- Today’s main news: Lending Club closes 5 investment funds, rebrands LC Advisors. CommonBond closes $248M securitization, receives AA S&P rating. LendingTree Q3 results. LandlordInvest expects to double IFISA intake. Ant Financial puts off IPO. Renredai volume surpasses 37.8B RMB. New Zealand prepares for open banking. SMART Box to debut in Canada.
- Today’s main analysis: Don’t forget about loan recoveries.
- Today’s thought-provoking articles: Big Tech vs. Big Banks. Social credit scores in China. Global AUM expected to rise to $145.4M by 2025. Why banks should fear Amazon. Indian regulations are a win-win for borrower and platform.
- Lending Club closes 5 investment funds, rebrands LC Advisors.
- CommonBond closes $248M securitization, secures S&P rating of AA. AT: “Congratulations.”
- Don’t forget about loan recoveries. AT: “A must-read analysis from Orchard Platform.”
- LendingTree Q3 results. AT: “LendingTree is looking good and setting new records in several areas.”
- Big Tech vs. Big Banks. AT: “So far, all this talk of Amazon and Google threatening banks has been speculation. They certainly have the financial clout and technological prowess to be the threat that everyone is anticipating. But we still haven’t seen it happen–yet.”
- Anticipation for Amazon SMB lending disruption grows. AT: “The danger for Amazon, if it branches out into too many verticals, is a threat of running up against antitrust concerns. They may very well be checking into those possibilities.”
- Amazon and tech companies are challenging big banks.
- Why student loan companies like SoFi are becoming useless. AT: “Overstated, but interesting.”
- Credit Sesame raises $42M.
- Something is broken in small business lending.
- McDonald’s franchise owners settle in payroll card lawsuit.
- BankMobile’s road to profitability.
- Overview of U.S. real estate platforms. AT: “Very interesting rundown on top RECF platforms and what they’ve raised in funding.”
- PayNet testifies in Congress.
- Mobile app reinvents personal credit.
- Braviant Holdings secures $40M credit facility.
- SBA approves record in New Jersey small business loans.
- Genesis Financial Solutions services Signet Jewelers’ non-prime consumer accounts.
- Online lenders can get credit to small businesses.
- 2017 spotlight on women business lending.
- Robo-advice vs. DIY.
- SelfScore rebrands as Deserve.
- Mortgage lending primer on blockchain.
- Jiko raises $7.7M.
- Templum raises $2.7M.
- Current raises $5M.
- The recent boom in real estate crowdfunding.
- Appetite grows for riskier MPL collateral.
- Local vets launch business with crowdlending.
- 3 places women-owned businesses can get financing.
- Zeus Crowdfunding hard money offer.
- OnDeck set to announce quarterly earnings this Wednesday.
- MakuSafe raises $1.25M.
- Wells Fargo adds smart beta to financial advice platform.
- Newable Business Finance partners with Open Risk Exchange.
- Pravati launches third fund.
- LandlordInvest expects to double IFISA intake.
- Will Lendingcrowd satiate investor appetite?
- Cryptocurrencies pose low terrorist financing risk.
- Regtech and financial inclusion.
- Silicon Valley doubles funding to UK tech after Brexit.
- London fintech firms set record investment.
- What P2P lending learned from Lego.
- HomeLyfe raises 2.4M GBP.
- Uber appoints Atom Bank exec.
- Quantuma joins P2PFA.
- Ant Financial postpones IPO.
- 51CreditCard to raise 500M on Hong Kong exchange.
- Chinese fintechs set flurry of IPOs.
- Renrendai surpasses 37.8B RMB.
- Qudian falls below offer price.
- Rong360 targets $200M IPO for Jianpu.
- China to tighten regulation on consumer loans.
- China learns fast on AI.
- Social credit scoring with Sesame Credit.
- Social credit system and P2P lending.
- BorsadelCredito.it launches fund.
- Europe’s fintechs don’t want to be banks.
- Crypto Lending Project announces ICO.
- Global AUM to reach $145.5T by 2025.
- Banks need to fear Amazon.
- How mobile phones, Internet changing banking.
- P2p lending will change how credit is dispensed.
- How fintech impacts international education.
- What is Ethercash?
- New Zealand looks to recognize open banking.
- Robo-advice raises alarm.
- Small banks need to work together on technology.
- 3 apps to help Aussies buy real estate.
- Regulation a win-win for platforms, borrowers.
- P2P regulations a missed opportunity.
- Online lending platforms rewrite SME lending habits.
- I2I Funding founder on post-demonetization.
- Five platforms a boon during demonetization.
- P2P gold lending, bullion.
- Emerging bright spots in fintech innovation.
- VCs call on startups to look at southeast Asia.
