting a loan request and being matched with a lender to the date of the mortgage loan closing. The study revealed that the median time from early rate shopping to closing on a purchase mortgage declined 7 days from 2016 to 2017.
From 2016 to 2017, LendingTree has seen a 19% increase in the number of loans closed within 30 days and a 27% increase in loans closed in 60 days.
Congress is Trying to Get the IRS to Modernize (Lend Academy), Rated: A
Back in December 2013 Renaud Laplanche testified on Capitol Hill on small business lending. He was CEO of Lending Club back then and when a Congressman asked Laplanche a question as to how the government can best help he said to make IRS data more easily accessible to online lenders.
Fast forward four years and there appears to finally be some movement on this. Last week Congressman Patrick McHenry (R-NC) along with Senator Cory Booker (D-NJ) introduced a billthat would help the IRS move into the modern age and allow the automated retrieval of tax information through an API.
The IRS Data Verification Modernization Act of 2017 as it is called will require the IRS to create an API that will allow lenders to verify income in real time.
RealtyShares – New Small Balance Multifamily Program (RealtyShares), Rated: A
RealtyShares is now financing Small & Large Balance Commercial Multifamily, Apartment, Retail, & Hotel Assets.
Typical dwellings/ deal structure:
- Class A, B & C+ dwellings
- Typically like properties within a 30 mile radius of a popular MSA (but not necessarily a deal breaker as long as the project looks good)
- The minimum loan financed needs to meet 1MM (Acquisition w/ renovation)
- Asset Based Lender but having an experienced client who has done deals in the particular area is a great compensating factor
- Loan Amount
- Duration (term)
- Closing deadline
- Reason for deadline
- Amount of existing first lien
- Amount of other liens
- Collateral Type
- Number of Units
- Total Square Footage
- Street Address
- Purchase Price and Purchase Date (if refi)
- “As Is” Real Estate Value
- Date of “as is” Appraisal/BPO
- Net Operating Income (NOI)
- Capital Expenditures since Purchase ($)
- Vacancy (%)
- Net Worth of Guarantor(s)
- Estimated liquid assets of Guarantor(s)
- FICO Score of Guarantor(s)
- Guarantor(s) investment in collateral – current or proposed
- Sponsor’s Website
Use of Proceeds:
Please provide a concise description, a few sentences, on the Use of Proceeds (i.e., discuss: acquisition, refinance, site improvement, tenant improvements, planning, design/permitting, carry costs and etc.)
Please provide a concise description, a few sentences on the Exit Strategy (e.g. discuss prospective buyer, prospective permanent financing).
What to Watch for When It Comes to Alternative Investing Opportunities (Madison.com), Rated: A
When you are working in the equity crowdfunding space, particularly as a company that is private, you certainly don’t have the liquidity that you would for a publicly traded stock that’s on the exchange.
On this episode of Industry Focus: Technology, host Dylan Lewis is joined by Motley Fool contributing writer Daniel Kline to talk about the dangers of this type of investing. They break down all the risks associated with purchasing shares in a company that does not have to report as much financial data as a traditional publicly traded company.
Watch the full video discussion here.
Elevate to Release Third Quarter 2017 Earnings on Monday, October 30, 2017 (Financial Times), Rated: B
Elevate Credit, Inc. today announced that it will release its third quarter 2017 financial results after the market closes on Monday, October 30, 2017. Ken Rees, Chief Executive Officer, and Chris Lutes, Chief Financial Officer, will also host a conference call on the day of the release (October 30, 2017) at 5:00 pm ET to discuss Elevate’s financial results.
Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Third Quarter 2017 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s website at http://www.elevate.com/investors.
An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on November 13, 2017, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13671832, or by accessing Elevate’s website.
These new mobile investment features include a dividend reinvestment plan (DRIP), fund screener, consolidated search functionality and enhanced visualization. Through the Citi Mobile App for iPhone, any Citi client with a brokerage account now enjoys one-touch access to their financial advisors and the ability to manage their investments personally, without switching to another channel.
