- Today’s main news: SoFi surpasses $25B in originations. JPMorgan Chase rolls out mobile banking app. ID Analytics has 85% visibility into online consumer lending. Zopa prices new securitization. Fannie Mae expands digital mortgage platform. SEC investigated Bank of Internet. China’s cash loan market hits 1 trillion RMB. Lendified secures $60M credit facility. Facebook, Clearbanc partner on merchant cash advance.
- Today’s main analysis: Behalf increases partner sales by 10-20%. The Chinese consumer lending market.
- Today’s thought-provoking articles: Wealthy depositors pressure banks to increase interest rates on deposits. Using the secondary MPL market to achieve above average returns. The Chinese consumer lending market. European Crowdfunding Network debates cross-border alternative finance. Ensuring safe crowdfunding investment landscape in Malaysia.
- SoFi hits $25B in loan originations. AT: “Interestingly, instead of firing out a press release, they made the announcement on Twitter. Congratulations.”
- JPMorgan Chase rolls out mobile banking app. AT: “Apparently, this is an attempt to reach millennials, but I wonder if the younger crowd will fall for that, giving their distrust of legacy financial institutions, or opt for the more independent mobile banking apps?”
- ID Analytics has 85% visibility into online consumer lending. AT: “This effectively makes the service a necessity for firms targeting consumers.”
- Fannie Mae expands partnerships with digital mortgage platform.
- 92.3% of acceptance partners say Behalf increases sales by 10-20%. AT: “Awesome white paper.”
- Bank of Internet faced 16-month SEC investigation. AT: “And evidently came out clean.”
- Wealthy depositors pressure banks to up interest rates. AT: “Money still talks.”
- FT Partners advises Credit Sesame on $42M growth financing.
- 13 Chinese companies that listed on the U.S. stock exchange this year.
- Leading banks embrace digital strategies more than ever.
- How technology is changing multifamily lending.
- AutoGravity partners with Global Lending Services.
- Can employers solve the student debt problem?
- Target integrates wallet functionality into mobile app.
- Jim Rogers says fintech will replace banks and cash.
- Zopa’s new securitization priced.
- How to use the secondary market for above-average returns. AT: “Interesting analysis on flipping MPL loans through a secondary market, but where’s the secondary market?”
- Monzo, Starling move closer to payment integration.
- Landbay’s P2P technology.
- Why brokers should consider P2P lending.
- An open letter to FCA’s chief.
- Cash loan market hits 1 trillion RMB in one year.
- Chinese consumer lending market analysis.
- Ali Microcredit Ltd. made 2.6B RMB in the first half of 2017.
- The cash loan controversy.
- The LendingClub of China. AT: “An interesting interview with Dianrong’s CEO.”
- Zhou Ji’an joins China Rapid Finance as non-executive independent director.
- European Crowdfunding Network discusses cross-border alt finance.
- Tink expands in Europe with investment and bank partners.
- United States
- A new milestone: we’ve surpassed $ 25b in loan originations! (@SoFi on Twitter), Rated: AAA
- Will JPM’s millennial-app experiment grant access to new markets? (American Banker), Rated: AAA
- ID Analytics Now Has 85% Visibility Into Online Consumer Lending (deBanked), Rated: AAA
- Fannie Mae goes all-out on fintech collaborations (Business Insider), Rated: AAA
- 92.3% of acceptance partners said Behalf increased their sales 10-20% (Behalf), Rated: AAA
- Bank of Internet was under 16-month SEC investigation (New York Post), Rated: AAA
- Wealthier Depositors Pressure Banks to Pay Up (WSJ), Rated: AAA
- FT Partners Advises Credit Sesame on its $42,000,000 Growth Financing (FT Partners), Rated: A
- The 13 Chinese Companies That Listed On US Stock Exchanges In 2017 (Frontera), Rated: A
- Leading Banks are Embracing Digital Strategies More Than Ever (Lend Academy), Rated: A
- How Tech is Changing Multifamily Lending (Multi-Housing News), Rated: A
- AutoGravity Announces Partnership With Global Lending Services (PR Newswire), Rated: A
- Can employers help solve the student debt problem? (HRDive), Rated: A
- Target.com Introduces GiftNow (PYMNTS), Rated: B
- Legendary Investor Jim Rogers Believes FinTech Will Replace Banks and Cash (Cryptocoins News), Rated: B
- United Kingdom
- New Zopa securitisation priced, highlights market confidence (AltFi), Rated: AAA
- Using the secondary market for above average returns on investment (P2P Banking), Rated: AAA
- Monzo and Starling take bigger steps towards payment integration (AltFi), Rated: A
- Case study: the technology behind P2P (Banking Technology), Rated: A