- United States
- Lending Club Closes Five Investment Funds, Rebrands LC Advisors (Lend Academy), Rated: AAA
- CommonBond Closes $ 248 Million Securitization, Secures Inaugural S&P Rating of AA (CommonBond), Rated: AAA
- Don’t Forget about Loan Recoveries (Orchard Platform), Rated: AAA
- LendingTree Reports Record 3Q 2017 Results; Increasing Full-Year 2017 Guidance (Business Insider), Rated: AAA
- McKinsey Report on Financial Services Big Tech vs. The Big Banks (PeerIQ), Rated: AAA
- Anticipation For Amazon’s SMB Lending Disruption Grows (PYMNTS), Rated: A
- Amazon, Tech Companies, Are Challenging Big Banks (Bloomberg), Rated: A
- Why Student Loan Companies Like SoFi Are Becoming Useless (Fortune), Rated: A
- Credit Sesame Raises $ 42 Million in Growth Funding (PR Newswire), Rated: A
- There’s something broken in small-business lending (American Banker), Rated: A
- McDonald’s Owners Settle PA Payroll Card Class Action (PYMNTS), Rated: A
- BankMobile’s long road to profitability (American Banker), Rated: A
- Overview of US real estate platforms (online lenders) (MonJa), Rated: A
- PayNet Provides Expert Testimony to U.S. Congress on The State of Fintech (BusinessWire), Rated: A
- New mobile application designed to reinvent personal credit (Muskogee Phoenix), Rated: A
- Braviant Holdings Announces $ 40 Million Credit Facility with Redpoint Capital Group (PR Web), Rated: A
- SBA Approves a Record $ 869 Million in Loans to NJ Small Business (Cap May County Herald), Rated: A
- Genesis Financial Solutions, Inc. agrees to service Signet Jewelers’ non-prime consumer accounts (Genesis Email), Rated: A
- Online lenders can get needed credit to small businesses (The Hill), Rated: A
- State of Small Business Lending: 2017 Spotlight on Women Entrepreneurs (Fudera), Rated: A
- In The Battle For Low-Fee Financial Advice, DIY Beats The Robos (FA-Mag), Rated: A
- SelfScore rebrands as Deserve, raises $ 12m funding (Banking Technology), Rated: A
- Mortgage lenders: Here’s your blockchain primer (Housingwire), Rated: A
- Jiko Raises $ 7.7m in Series A Funding (FINSMEs), Rated: A
- Templum Raises $ 2.7M in Seed Funding (FINSMEs), Rated: A
- Digital bank for teenagers raises $ 5m in Series A investment round (AltFi), Rated: A
- 10 Takeaways from the ULI Fall Conference 2017 (National Real Estate Investor), Rated: A
- Appetite grows for riskier MPL collateral and deeper sub notes (Global Capital), Rated: A
- Local veterans get help launching businesses through crowd lending (WFLA), Rated: A
- 3 Places Women-Owned Businesses Turn for Financing (NAV.com), Rated: A
- Zeus CrowdFunding Year-End Hard Money Offer Helps Real Estate Investors Finish 2017 Strong (PR.com), Rated: B
- On Deck Capital, Inc. (ONDK) Set to Announce Quarterly Earnings on Wednesday (Ledger Gazette), Rated: B
- MākuSafe Raises $ 1.25m Convertible Funding Round (FINSMEs), Rated: B
- Wells Fargo Adds Smart Beta to FA Platform (Financial Advisor IQ), Rated: B
- Newable Business Finance partners with Open Risk Exchange (Fintech Finance), Rated: B
- Litigation Finance Specialist Pravati Launches Third Fund (FINAlternatives), Rated: B
- United Kingdom
- LandlordInvest expects to double IFISA intake this tax year (P2P Finance News), Rated: AAA
- Could this platform satiate investor appetite for manual lending? (P2P Finance News), Rated: A
- UK Treasury: Cryptocurrencies Pose Low Terrorist Financing Risk (Coindesk), Rated: A
- Regtech and financial inclusion: “For Millennials opening a bank account online is a no-brainer” (Bob’s Guide), Rated: A
- Silicon Valley investors double funding for UK tech after Brexit (The Telegraph), Rated: A
- London fintech firms set for record investment despite Brexit (Descrier), Rated: A
- What the peer-to-peer lending industry learnt from Lego (City A.M.), Rated: A
- Homelyfe Raises £2.4M in Seed Funding (FINSMEs), Rated: B
- Uber appoints former Bank of England senior adviser as non-executive UK chair (Independent), Rated: B
- Quantuma Joins UK Peer to Peer Finance Association (Crowdfund Insider), Rated: B
- Alibaba-Affiliate Ant Financial Isn’t Itching to Go Public (WSJ), Rated: AAA
- WeiyangX Fintech Review (Crowdfund Insider), Rated: A
- Chinese fintech firms set for flurry of IPOs in US, HK (China Daily), Rated: A
- Total Volume of Renrendai Surpass 37.8 Billion RMB (Xing Ping She), Rated: AAA
- Qudian Stock Fell Below its Offer Price (Xing Ping She), Rated: A
- Chinese fintech Rong360 targets $200m US IPO for subsidiary Jianpu (Deal Street Asia), Rated: A
- China to tighten regulation of fintech consumer loans (Financial Times), Rated: A
- China a fast learner when it comes to artificial intelligence-powered fintech, experts say (SCMP), Rated: A
- Sesame Credit, fintech and social credit scores in China (Technode), Rated: AAA