Dividend Reinvestment Plan: Now clients can enroll eligible securities in a dividend reinvestment plan (DRIP) right within the app. Once a customer has opted in, this feature helps our clients put their cash dividends to work, instead of idling in their accounts.
Investment Search: This consolidated search function makes investing easier for clients interested in managing their portfolios themselves.
Performance Visualization: An enhanced visualization enables clients to track their portfolio’s performance and make adjustments right within the app.
App-only bank Atom nears £1 billion in deposits (Business Insider), Rated: AAA
Startup, app-only bank Atom has passed £900 million in deposits less than two years after launching its first savings product.
The disclosure comes as Atom’s annual accounts show that the startup had £538 million in deposits from over 17,000 customers at the end of March. It means the app-only bank has attracted around £400 million in four months.
The bank’s accounts, filed with Companies House this week, show Atom has received over £300 million of small business loan applications and lent out close to £100 million in loans and mortgages by March this year.
Atom had a net interest loss of £1 million for the year, due to paying out interest on its 1.95% and 2.5% fixed savings accounts, at the time market-leading interest rates, before the launch of its lending products.
UK’s biggest robo-advisor Nutmeg sees losses widen (Business Insider), Rated: AAA
Nutmeg, the UK’s biggest automated investment fintech in terms of assets under management (AUM), released results for 2016 that showed a mixed picture for the company.
The good news is that Nutmeg saw turnover grow by an impressive 53% from £1.7 million ($2.3 million) in 2015 to £2.6 million ($3.5 million) in 2016. Additionally, the fintech hit some £600 million ($798 million) in AUM and 25,000 customers by the end of December 2016, meaning it is still the leader in the UK’s automated investment market.
P2P lending on course for 20 per cent jump (FT Adviser), Rated: A
Lending across all of the peer-to-peer platforms in 2017 to date is already higher than in the whole of 2016, according to data from research agency 4thWay.
According to the data, total lending across all peer-to-peer platforms is likely to be at least 20 per cent higher this year than last with the largest platforms, Funding Circle and Zopa, leading the way.
Funding Circle has lent £865m in 2017 to date, compared with £825m in the whole of 2016.
The 8 Biggest Startups in Europe by Funding (Nanalyze), Rated: AAA
Zee Germans are leading the pack with 4 unicorns and we also see that fintech and ecommerce make up half of all the sector allocations.
|Spotify||$8.53||Sweden||Internet Software & Services|
|Otto Bock HealthCare||$3.50||Germany||Healthcare|
|Global Fashion Group||$1.10||Luxembourg||eCommerce/Marketplace|
|AVAST Software||$1||Czech Republic||Cybersecurity|
Big Brand Payments, Part 1
Another big player from Sweden is Klarna, founded in 2005 and now valued at $2.5 billion. With $521.44 million in funding from investors like Sequoia and Visa, Klarna is one of the most popular e-commerce payment solutions in Europe, used by Burberry, Overstock.com, J.Crew, Nike, Lenovo, and hundreds more.
Adlibris, one of Europe’s largest booksellers, used Klarna to improve its mobile checkout solution, resulting in an 80% conversion increase.
Big Brand Payments, Part 2
With a valuation just shy of its Swedish colleague Klarna, Netherlands-based Adyen (valued at $2.3 billion), has established a firm foothold in the world of merchant payments by providing a “friction-less payment experience”. Founded in 2006 and funded with $266 million to date, Adyen has some huge customers in its corner, including Netflix, Uber, Etsy, Spotify, Groupon, and LinkedIn. The secret is in its platform, which features support for a wide variety of payment options (250 worldwide, to be exact) in a single system, including Apple and Android Pay, all major credit cards, direct debit for recurring payments, in-app purchases, and much more. The Cambridge Satchel, a UK handbag company, saw its Black Friday sales rocket by 124% after switching to Adyen’s platform. In addition to one-time purchases, the platform also facilitates subscriptions and recurring payments more seamlessly.