- Brokers should consider the P2P option (Mortgage Introducer), Rated: A
- Open letter to Andrew Bailey, chief executive of FCA (Specialist Banking), Rated: A
- Chinese Cash loan market grown to 1 trillion RMB in one year (Xing Ping She), Rated: AAA
- Xi’s Neighborhood Watch (Bloomberg), Rated: AAA
- Ali Microcredit Ltd. made 2.6 billion RMB in first half, exceeding 14 public banks (Xing Ping She), Rated: A
- Cash loan controversy (Global Times), Rated: A
- LendingClub of China: World’s no.2 economy is a fintech haven (MSN), Rated: A
- China Rapid Finance names Zhou Ji’an a non-executive independent director (Bankless Times), Rated: B
- European Union
- ECN Convention Debates Technology & Cross-border Future in EU Alternative Finance & Crowdfunding (Crowdfund Insider), Rated: AAA
- Tink secures investment and bank partners as it plans European expansion (Banking Technology), Rated: A
- DTCC: HOW TO THINK ABOUT FINTECH (All About Alpha), Rated: A
- The Importance of Fintech Spreads Across the Financial Industry (PR Newswire), Rated: A
- ANZ BBSW penalty too low: P2P lender (InvestorDaily), Rated: A
- Gratification Unleashed (OutlookMoney), Rated: A
- Finance: Ensuring a safe investment crowdfunding landscape (The Edge Markets), Rated: AAA
- Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: AAA
- Facebook teams up with Clearbanc to offer cash advances to business (Financial Times), Rated: AAA
- MONEYTREE Q3 REPORT: STRONG AI AND FINTECH FUNDING PUSHING 2017 BACK ON TRACK (Betakit), Rated: A
A new milestone: we’ve surpassed $ 25b in loan originations! (@SoFi on Twitter), Rated: AAA
Thank you to our community of over 390,000 people for growing with us.
Will JPM’s millennial-app experiment grant access to new markets? (American Banker), Rated: AAA
JPMorgan Chase spent more than a year researching what millennials (and clients wanting to bank like them) desire in a financial relationship. The result is a new mobile-only app that lets people sign up for a bank account within minutes and also helps manage their spending.
The megabank made a splash on Monday debuting Finn by Chase, an app that includes a checking and savings account and a physical debit card.
ID Analytics Now Has 85% Visibility Into Online Consumer Lending (deBanked), Rated: AAA
At Money2020, deBanked caught up with Kevin King, Director of Product Marketing and Ken Meiser, VP of Identity Solutions for ID Analytics. The last time I crossed paths with the company was six months ago at the LendIt Conference in New York City. Since then, the company has increased its visibility into the online consumer lending market to 85%.
Fannie Mae goes all-out on fintech collaborations (Business Insider), Rated: AAA
Fannie Mae, a US government agency that funds mortgages for lenders, rolled out 1 Day Certainty, a digital platform designed to make the mortgage process more streamlined for both lenders and consumers, last year.
This week, it announced three new features on the platform, including Single Source Validation, which will allow mortgage lenders to underwrite applicants more quickly and accurately. Single Source Validation is currently being piloted, with a full launch scheduled for 2018.
The service leverages Yodlee‘s Risk Insight Solutions technology, which augments conventional credit reports with data from circa 16,000 external sources with customers’ permission. Additionally, the solution is using digital identity verification fintech FormFree‘s AccountChek software, which allows applicants to send their financial data and documents required for authentication online directly to lenders instead of submitting physical documentation. API platform Plaid, meanwhile, will make it easier for Fannie Mae lenders tap into borrowers’ bank accounts, thereby speeding up the credit check and approval process. Moreover, Single Source Validation is being trialed in collaboration with big-name alt lenders including Quicken Loans.
92.3% of acceptance partners said Behalf increased their sales 10-20% (Behalf), Rated: AAA
Behalf’s merchant acceptance partners have found a way to apply Amazon’s small business strategies to their own business models. By adding the Behalf instant credit approval tool to their ecommerce experience, they also unlock the power of flexible terms on every sale. Customers of our partners can get instant access to up to $50,000 in buying power with their choice of flexible payment terms. With this boost in working capital, small businesses are able to invest in their growth, which increases their business purchasing velocity. Case in point: 92.3% of the Behalf acceptance partners surveyed reported that adding Behalf to their checkout experience drove a 10-20% sales lift.