- China’s Social Credit System And P2P Lending: An Opportunity For Yirendai (Seeking Alpha), Rated: A
- European Union
- Italian peer-to-peer lender launches its own fund, targets €100m raise (AltFi), Rated: A
- Europe’s fintech lenders don’t want to become banks (yet) (AltFi), Rated: A
- CLP Initial Coin Offering Announcement (Cointelegraph), Rated: B
- Global Assets under Management set to rise to $ 145.4 trillion by 2025 (Finchannel), Rated: AAA
- Banks need to fear Amazon’s finance ambitions: McKinsey report (American Banker), Rated: AAA
- How Mobile Phones and the Internet are Changing Banking (The Merkle), Rated: A
- P2P Lending Will Change the Way Credit Is Dispensed Globally (Crytocoins News), Rated: A
- Click, pay, study – how fintech is impacting international education (The PIE News), Rated: AAA
- Ethercash Aims to Revolutionise Three Core Functions of Finance (Coinidol), Rated: B
- Australia/New Zealand
- NZ prepares to join the ‘open banking’ revolution (Stuff), Rate: AAA
- Robo-advice raises alarm (Financial Standard), Rated: A
- COBA conference 2017: small banks need to work together on tech (The Courier Mail), Rated: A
- 3 apps helping Australians buy real estate in ways that traditional banks can’t (Business Insider), Rated: A
- RBI Regulations For P2P Lending Industry: A Win Win Situation For Both Platforms And Consumers (Inc42), Rated: AAA
- P2P regulations: A missed opportunity (Livemint), Rated: A
- Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India (BW Disrupt), Rated: A
- I2I Funding cofounder Neha Agarwal: Saw significant business growth post-demonetisation (Financial Express), Rated: A
- Five platforms which were a boon during demonetization (Business-Standard), Rated: A
- P2P Gold Lending, Bullion, and Physical Crypto Storage (Palisade-Research), Rated: A
- Here are some emerging bright spots in fintech innovation in Asia (e27), Rated: A
- VCs call on startups to set sights on SE Asia (The Investor), Rated: A
- The Credit Crisis in Malawi (Maravipost), Rated: A
- CANADIAN LENDERS ASSOCIATION & INNOVATIVE LENDING PLATFORM ASSOCIATION LAUNCH SMART BOX IN CANADA (Canadian Lenders Association), Rated: AAA
- Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: A
- Finn.ai Raises $ 3 Million in Institutional Financing Round (Finn.ai), Rated: A
Lending Club Closes Five Investment Funds, Rebrands LC Advisors (Lend Academy), Rated: AAA
Yesterday, Lending Club announced the closure of several funds. The funds were part of what was previously known as LC Advisors, an investment management company dedicated to investing in notes originated by the platform.
Since each fund is a separate legal entity there were many different buyers that participated. While we don’t know the terms of the deals or who purchased these loans, Suri did share with us that there were over 40 bids for the assets and 5 of the 6 funds have been sold at fair value or a slight premium.
What happens next?
Lending Club is rebranding its asset management business. Now called LendingClub Asset Management or LCAM for short.
When we asked Suri about positioning the new offerings to investors he stated that their biggest flagship fund under LC Advisors had delivered slightly over 6% annualized since 2011.
CommonBond Closes $ 248 Million Securitization, Secures Inaugural S&P Rating of AA (CommonBond), Rated: AAA
CommonBond, a leading financial technology company that helps students and graduates pay for higher education, today announces the close of a $248 million securitization of refinanced student loans. The offering’s most senior notes achieved AA ratings from Moody’s, S&P, and DBRS – Aa2, AA, and AA (high), respectively – the company’s highest ratings to date.
The transaction was CommonBond’s fifth and largest to date. Investors submitted $1 billion in orders, making the deal more than four times oversubscribed. Goldman Sachs served as structuring agent, co-lead manager, book-runner, and co-sponsor. Barclays and Citi also served as co-lead managers and book-runners on the transaction, while Guggenheim Securities served as co-manager.
The transaction was the first of CommonBond’s to be rated by S&P, who assigned AA ratings to the transaction, alongside similar ratings from Moody’s and DBRS. Moody’s and DBRS also recently upgraded CommonBond’s ratings on previous deals in recognition of the company’s strong credit performance.
Don’t Forget about Loan Recoveries (Orchard Platform), Rated: AAA
To showcase the significance of the third-party debt collection industry in America, the New York Fed publishes in their Quarterly Report on Household Debt and Credit a ‘Third-Party Collections’ chart (below). As of 2017-Q1, between 12-13% of consumers with debt have debt being collected by third-party agencies (blue line). Of those, the average amount of debt in collections is ~$1,400 (red line).