Trelix Approved as a Third-Party Due Diligence Provider by DBRS (Business Insider), Rated: A
Trelix, a provider of due diligence, quality control, licensed fulfillment and non-licensed fulfillment products and services across the origination and securitization lifecycle, today announced that it has been approved as a third-party due diligence provider for DBRS-rated transactions. DBRS is a full-service credit rating agency respected for its independent, third-party evaluations of corporate and government issues. DBRS’s approval process, before adding a company as an accepted provider, includes an on-site review to assess companies’ staffing, infrastructure and capabilities relevant to securitization-related services.
As part of Altisource’s Origination Solutions platform, Trelix offers clients a unique combination of technology and risk management tools that position it to have a meaningful impact on the securitization market.
Dutch fintech company InvoiceFinance raises €6 million in funding (Tech.eu), Rated: A
The new funds will be invested in marketing purposes and hiring for the sales and development team.
New10 Partners With Mambu To Redefine Dutch SME Lending (Bob’s Guide), Rated: A
Mambu today announced that New10, ABN AMRO’s newly launched FinTech, has selected the SaaS engine to power a range of small and medium enterprise (SME) lending products in the Netherlands. New10, which aims to provide credit decisions within 15 minutes, went from concept to launch within 10 months, in line with ABN AMRO’s vision of digitisation and innovation.
Mambu took a collaborative approach working with the New10 team in order to complete implementation within four months. In a highly regulated environment, Mambu’s partnership with Amazon Web Services (AWS) which has received Dutch regulatory approval, helped smooth the path to market. New10 launched on 21 September 2017 with a fully digital SME lending platform with plans to broaden the portfolio and potentially expand into new markets.
collectAI manages 25m Euro in Receivables (Otto Group), Rated: A
collectAI, the service for digital receivables, has processed receivables at a volume of 25m Euro since its foundation in 2016. collectAI automates and digitises invoices, dunning and debt collection processes and is the first digital end-to-end provider in receivables management.
Examples of successful KPIs on the clients’ side include: Introducing digital communication channels lead to an increase of the collection rate of 33 percent, while processing costs have been reduced by up to 41 percent.
While 23 percent of invoices are overdue Europe-wide (EHI 2016 – online retail only), the invoice remains the most popular payment method in Germany with a market share of 30,5 percent (EOS 2016). Even though returns from receivables and debt collection are essential for revenue and thus liquidity, only 18 percent of companies have digitised their receivables to date (EOS/Kantar 2017).
Papering Over the Cracks (LendIt), Rated: A
In 2016 there were a reported 5.4 million SMEs in operation in the UK alone and our economy depends heavily on the success of these “little guys”.
Fintechs and banks are now lending faster than the speed of light, but when it comes to uncovering fraudulent activity, are they actually left standing in the dark?
Invoice finance lenders have to be particularly vigilant when it comes to a different type of fraud: fresh air invoicing.
One way to avoid being stung by paper fraud is to lend against accurate financial data extracted directly from a company’s accounting package, rather than lending against a PDF or excel file that can be amended. Advances in technology means lenders are now able to access this level of data directly, securely and efficiently, so they can be sure they’re providing fair financial support to loan applicants.
BitProperty Announces Upcoming Token Sale, Beta Release of Real Estate Investment Platform (Bitcoinist), Rated: AAA
BitProperty, the blockchain-powered real estate investment platform, has announced that it will launch a closed beta release on October 5, 2017. Ten days later, on October 15, it will kick off a token sale to raise funds for further development of the platform.
The BitProperty platform is built on the Ethereum blockchain and uses two different types of tokens. The first type is an asset token that represents a share of a particular asset. When a real estate owner lists a property on the platform, the number of asset tokens issued against the property represents its value. Investors can purchase these asset tokens and will then receive income based on the performance of the asset (property) and the size of the stake that each investor holds.