Download and read the full whitepaper here.
Bank of Internet was under 16-month SEC investigation (New York Post), Rated: AAA
Online lender Bank of Internet was the subject of a formal 16-month Securities and Exchange Commission investigation, according to a report.
The company, led by Chief Executive Greg Garrabrants, was the subject of scrutiny until June — when it ceased without the SEC taking any action.
The probe was focused on alleged conflicts of interests, auditing practices, and loans made to two entities, according to subpoenas and government documents obtained by Probes Reporter, a publisher of investment research.
Wealthier Depositors Pressure Banks to Pay Up (WSJ), Rated: AAA
Large U.S. banks are starting to pay up to keep depositors from moving their money, saying customers are becoming increasingly demanding as the stronger economy nudges interest rates higher.
The average interest rate paid by the biggest U.S. banks on interest-bearing deposits jumped to 0.40% in the third quarter, the highest level since 2012 and the biggest quarterly increase this year, from 0.34% in the second quarter, according to Autonomous Research.
Bank executives said that the newest pressure for higher rates is coming primarily from wealth-management customers, typically well-to-do individuals and families who deposit cash as part of their investment accounts.
Fifth Third executives said they were raising deposit rates for some of those customers, particularly those who had other relationships with the bank.
FT Partners Advises Credit Sesame on its ,000,000 Growth Financing (FT Partners), Rated: A
- On October 25, 2017, Credit Sesame announced it has raised over $42 million in equity and venture debt
- The funding comes from existing and new investors including Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital, SF Capital, among others, along with a strategic investor
- The $42 million in funding is comprised of $26.6 million in equity and $15.5 million in venture debt, bringing the Company’s total funding to over $77 million
- Headquartered in Mountain View, CA, Credit Sesame was founded in 2011 and has provided credit and loan management tools to over 12 million members
- The mobile and web solution provides consumers with tools to build a path to achieve financial wellness, including free access to their credit profile complete with their credit score, credit report grades, credit monitoring, interactive step-by-step tools and recommendations for better lending options
The 13 Chinese Companies That Listed On US Stock Exchanges In 2017 (Frontera), Rated: A
With about $2.4 billion raised in IPOs on US exchanges by Chinese companies so far this year, other China-based firms are increasingly vying for US investors and exchanges.
Qudian Inc (QD)
On October 18, Chinese online micro-credit provider Qudian Inc listed on the NYSE, raising $900 million in an IPO that was priced at $24, in the biggest ever US listing by a Chinese fintech firm. The financial sector firm’s stock, trading under the symbol QD, closed at $33 as of October 23. The stock commands a market capitalization of $8.8 billion in the US stock market.
Year-end Forward P/E for the depository receipt is estimated at 21.47. Estimated earnings-per-share stand at $8.21.
China Internet Nationwide Financial Services (CIFS)
This Beijing-based financial sector firm, trades under the ticker CIFS on the NASDAQ GM stock exchange, is engaged in providing financial advisory services in China. The company’s stock listed on the US stock market on August 8 at an initial offer price of $10 a share, raising $20.2 million for the company. The stock, trading at $31.5 (as of October 23rd), commands a market capitalization of $693 million in the US stock market.
China Rapid Finance Ltd (XRF)
Listed since April 28th on the NYSE stock market, China Rapid Finance Limited operates one of China’s largest online consumer lending marketplaces. The company caters well to China’s 500 million EMMAs (Emerging Middle-class Mobile Active consumers), and has facilitated over 20 million loans to more than 2.7 million borrowers. Back in April, the company raised $69 million in an IPO, marking its listing on the US stock exchange under the ticker XRF. The shares initially offered at $6 a share, and now trade at $9.06 (as of October 23) with a market capitalization of $586.2 million.
Leading Banks are Embracing Digital Strategies More Than Ever (Lend Academy), Rated: A
JPMorgan was the first major US bank to partner with a fintech company when they launched their small business lending partnership with OnDeck in early 2016. That partnership was renewed earlier this year and has helped the bank to offer a seamless small business lending experience and reach customers it might not have otherwise. In recent months they have struck a new partnership with Mosaic Smart Data to help the slumping fixed income trading revenues and they have also completed an acquisition of WePay, a Silicon Valley company that offers payment capabilities to business platforms using APIs. Finally, just this week they launched Finn by Chase, an app aimed at millennials that allows people to use a phone to open a bank account, make deposits, issue checks, track spending and set up savings plans.