The 2015-2016 roll rate matrix is experiencing a higher percentage of loans going from non-performing (60-89 DPD & 90-119 DPD) to current when compared to the 2013-2014 roll rate matrix. This 100 bps difference for 60-89 DPD and 200 bps for 90-119 DPD can be attributed to the improvement of servicers’ collection and outreach programs for delinquent loans.
Consumer loans have experienced a monthly recovery rate between 5% to 15% within different portfolios on our platform. Based on this table, a $100M pool of loans would have a $1M valuation difference between a 5% and 15% recovery rate input.
LendingTree Reports Record 3Q 2017 Results; Increasing Full-Year 2017 Guidance (Business Insider), Rated: AAA
LendingTree, Inc. (NASDAQ: TREE), operator of September 30, 2017., the nation’s leading online loan marketplace, today announced results for the quarter ended
Third Quarter 2017 Business Highlights
- Record revenue from mortgage products of $73.8 million represents an increase of 38% over third quarter 2016 driven by strong growth in both purchase and refinance revenues at 87% and 24%, respectively. According to Mortgage Bankers Association, originations industry-wide were down 16% in the comparable period.
- Record revenue from non-mortgage products of $97.7 million in the third quarter represents an increase of 138% over the third quarter 2016 and increased to 57% of total revenue compared to 43% one year ago.
- Home equity revenue growth accelerated, increasing $9.0 million, or 176% over third quarter 2016, and marked the eighth consecutive quarter of year-over-year growth exceeding 100%.
- Personal loans revenue of $25.4 million grew 44% over third quarter 2016 and grew 24% sequentially.
- Revenue from our credit card offerings grew to $39.4 million in 3Q compared to just $6.6 million in 3Q 2016. On a proforma basis, giving effect to the CompareCards and MagnifyMoney acquisitions as if they had occurred on January 1, 2016, credit cards revenue grew 43%.
- More than 6.5 million consumers have now signed up for free credit scores and savings alerts through My LendingTree, and the volume of new enrollments accelerated. Revenue contribution from MyLendingTree grew 96% in the third quarter compared to the prior year period as new features and smarter savings alerts are driving increased engagement.
Third Quarter 2017 Financial Highlights
- Record consolidated revenue of $171.5 million represents an increase of $76.9 million, or 81%, over revenue in the third quarter 2016.
- GAAP net income from continuing operations of $10.1 million, or $0.74per diluted share.
- Record Variable Marketing Margin of $59.1 million represents an increase of $22.8 million, or 63%, over third quarter 2016.
- Record Adjusted EBITDA of $34.7 million increased $16.2 million, or 88%, over third quarter 2016.
- Adjusted Net Income per share of $1.17 represents growth of 65% over third quarter 2016.
- During the quarter, the company repurchased 42 thousand shares of its stock at a weighted-average price per share of $237 for aggregate consideration of $10.0 million. As of September 30, 2017, the company has $38.7 million in repurchase authorization remaining.
Business Outlook – 2017
LendingTree is revising Revenue, Variable Marketing Margin and Adjusted EBITDA guidance for full-year 2017, as follows:
- Revenue is anticipated to be in the range of $603 – $608 million, representing growth of 57% – 58% over full-year 2016 and an increase from prior guidance of $580 – $590 million.
- Variable Marketing Margin is anticipated to be $202 – $205 millioncompared to prior guidance of $190 – $195 million.
- Adjusted EBITDA is anticipated to be in the range of $111 – $113 million, up 59% – 62% over full-year 2016 and an increase from prior guidance of $103 – $106 million.
McKinsey Report on Financial Services Big Tech vs. The Big Banks (PeerIQ), Rated: AAA
A recent report from McKinsey on the global banking industry addressed the threat banks face from technology firms. Amazon stock jumped 13% on earnings and reporting that Amazon is increasing its lending footprint. Tune into Bloomberg Radio archive to hear more about this topic as PeerIQ’s CEO discusses the threats and opportunities of big technology with Bloomberg’s Lisa Abramowicz and Pimm Fox.
Summary of Amazon’s Lending Business
Amazon finances small businesses that sell products through the Amazon marketplace on an invitation-only basis. Interest rates range from 6 to 15%, tenor ranges from 4 to 6 months, and loan size is up to $750K.
Although there is no segment-level P&L reporting for the lending unit, loss-rates according to Amazon’s Peeyush Nahar have been “very, very small.” Amazon’s lending makes up a small part of their business (e.g., $3 Bn in loans to date vs. Amazon’s $136 Bn annual revenue). Amazon is also not directly financing the consumers indicating substantial opportunity to grow.
Owning the Customer
The most compelling advantage big tech has outside of data and customer acquisition are the creation of entirely new channels that banks cannot easily replicate.