The second type of token is the BTP token, which represents the inherent value of the platform backed by the pool of the company’s managed assets.
Rubique crosses over 50,000 credit cards customers (India.com), Rated: AAA
Mumbai-based FinTech startup Rubique continues to embark upon its fast-paced growth across sectors, including Retail and SME financing.
Rubique has till date successfully crossed over 50,000 Credit Cards customers.
RBI issues directions for peer-to-peer lending platforms (India Times), Rated: AAA
The Reserve Bank of India (RBI), on October 4, issued directions for non-banking financial companies (NBFC) that operate peer-to-peer (P2P) lending platforms. According to the directions, from now on no NBFC can start or carry on the business of a P2P lending platform without obtaining a Certificate of Registration. Every company seeking registration with the bank as an NBFC-P2P shall have a net owned funds of not less than Rs 20 million or such higher amount as the bank may specify.
They have been asked to apply for registration as NBFC-P2Ps within 3 months.
NOTIFICATIONS (Reserve Bank of India), Rated: AAA
These Directions provide a framework for the registration and operation of NBFC-P2Ps in India.
(2) Process of Registration
(i) Every existing and prospective NBFC-P2P shall make an application for registration to the Department of Non-Banking Regulation, Mumbai of the Bank, in the form which will be specified by the Bank for the purpose. Existing NBFC-P2Ps shall apply within three months from the issuance of these Directions.
(ii) The Bank, for the purpose of considering the application for registration, shall require the following conditions, among others, to be fulfilled:
- The company is incorporated in India;
- The company has the necessary technological, entrepreneurial and managerial resources to offer such services to the participants;
- The company has the adequate capital structure to undertake the business of Peer to Peer Lending Platform;
- The promoters and the Directors of the company are fit and proper;
- The general character of the management of the company is not prejudicial to the public interest;
- The company has submitted a plan for, or implemented, a robust and secure Information Technology system;
- The company has submitted a viable business plan for conducting the business of Peer to Peer Lending Platform;
- Public interest shall be served by the grant of CoR;
Any other condition as may be specified by the Bank, fulfillment of which, in the opinion of the Bank, is necessary to ensure that the commencement of or carrying on the business in India shall not be prejudicial to the public interest.
6. Scope of Activities
(1) An NBFC-P2P shall-
- act as an intermediary providing an online marketplace or platform to the participants involved in Peer to Peer lending;
- not raise deposits as defined by or under Section 45I(bb) of the Act or the Companies Act, 2013;
- not lend on its own;
- not provide or arrange any credit enhancement or credit guarantee;
- not facilitate or permit any secured lending linked to its platform; i.e. only clean loans will be permitted;
- not hold, on its own balance sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans; or such funds as stipulated in paragraph 9;
- not cross sell any product except for loan specific insurance products;
- not permit international flow of funds;
- ensure adherence to legal requirements applicable to the participants as prescribed under relevant laws.
- store and process all data relating to its activities and participants on hardware located within India.
(2) Further, NBFC-P2P shall-
- undertake due diligence on the participants;
- undertake credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders;
- require prior and explicit consent of the participant to access its credit information;
- undertake documentation of loan agreements and other related documents;
- provide assistance in disbursement and repayments of loan amount;
- render services for recovery of loans originated on the platform.
(3) NBFC-P2P shall not undertake any activity other than those stated in paras 6(1) and 6(2) of these Directions. Deployment of investible funds by an NBFC-P2P in instruments specified by the Bank, not for trading, shall however be permitted.
11. Transparency and Disclosure Requirements
(1) An NBFC-P2P shall be required to disclose the following:
(i) to the lender
- details about the borrower/s including personal identity, required amount, interest rate sought and credit score as arrived by the NBFC-P2P.
- details about all the terms and conditions of the loan, including likely return, fees and taxes;
(ii) to the borrower – details about the lender/s including proposed amount, interest rate offered but excluding personal identity and contact details;
(iii) publicly disclose on its website:
- overview of credit assessment/score methodology and factors considered;
- disclosures on usage/protection of data;
- grievance redressal mechanism;
- portfolio performance including share of non-performing assets on a monthly basis and segregation by age; and
- its broad business model.