Bank of America saw more than 1 million users added to their digital channels and active digital banking users go from 32.8 million to 34.5 million in the last year. The main driver of this growth was through their mobile app. Customers are using the mobile deposit feature more than any other, mobile deposits now account for 21 percent of total bank deposits.
Wells Fargo’s digital growth, which includes web based and mobile users, saw a 2 percent increase from 2016. Branch and ATM interactions were down 6 percent while digital sessions through the web and mobile app increased 6 percent.
Citi is the first global bank to integrate banking, money movement and wealth management on mobile.
How Tech is Changing Multifamily Lending (Multi-Housing News), Rated: A
“Technology has helped us bring efficiency, speed and first-rate customer service to the small-loan space for all of our stakeholders, borrowers and brokers alike,” said Bonnie Habyan, executive vice president, marketing, at Arbor. Small-balance owners and operators need to work long hours to be successful, and the time and paperwork dedicated to obtaining financing is an inefficient use of time. Online multifamily financing platforms such as Arbor LoanExpress, or ALEX, address this by providing the ability to e-sign and upload documents.
“Crowdfunding was originally created to give average investors access to investments they normally wouldn’t have access to, and to give sponsors or borrowers easier access to capital,”said Bill Lanting, vice president, Commercial Debt at RealtyShares. “We were formed specifically with that idea in mind, to make borrowing easier and less cumbersome, and also to make investments in assets more available to everybody.”
AutoGravity Announces Partnership With Global Lending Services (PR Newswire), Rated: A
AutoGravity, a FinTech pioneer on a mission to transform car financing by harnessing the power of the smartphone, announced a partnership with Global Lending Services LLC, a South Carolina-based auto finance company, to provide access to finance offers through the innovative AutoGravity digital platform. Qualified car buyers gain access to an even broader set of car finance options through the AutoGravity iOS, Android and Web Apps.
Can employers help solve the student debt problem? (HRDive), Rated: A
The good news about student loans is that they allow millions of people to earn college degrees who otherwise wouldn’t be able to afford them. The bad news is that college graduates enter the workforce deeply mired in debt that deflates their net worth and keeps them cash-strapped for years, if not decades. The current wave of college graduates is facing debt in amounts far above previous generations.
Oliver Wyman, a global management consulting firm, sets the median figure for an undergraduate degree at more than $25,000. That figure rises with each advanced degree. Graduates with MBAs enter the workforce with a median debt of $45,000. Medical school graduates can expect to be $200,000 in debt.
Debt repayments for the typical college graduate will amount to $265 a month and for medical school graduates, $1,600 a month.
Target.com Introduces GiftNow (PYMNTS), Rated: B
Target announced that, starting this November, the retailer will integrate a wallet function in its Target mobile app. The purpose, says the retailer, is to allow customers to pay for purchases and redeem promotions through the use of a smartphone.
Legendary Investor Jim Rogers Believes FinTech Will Replace Banks and Cash (Cryptocoins News), Rated: B
Veteran investor Jim Rogers believes that banks must invest in the financial technology (fintech) space or they face being replaced.
According to the report, he has invested in Hong Kong-based ITF Corporation, the world’s first financial technology bank founded by Hui Jie Lim. Rogers has also invested in Tiger Broker, a Chinese online brokerage.
He also believes that digital currencies could change how we see money in the next 10 to 20 years. Even though he hasn’t invested in the crypto market Rogers is of the opinion that governments could issue their own cryptocurrencies in the future.
New Zopa securitisation priced, highlights market confidence (AltFi), Rated: AAA
A securitisation of loans originated by peer-to-peer lending firm Zopa has received a warm reception in the market. The deal, which is the second securitisation of Zopa loans, has been priced significantly tighter than last year’s transaction.
The securitisation was led by P2P Global Investments PLC, the first UK listed investment trust to dedicate itself to investing in marketplace loans, and was arranged by Deutsche Bank. The most senior class of notes was priced at 70bps over one month Libor, compared to 145bps last year.
The senior tranche of the £209m securitisation, which represents 80 per cent of the portfolio, was rated AA by Moody’s.