A few examples:
- In-Home: Large consumer tech firms occupy the most intimate space of consumer through services such as Amazon’s Echo, Google’s Home, or Apple’s Siri. These platforms represent a trojan horse for delivering new products and services in a highly personal and exclusive manner.
- Personal assistants that are increasingly anticipatory and have access to the calendars, preferences, and daily lives of consumers.
- Mobile and virtual wallets which shift the battleground from legacy “share of wallet” and “primary card” concepts to mobile platforms and virtual wallets
- Virtual spaces created via social media including Facebook or services such as Lyft or Uber which enable unobstructed access to the consumer.
Anticipation For Amazon’s SMB Lending Disruption Grows (PYMNTS), Rated: A
Technology giants like Google and Amazon, which gained their market muscle from non-finance-related ventures, are slowly stepping into the space. Their next target could be small business lending, and according to some experts, it’s fast approaching the market.
Amazon in particular is positioned to dominate. The company has already lent more than $1 billion to merchants selling on its platform, and, just as alternative lenders put the pressure on traditional FIs with their quick surge into the market, the Amazons of the world will do the same, Mills predicted.
Chatter Picks Up Steam
Karen Mills’ statements have found new backing in the latest banking report released by McKinsey & Co. this week. New reports in Bloomberg on Wednesday (Oct. 25) said the report identifies Amazon as the newest, biggest threat to the small business lending status quo.
The report points to sagging return on equities for the banks, which have not been able to surpass 10 percent since the 2007/2008 global financial crisis. The FIs that collaborate with those FinTechs could boost their return on equities to 14 percent and even higher if they develop their own solutions in-house.
Amazon, Tech Companies, Are Challenging Big Banks (Bloomberg), Rated: A
GUEST: Ram Ahluwalia, CEO and co-founder of Peer IQ, on how Amazon and other big tech companies are challenging big banks.
Why Student Loan Companies Like SoFi Are Becoming Useless (Fortune), Rated: A
In fact, starting this year the entire business model of private student loan refinancing may prove to be less viable.
First, only a tiny percentage of all student loan borrowers can reap significant savings from private loan refinancing. And second, the private refinance boom was created by a historically large spread between federal and private rates. As today’s federal student loan rates fall and private loan rates rise, that gap is shrinking.
SoFi, for example, claims the average lifetime savings of borrowers who have refinanced with them is $22,359. I tried using SoFi’s own calculator to arrive at such a figure, and found that a borrower paying 8% on $100,000 in loans with 10 years remaining could refinance down to 4.5%, saving up to $177 a month or $21,285 over the life of the loan.
Consumer finance site NerdWallet indicates that the average approved borrower at SoFi has an annual income of $130,000 and an average credit score of 766. From this we can infer what kind of borrowers fit SoFi’s profile: lawyers, doctors, MBAs, and other professionals who are high earners.
It turns out that private lenders are targeting a very small slice of student loan borrowers. To put things in perspective, as of September 2017, only 6.9% of all working professionals make $130,000 or more per year.
Credit Sesame Raises $ 42 Million in Growth Funding (PR Newswire), Rated: A
Credit Sesame, a fast-growing, personalized credit service and financial wellness company, announced today 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 funds will be used to accelerate the company’s growth, hiring, and member acquisition, and to advance its analytics, robo-advisor and machine learning technologies.
There’s something broken in small-business lending (American Banker), Rated: A
Banks often tout the strength of their small-business loan programs. So why are their small-business customers so hacked off?
It’s hardly an enigma, according to J.D. Power. The thing that sticks in the craw of most small-business owners is that their banks have not assigned account representatives to take care of their needs, the market research firm said in its latest Small Business Banking Satisfaction Study.
McDonald’s Owners Settle PA Payroll Card Class Action (PYMNTS), Rated: A
McDonald’s franchise owners in Pennsylvania have settled a lawsuit filed in 2015 over their use of payroll cards, news reports on Wednesday (Oct. 25) said.
Owners of 16 McDonald’s locations across the state have agreed to pay nearly $3 million to hourly employees that joined a class action lawsuit against the fast food restaurant owners’ use of payroll cards they said were riddled with unfair fees. Employees were forced to pay fees whenever they went to an ATM to withdraw funds from their payroll cards, as well as when they made online bill payments.
The class action named the McDonald’s franchisees as well as the card-issuing banks, JPMorgan Chase & Co. and JPMorgan Chase Bank N.A., as defendants.
BankMobile’s long road to profitability (American Banker), Rated: A
What will BankMobile’s future look like once it is spun off from Customers Bancorp?
Customers launched the digital-only bank, designed to target millennials and technophiles, in January 2015. Since then, BankMobile has adapted an app for Apple Watch, formed an innovation unit and created a financial literacy and self-help podcast series.
Overview of US real estate platforms (online lenders) (MonJa), Rated: A
Having said that, the real estate construction sector is showing no signs of slowing down and in 2015 it reached a size of $1.113 trillion as per the U.S. Census Bureau. There was an evident demand-supply mismatch in the market that led to the rise of alternative online lenders.