(2) NBFC-P2P shall ensure that the providing of services to a participant, who has applied for availing of such services, is backed by appropriate agreements between the participants and the NBFC-P2P. The agreements shall categorically specify all the terms and conditions among the borrower, the lender and the NBFC-P2P.
(3) The interest rates displayed on the platform shall be in Annualized Percentage Rate (APR) format.
Finance Ministry Welcomes RBI Move On P2P Lending (Bloomberg Quint), Rated: A
The finance ministry today welcomed the central bank’s move to treat peer-to-peer, also known as P2P, lending platforms as non banking financial companies, saying it would improve financing for smaller firms.
RBI To Observe P2P Lenders As Well As Invest in Security Frameworks (Industry Daily News), Rated: A
The government has declared RBI (Reserve Bank of India) as the watchdog for P2P (peer to peer) lending marketplaces that have been segmented as NBFCs (non-banking finance companies). While this might elevate prices for online lenders via compliance needs, most have greeted the decision claiming that it provides them identification.
RBI To Allow Funds Transfer Among Mobile Wallets (Bloomberg Quint), Rated: A
The Reserve Bank of India will make prepaid payment instruments like e-wallets, gift cards and meal coupons interoperable for customers complying with the central bank’s know your customer guidelines.
Inter-operability among KYC compliant prepaid instruments will be implemented in six months after the RBI issues its revised norms within a week by October 11, the central bank said as part of its developmental and regulatory policies.
What startup entrepreneurs should learn from sports (MoneyControl), Rated: B
The so-called unicorn startups and their founders have become role models for the millennials. Hardly any town or city in India is left untouched by the startup fever and its multi-million funding stories.
1. Sport helps build character: Sanjay Darbha, the founder of Peerlend, a peer-to-peer lending platform and a sports enthusiast who competes in Senior Men’s circuit tournaments of the International Tennis Federation (ITF), explains, that sports inculcates attributes such as discipline, focus, and patience.
2. Sports lets you, be yourself: If entrepreneurs want to know the better or bitter side of their team members – make them play a sport.
3. Sport is a medium to connect beyond business: Ecosystem players should find innovative ways to connect with each other to get a better understanding of other’s needs and challenges.
4. Sport helps in building lasting bonds: A playground in an excellent incubator that helps in the construction of robust and long-lasting relationships.
Startups could use games to let their team members explore possible synergies between them.
Aspire FinTech is closing down (Aspire Email), Rated: AAA
I wanted to share the news today that Aspire Financial Technologies will be officially shutting down this week. Sadly, the search for a strategic partner we started in the summer wasn’t successful, and our funding has now run out. As a result, we no longer have the resources to continue the build of our loan data and analytics infrastructure solutions.
I’ll be running a sale process of Aspire’s IP (Aspire Gateway and ALD Explorer solutions) over the next month or so, looking for a quick outcome. Feel free to contact me to discuss.
Thanks to all that have supported Aspire over the past two years. Despite the odds, we made it this far, with your help. Unfortunately, expensive and complex build requirements, with long institutional sales cycles, combined with a lack of scalable professional seed-stage funding in Canada, have been our undoing. Any one of these being different would likely have yielded a better outcome, but all three together have proved to be terminal.
Mark and I have had a great team to work with. We thank them for all the hard work and long hours, and wish them well as they move on to their next challenges (and hopefully a bit more stability!).
For me personally, I’ve made and consumed a great deal of “FinTech Kool-Aid” over the past two years, which has permanently altered by view of the future, and the role that technology will play in the delivery of financial services to consumers, small businesses and corporations going forward. I’m excited to see this play out, and the role I can play in making it happen.
David A. Fry, MBA, CFA
Co-Founder and CEO
Aspire Financial Technologies Inc.