Using the secondary market for above average returns on investment (P2P Banking), Rated: AAA
One central piece to understanding why trading (or flipping) strategies can be highly attractive is the effect of even small premiums pocketed on the portfolio yield. Take an investor that invests into a 100 (whatever currency) loan part and sells that part for 100.40 after holding it for 5 days. That is only a 0.4% premium, but the annualized yield is 33.8%.
Two main strategy approaches
A) Invest on the primary market and then sell the loan later on the secondary market
B) Buy loan parts on the secondary market which they deem underpriced and then sell at a higher price. Be it buying at discount and selling at a lower discount, or already buying at premium and selling at an even higher premium.
One important point, is that market conditions change, usually good opportunities will stop working after a few months or weeks either because too many investors try to use them, or more general the demand/supply ratio changes or the marketplace itself changes the rules how the market functions.
- First an investor will want to look how loan information is presented on the primary and secondary market.
- Understand the allocation mechanism on the primary market. How does the autoinvest feature work exactly?
- When is interest paid? Does it accrue for each of the day held, or does the investor holding the loan at the date of the interest payment gets full interest credited. This is important, because if in the example at the start of the article the investor not only makes a 0.40 capital gain but also collects interest for the 5 days he held the part, it will have a huge impact on yield
- Usually for this strategy longer duration loans are more attractive.
- Usually smaller loans are more attractive.
- Usually the time span a trading investor wants to hold on to a loan part, will be as short as possible (days). However there might be patterns observed where it could be desirable to hold for longer time spans.
- Strategies that allow to hold parts only at a time when the status of a loan cannot change can be attractive.
Monzo and Starling take bigger steps towards payment integration (AltFi), Rated: A
Monzo has announced today, after a week of dropping hints on various Twitter accounts, that it plans to integrate Android Pay into its user interface for current account users.
A few hours earlier, Starling Bank confirmed this morning that it will be the first bank in the UK to connect with Fitbit Pay.
Case study: the technology behind P2P (Banking Technology), Rated: A
The UK peer-to-peer (P2P) lending market has flourished in the last decade. Lending volumes among the major platforms are increasing rapidly, pushing the cumulative total above £7 billion for the first time, as the understanding of the investment model continues to grow.
New technology architectures, as well as the ability to quickly run up minimal viable products, mean that emerging P2P companies can turn ideas into reality much faster than their larger counterparts (“fail fast” or as I like to call it, “test quickly”).
This prioritisation of speed and efficiency, coupled with the ability to focus, means that P2P lenders can zero in on specific problems and provide what customers want and are increasingly expecting. At Landbay we can bring a new micro service up from scratch in 20 minutes, with the lag for code from committing to going live being about six to eight minutes whilst still maintaining the up time required.
Brokers should consider the P2P option (Mortgage Introducer), Rated: A
As the alternative finance market has become saturated with different funding options, it can be difficult for brokers to determine the best solution to suit their clients’ needs.
Loans can also be tailored to fit the specific needs of customers, with fixed rates available to allow customers to budget effectively for the full term of the loan. The flexibility of loans means borrowers can cover unexpected costs or finance planned purchases at more affordable rates, meaning P2P finance is a great option when situations happen to change at a company.
Whilst 25% of borrowers that apply to banks have their loan application rejected, according to British Business Bank, other forms of lending have paved the way for businesses to obtain cash, with P2P lending becoming one of the most prominent solutions in the current market.
Open letter to Andrew Bailey, chief executive of FCA (Specialist Banking), Rated: A
Founder and chief unbanking officer, U
Chinese Cash loan market grown to 1 trillion RMB in one year (Xing Ping She), Rated: AAA
Cash loan originated from the payday loan in America, and accelerated in China. In less than one year, the total volume increased from 600 billion RMB to 1 trillion RMB. As a branch of consumer finance, cash loan developed rapidly as much as P2P lending industry.
Early in this April, the regulator issued the first order to clean up the “cash loans”，while after six months the trend of compliance in the field is still unclear. Recently, with several relative businesses coming to the U.S. for IPO, the critical voice on the profiteering of cash loan becomes louder.
However, owing to the annual lending rate much more than the rate legal limited (36%), taking the consumer finance vents, cash loan still grow wildly under strict regulation.
Xi’s Neighborhood Watch (Bloomberg), Rated: AAA
Houses are for living in, not for speculation, Chinese President Xi Jinping said last week. The trouble is, fueling this speculation has been a surge in consumer lending, not only by banks but also by fintech firms such as recently listedQudian Inc.