- LendingHome (https://www.lendinghome.com) – It has raised over $166 million in various rounds of funding and has originated loans in excess of $1.75 billion.
- Fundrise (https://fundrise.com) – This incredibly efficient new model enables access to a diversified portfolio of private real estate assets with as little as $500. It has raised over $55 million and has invested $1.4 billion in real estate so far.
- Sharestates (www.sharestates.com) – It has so far funded $656 million.
- RealtyShares (www.realtyshares.com) – It has raised over $100 million in various rounds of funding and over $500 million has been invested through its platform.
- Patch of Land (patchofland.com) – It has raised almost $25 million in different rounds of funding and has done over $366 million in loan origination.
- RealtyMogul.com (www.realtymogul.com) – It has raised over $46 million in funding and over $300 million has been invested through its platform.
- GroundFloor (https://www.groundfloor.us) – In 2015, GroundFloor became the first issuer to be qualified by SEC for selling private real estate debt investments to non-accredited investors.
- Allrise Financial Group Inc (https://allrise.us) – It has originated $ 162 million in loans so far and has a network of 169 borrowers in four different countries.
- CrowdStreet (www.crowdstreet.com) – It has raised over $5.5 million so far and has done $155 million in equity loan funding.
- Money360 (https://www.money360.com) – The company’s total loan origination stood at $70 millionin 2015. It has raised almost $165 million in debt financing from multiple investors.
- Wealth Migrate (www.wealthmigrate.com) – It has raised $5.6 million so far and over $64 million has been invested through its platform.
- Roofstock (www.roofstock.com) – It has raised over $68 million in funding.
- PeerStreet (https://www.peerstreet.com) – It has raised over $ 21 million in various rounds of funding.
- AssetAvenue (www.assetavenue.com) – It has raised over $19 million so far.
- AlphaFlow (www.alphaflow.com) – It is the first and the fastest growing automated real estate investment service. It managed to raise $6.4 million as seed funding from various investors notably Y Combinator, FundersClub and Red Swan Ventures.
- Acquire Real Estate (www.acquirerealestate.com) – It has raised $6 million in various rounds of funding.
- EarlyShares (www.earlyshares.com) – It has raised over $5.8 million in funding.
- Fundthatflip (www.fundthatflip.com) – It has raised over $2 million so far.
- RealCrowd (www.realcrowd.com) – It has raised $1.6 million.
- DiversyFund (https://diversyfund.com) – It has raised over $1.2 million so far.
PayNet Provides Expert Testimony to U.S. Congress on The State of Fintech (BusinessWire), Rated: A
PayNet, Inc., the nation’s provider of credit assessments on privately held commercial lending businesses, addressed The Congress of the United States, U.S. House of Representatives, Committee on Small Business to testify on online lending’s role in improving small business capital access.
New mobile application designed to reinvent personal credit (Muskogee Phoenix), Rated: A
A recent study conducted by Affirm, a company intent on reinventing personal credit, found that 67 percent of 1,600 U.S. adults surveyed expressed personal fears about debt. Almost a third — 32 percent — are fearful because they don’t know how long it would take to pay off that debt, and 72 percent of those who have carried a credit card balance worried about how much their purchases would end up costing after interest was included.
Findings like those and other factors prompted PayPal co-founder and serial entrepreneur Max Levchin to develop and roll out a new mobile application designed to reinvent personal credit. The Affirm app — rolled out this week and available for download from the App Store and Google Play — allows customers to split big online purchases into smaller, fixed payments with a virtual card.
Braviant Holdings Announces $ 40 Million Credit Facility with Redpoint Capital Group (PR Web), Rated: A
Braviant Holdings, a leading fintech startup that offers analytics and technology-driven credit solutions for underserved Americans, has entered into a $40 million Senior Secured Credit Facility with Redpoint Capital Groupfor its wholly-owned subsidiary, Balance Credit.
SBA Approves a Record $ 869 Million in Loans to NJ Small Business (Cap May County Herald), Rated: A
The U.S. Small Business Administration approved a record $869 million in loans to New Jersey small business owners during the agency’s fiscal year 2017(the period from Oct. 1, 2016 thru Sept. 30, 2017). Nationally SBA approved over 68,000 loans for over $30 billion, during the past year.
This past year, SBA has launched its online lender referral tool Lender Match. “The idea is to always be thinking of streamlining and simplifying whenever possible, when it comes to giving entrepreneurs access to capital,” said Titone. “In 2017, SBA loans have helped New Jersey companies to create 8,666 jobs and retain another 10,671 jobs. When you look at it that way, our programs are having significant impact on our local economy.”
Genesis Financial Solutions, Inc. agrees to service Signet Jewelers’ non-prime consumer accounts (Genesis Email), Rated: A
Genesis Financial Solutions, Inc., the nation’s leading provider of private label credit programs for consumers with non-prime credit, and Signet Jewelers (NYSE: SIG), the world’s largest retailer of diamond jewelry, have closed a previously announced servicing agreement related to Signet’s secondary consumer credit program.