Thanks to improved earnings and corporate debt that’s souring at a slower rate, Chinese bank shares have rallied this year.
What investors may be ignoring at their peril, however, is the spike in household advances. Consisting of mortgages, credit-card debt and auto loans, consumer lending as a share of the total is relatively low. Only 400 million Chinese had personal loans in 2016, or about 29 percent of the population. The ratio in the U.S. is about 82 percent, according to Bloomberg Intelligence. But it’s been growing fast and even People’s Bank of China Governor Zhou Xiaochuan is worried. China’s household debt-to-GDP ratio reached 47 percent in the first half, according to a recent Citigroup Inc. report.
Ali Microcredit Ltd. made 2.6 billion RMB in first half, exceeding 14 public banks (Xing Ping She), Rated: A
In the first half year of 2017, Chongqing Ali Microcredit Ltd. has made the revenue of 3.97 billion RMB, which increased 100 million RMB compared to the 3.86 billion RMB of 2016. The company’s net profit was 2.644 billion RMB, in a growth of about 700 million RMB from the end of 2016.
As one of the Ant Financial eco-system, Ali Microcredit takes the business of credit loan (Ant Jiebei). Therefore, Ali Microcredit is already the industry leader in the consumer finance field. Even compared to the listed banks, Ali Microcredit’s profit data can defeat many of them. Take the first half year for example, the company profit exceeded 14 of all the 38 listed banks in stock exchange of Shanghai, Hong Kong and Shenzhen, including Guangzhou Rural Commercial Bank (01551.HK, profit of 2.639 billion RMB), Bank of Tianjin(01578.HK,profit of 2.62 billion RMB), Bank of Hangzhou(600926.SH, profit of 2.53 billion RMB),etc.
Cash loan controversy (Global Times), Rated: A
Chinese people are becoming more and more willing to spend. But if they don’t have money, they borrow. This ever-growing phenomenon has recently thrown cash loans, also known as fast loans, right under the public spotlight.
Han, a 26-year-old white-collar worker in Shanghai, who preferred only to give her surname, borrowed a 6-month loan of 10,000 yuan ($1505.53) from Mayi Jiebei, the online cash loan service provided by e-commerce giant Alibaba’s subsidiary Ant Financial, at the end of September.
When borrowing the money, Han was informed by Mayi Jiebei that she will need to pay a monthly interest rate of slightly more than 100 yuan. In total, Han will need to pay an interest rate of 637 yuan to the provider.
Currently, the entire cash loan market is worth between 600 billion yuan and 1 trillion yuan, the wdzj.com report showed.
LendingClub of China: World’s no.2 economy is a fintech haven (MSN), Rated: A
China Rapid Finance names Zhou Ji’an a non-executive independent director (Bankless Times), Rated: B
China Rapid Finance has named Zhou Ji’an a non-executive independent director. He becomes the seventh member of a board that includes former executives of Hewlett Packard, McKinsey & Company, Morgan Stanley, and UBS.
Mr. Zhou is the executive director and general manager of China United SME Guarantee Corporation aka Sino Guarantee. He previously served in senior roles with China Export & Credit Insurance Corporation, and China Life Insurance Co . and is a senior scholar of the Eisenhower Fellowships, an international nonprofit leadership corporation.
ECN Convention Debates Technology & Cross-border Future in EU Alternative Finance & Crowdfunding (Crowdfund Insider), Rated: AAA
Two main topics of the 6th Annual Convention of the European Crowdfunding Network (ECN) on October 19th and 20th were technology innovation and cross-border finance.
To retain their lead in innovation over banks and traditional finance’s Fintech, startups must keep delivering greater customer orientation and execution efficiency. The success of Initial Coin Offerings (ICOs) is a clear signal, and a red flag, that there exist gaps in technology and cross-border funding that finance has not filled.
Cross-border alternative finance is still hampered by the fragmentation of the European Union (EU) regulation at many levels: Not only do crowdfunding and crowdlending regulation differ from one country to the next, but so do investor taxation and corporate law.
Ingi Sigurdsson, CEO, Karolina Engine, claimed that artificial intelligence enables the platform to predict the success of crowdfunding campaigns with 80% accuracy. Mads Dalsgaar CMO, Funderbeam, explained how Funderbeam uses Bitcoin’s blockchain to register, clear and settle the trading of private companies’ shares. For Rein Ojavere, CFO of Bondora, technology enables his lending platform to “cut through the layers of fat” of multiple investment intermediaries. In the same vein, Lasse Mäkelä, CEO of Invesdor, called his company a “digital investment bank.”
Umberto Piattelli of law firm Osborne Clarke summarized the conclusion of ECN’s updated complete review of national crowdfunding and crowdlending regulations in 29 countries. He stressed the strong correlation between the growth of alternative finance and effective crowdfunding regulation. Only 11 out of the 28 EU markets researched have published specific regulations for crowdfunding and crowdlending. These markets have taken off rapidly after the issuing of such regulations.
Tink secures investment and bank partners as it plans European expansion (Banking Technology), Rated: A
Swedish fintech company Tink has signed with Nordic banks Nordea, Klarna and Nordnet. Integrating in 2018, the banks will use Tink’s payment technology and personal finance management (PFM) platform within their existing customer channels.
In addition to the partnership agreements, SEB, Nordea, Nordnet, ABN Amro, Creades and Sunstone has invested €14 million in Tink.
DTCC: HOW TO THINK ABOUT FINTECH (All About Alpha), Rated: A
The Depository Trust and Clearing Corporation (DTCC), a provider of clearance, settlement, and a wide range of other services to the financial markets, has issued a new white paper on technological innovations and the disruptions fintech may generate.
By “core banking functions,” (1) the authors of the white paper have in mind credit, liquidity, and maturity transformation. The banks have more institutional experience handling these functions than upstart fintech firms and, to the extent the latter take over the core functions of the former, there may be reason to worry. Likewise, the fragmentation (2) of “the creation and delivery of financial services across additional providers and platforms” could cause errors and inefficiencies. And (3) if certain players could become too good at delivering these services in this way, they could pose systemic risks.
Read the full report here.
The Importance of Fintech Spreads Across the Financial Industry (PR Newswire), Rated: A
A research report by Transparency Market Research, predicts that the global peer-to-peer (P2P) market lending valuation will reach US$897.85 billion by 2024, as it expands at a significant CAGR of 48.2% from 2016 to 2024.
Dragon Victory International Limited (NASDAQ: LYL) announced today that, the Company has entered into a Strategic Cooperation Agreement (the “Agreement”) with Shenzhen 708090 Investment and Development Co., Ltd (“708090”), a leading provider of shared workspace, community, and services for entrepreneurs, freelancers, startups and small businesses, to promote incubation services.
On October 24th, Fiserv announced that Regions Bank will expand their digital money movement capabilities with the addition of person-to-person payment and account-to-account transfer solutions from Fiserv.
On June 15th, Yirendai announced that it was awarded the Best P2P Lending Platform in ChinaAward at The Future of Finance Summit (the “Summit”) held in Singapore. Yirendai is the first FinTech company in China to receive this prestigious reward.
Qudian Inc. (NYSE: QD) is a leading provider of online small consumer credit in China. The Company uses big data-enabled technologies, such as artificial intelligence and machine learning, to transform the consumer finance experience in China. The company recently emphasizes Its collection efforts and pricing policy. The Company’s collection efforts extend to every delinquent borrower. The Company’s collection process is divided into distinct stages based on the severity of delinquency, which dictates the level of collection steps taken. As part of the major upgrade of the Company’s risk management system in January 2017, the Company has developed a machine learning algorithm to better allocate collection resources based on more detailed grouping of larger delinquency risk. Higher risk groups are allocated with more collection resources as the likelihood of their outstanding balance becoming longer-term delinquent or even uncollectable is generally higher.
ANZ BBSW penalty too low: P2P lender (InvestorDaily), Rated: A
On Tuesday, ASIC announced that it had reached a confidential in-principle settlement with ANZ resolving the dispute over alleged BBSW misconduct. Commenting on the matter, RateSetter chief executive Daniel Foggo said the corporate regulator’s activity in this area of the market bodes well for a more transparent financial system.
Gratification Unleashed (OutlookMoney), Rated: A
There was a time when a loan mostly meant you were going to buy a house or a car. This is not the case any longer. With changing times, now there are loans against salary advance to fund even your honeymoon. Today, there are loans available practically for every need and dream.