Under the terms of the agreement, Genesis will provide credit servicing functions, including operational interface and customer servicing, for Signet’s existing portfolio of approximately 600,000 non-prime consumer accounts as well as for newly originated non-prime accounts with an initial term of five years. The agreement also includes the transition of 640 Signet employees from Signet to Genesis, who will continue to work from their current Akron, Ohio, location.
Online lenders can get needed credit to small businesses (The Hill), Rated: A
This challenge has resulted in a global small-business financing gap, estimated by the International Finance Corporation (IFC) to be between $2.1-$2.6 trillion in developing countries.
In The Battle For Low-Fee Financial Advice, DIY Beats The Robos (FA-Mag), Rated: A
When customers open an account at one of these automated investing firms, they’re put into funds from companies like Charles Schwab Corp. and Vanguard Group and charged a fee of anywhere from 25 to 50 basis points. In return, they get some extra benefits, like tax loss harvesting, which can result in a lower tax bill, and automatic re-balancing at no extra cost.
But there’s a catch, the funds that customers buy through these advisors are all available on free trading platforms such as Robinhood Financial, where there’s no added cost.
SelfScore rebrands as Deserve, raises $ 12m funding (Banking Technology), Rated: A
Consumer analytics company SelfScore has rebranded as Deserve, writes Julie Muhn at Finovate (Banking Technology‘s sister company).
The California-based company continues to be committed to providing underbanked Americans with access to credit, and to fuel that mission, Deserve has received $12 million in funding. The round was led by Accel, with participation from Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group, and GDP Venture, and brings Deserve’s total funding to $27 million.
Mortgage lenders: Here’s your blockchain primer (Housingwire), Rated: A
Blockchain is particularly relevant to the lending market. Lending is a contract-intensive process with an extensive lifecycle; it carries significant risk and limited trust across its value chain – from origination to funding through to the fulfillment and servicing of the loan.
Moreover, the integration of blockchain with digital lending ensures transactions are tracked in an open and transparent way. Banks and lenders get direct visibility into exactly what happened during the lending process – who was involved, who had control over the authoritative copy of the digital assets and ultimately, who owns the value of those assets, as required by law.
Jiko Raises $ 7.7m in Series A Funding (FINSMEs), Rated: A
Jiko, an Oakland, Calif.-based personal bank startup, raised $7.7m in Series A funding.
The round was led by Upfront Ventures and Radicle Impact with participation from Social Capital, 500 Fintech, Digital Currency Group, Core Innovation, Embark Ventures and Story Ventures.
Templum Raises $ 2.7M in Seed Funding (FINSMEs), Rated: A
Templum, LLC, a NYC-based fintech startup facilitating regulatory compliant ICOs as securities and secondary trading of digital assets, closed a $2.7m seed funding round.
The round was led by Raptor Group, Galaxy Investment Partners, Blockchain Capital and firstminute.capital.
Digital bank for teenagers raises $ 5m in Series A investment round (AltFi), Rated: A
Current, a new mobile-only banking platform for parents and teenagers, has raised $5m in a Series A funding round led by QED Investors.
10 Takeaways from the ULI Fall Conference 2017 (National Real Estate Investor), Rated: A
Touching on the recent boom in real estate crowdfunding firms, John McNellis, co-founder of Palo Alto, Calif.-based development firm McNellis Partners, divided the crowdfunding sector into two groups: firms that simply connect investors with developers and firms that invest in projects themselves. The first concept should work in the long term, he noted. But when it comes to crowdfunding firms underwriting real estate deals, McNellis pointed out that it takes at least a decade in the business to become a reliable underwriter. “To expect these 20-year-olds who are good at tech to be good at underwriting” is unrealistic, he said. McNellis added that established developers normally already have financial partners that they prefer to work with. The developers most in need of crowdfunding dollars would be either those just starting out in the business or developers with a spotty track record.
Appetite grows for riskier MPL collateral and deeper sub notes (Global Capital), Rated: A
The decline in underlying collateral quality — a theme across wider consumer ABS sectors — has been playing out in marketplace loan ABS, with recent deals from Prosper, Marlette Funding and Avant featuring a growing proportion of loans taken by borrowers with credit scores of less than 680.
Local veterans get help launching businesses through crowd lending (WFLA), Rated: A
There is now a way anyone can help veterans launch their new life through a concept called StreetShares.
You can invest just a few dollars or thousands to the fund. Investors can earn 5 percent on their money.
For Shane and Melissa Underwood, a $20,000 loan allowed them to purchase a piece of equipment that launched their small business Driveshaft Specialists.
3 Places Women-Owned Businesses Turn for Financing (NAV.com), Rated: A
A 2017 crowdfunding reportby the National Women’s Business Council, for example, found that 47% of successful campaigns on the popular crowdfunding platform Indiegogo were run by women.