Take the case of the ubiquitous car loan, the advent of luxury cars has turned several car companies to offer loans that are tailored to suit customer offerings. For instance, Volkswagen Finance (India), offers financing solutions to customers for both new and pre-owned Volkswagen group vehicles (namely Volkswagen, Skoda, Audi, Porsche, Lamborghini, MAN and Scania) through registered and authorised Volkswagen group dealer channels.
Yet, borrowing is not as smooth as one would expect it to be. Take for instance Mumbai-based Amit Shukla, he had to take a personal loan of Rs 5 lakh to fund his first commercial car, because a car loan did not work out the way he wanted it to work for him.
Finance: Ensuring a safe investment crowdfunding landscape (The Edge Markets), Rated: AAA
When equity and debt-based crowdfunding platforms were launched in the market, there were concerns that these vehicles could be used for money laundering. After all, investors could unknowingly fund a fraudulent company and the money could end up being misused by the issuers for their personal gain or, even worse, to fund criminal activities.
The Securities Commission Malaysia (SC) introduced a legal and regulatory framework for equity crowdfunding (ECF) in 2015 and peer-to-peer (P2P) financing last year to address these concerns. According to the SC’s deputy general manager Tengku Ahmad Ruzhuar Tengku Ali, the regulator views money-laundering activities to be of minimal risk on ECF and P2P platforms due to the safeguards built into their frameworks and the platform operators’ vetting process.
There have been several cases of fraud linked to investment crowdfunding. The first widely known case, involving US-based Ascenergy, came to light in 2015. The company had raised US$5 million from about 90 local and foreign investors by leveraging some of the better known crowdfunding platforms such as Fundable and EquityNet.
The SC’s approach
All six ECF operators registered in Malaysia are operational. According to Tengku Ahmad Ruzhuar, 31 issuers had successfully raised RM18.3 million on ECF platforms as at end-September, reaching 80% of their target amount.
Retail investors are allowed to invest up to RM5,000 per issuer and a total investment of RM50,000 within a 12-month period. Angel investors registered with the Malaysian Business Angel Network can invest up to RM500,000 while there are no restrictions for sophisticated investors.
Issuers are able to keep the funds raised if they reach a minimum of 80% of the target amount, but they are not allowed to raise multiple funds for the same purpose.
Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: AAA
Lendified, a Canada-based lender who provides small business loans online has entered into an agreement with ClearFlow Commercial Finance to increase its lending capacity. According to the lending platform, through the agreement, ClearFlow is providing it with a $60 million credit facility to fund loans delivered through its website.
Facebook teams up with Clearbanc to offer cash advances to business (Financial Times), Rated: AAA
Small businesses advertising on Facebook can now get their hands on up to half a million dollars in growth capital, in the latest example of an online platform moving into territory historically dominated by bricks-and-mortar banks.
The social network has been trialling a scheme in partnership with Clearbanc, a Toronto-based firm, since February. Under the scheme, known as “Chrged,” customers connect their Facebook Ads account and their payment processor with Clearbanc, which then makes an offer.
Funds are not loans but merchant cash advances, giving Clearbanc the right to a certain portion of revenues flowing through the customer’s account until it gets its money back, plus a fee, typically of 5-10 per cent. The fee is set by analysing daily cash flows to determine the customer’s ability to repay.
About 1,000 small-business owners have so far taken up an offer.
MONEYTREE Q3 REPORT: STRONG AI AND FINTECH FUNDING PUSHING 2017 BACK ON TRACK (Betakit), Rated: A
According to CB Insights and PwC’s Canada’s latest MoneyTree report, 2017’s sluggish start may transform into a podium finish by year’s end.
The report, which tracks VC activity in Canada for Q3 2017, indicates that Canada could exceed $2.5 billion ($2 billion USD) across more than 300 deals for the year. The result would match or surpass activity from last year, when a total of $2.2 billion USD was invested, and 2016, which fell just below the $2 billion USD threshold.
Seed-stage deals accounted for 32 percent of deals in Q3 2017, a 19 percent drop from 51 percent of all deals in Q2 2017. However, early-stage and expansion-stage deals increased to 27 percent and 21 percent of deal share, respectively. Expansion-stage deals climbed to an eight-quarter high in Q3 — a strong contrast from past quarters where seed-stage deals were the most prominent, and perhaps a sign of a more robust investment ecosystem.
FinTech was another notably strong sector, as Canadian FinTech companies have received $252 million ($200 million USD) across 27 deals. This year is on pace to see $341 million ($270 million USD) invested across over 30 deals, on par with last year’s figure of $351 million ($278 million USD).