Keep in mind that online business loan shopping sites may operate in a variety of ways:
- Lead generation sites will simply gather your information then sell it to various lenders, which may then call or email you with information or offers.
- Online lenders may offer a specific set of loan products aimed at specific types of borrowers (for example, those with significant credit card sales). Remember: just because you can’t qualify with one lender doesn’t mean you can’t quality with others.
- Online brokers may try to help get you funding with various lenders with whom they have a relationship. They may charge a significant fee for this service, so be sure to ask.
- Online marketplaces will present you with options and allow you to choose which ones seem right for your needs. Ideally, you’ll also see which loans are best matched to your qualifications. (Disclosure: Nav’s small business loan marketplace operates this way.)
Zeus CrowdFunding Year-End Hard Money Offer Helps Real Estate Investors Finish 2017 Strong (PR.com), Rated: B
Zeus CrowdFunding once again offers borrowers what other lenders won’t – low rates designed specifically for the real estate investor and their year-end needs. For a limited time, qualified applicants will pay only six percent interest for the first six months of the loan term.
The company loans up to 100 percent of a project’s cost to qualified applicants in as little as four days.
On Deck Capital, Inc. (ONDK) Set to Announce Quarterly Earnings on Wednesday (Ledger Gazette), Rated: B
On Deck Capital, Inc. (NYSE:ONDK) is scheduled to be issuing its quarterly earnings data before the market opens on Wednesday, November 1st. Analysts expect the company to announce earnings of $0.03 per share for the quarter.
MākuSafe Raises $ 1.25m Convertible Funding Round (FINSMEs), Rated: B
MākuSafe, a West Des Moines, Iowa-based Insurtech startup, raised $1.25m convertible note round of funding.
Wells Fargo Adds Smart Beta to FA Platform (Financial Advisor IQ), Rated: B
As banks rush to catch a wave of robo technologies, Wells Fargo Advisors is rolling out a factor-based approach designed for advisors and their clients.
The wirehouse has launched an expansion to its electronic model portfolio services platform, according to Patty Loepker, WFA’s head of research directed advisory programs. The new managed accounts program features allocations built around smart beta ETFs.
Newable Business Finance partners with Open Risk Exchange (Fintech Finance), Rated: B
Litigation Finance Specialist Pravati Launches Third Fund (FINAlternatives), Rated: B
Litigation finance specialist Pravati Capital has launched its third fund vehicle to capitalize on opportunities in the burgeoning litigation finance sector.
The new fund, named Pravati Credit Fund III, will invest in mature stage, high-probability, high-value cases or case portfolios where there is established liability and precedent for settlement, according to a statement.
LandlordInvest expects to double IFISA intake this tax year (P2P Finance News), Rated: AAA
LANDLORDINVEST is expecting its Innovative Finance ISA (IFISA) intake to double this tax year.
The property peer-to-peer platform, which launched its IFISA in January, said it attracted £419,385 in the previous tax year and was hoping to see that double to nearer £1m.
Could this platform satiate investor appetite for manual lending? (P2P Finance News), Rated: A
LENDINGCROWD has been ranked as an alternative to Funding Circle for investors looking to continue with manual lending, as they both offer similar interest rates and borrower profiles.
Peer-to-peer analyst Orca said that before Funding Circle shifted to manual lending last month, 27 per cent of investors used the manual option, suggesting there is demand for this functionality.
UK Treasury: Cryptocurrencies Pose Low Terrorist Financing Risk (Coindesk), Rated: A
The U.K. government’s economic and finance ministry has released a new policy document stating that cryptocurrencies like bitcoin pose a “low risk” for terrorist financing.
The paper further cited the peer-to-peer lending industry, which it said has the potential to be used as a “terrorist financing tool,” though no incidences have been observed in the U.K. to date.
Regtech and financial inclusion: “For Millennials opening a bank account online is a no-brainer” (Bob’s Guide), Rated: A
How did you find your way to founding Onfido?
Initially, my co-founders and I had experience verifying identity documents meant for an offline world. The current way of verifying documentation for a standard current account requires hours and hours of face-to-face in-branch and still not getting approved; it’s no wonder there’s a 40% drop-off.
Of the 7 billion people in the world, Facebook has brought their social identity online, LinkedIn has brought their professional identity online and now we’re looking to bring their legal identity online.
How exactly are Onfido providing something that mainstream banks should take notice of?
Very simply, we help business verify the identity of the people they are onboarding digitally. That can be with a photo of their government issued ID that the user can send with a smartphone. We cover 600 IDs globally and use machine learning to verify whether the ID is genuine or not. There are three steps to our core technology. The first, we extract the details, see if the patterns are consistent and compare them to the millions of historically computed IDs. The second step is asking the user to take a photo or short video of their face, which we compare to the photo on their identity document for similarity. The third step is to check that their details – name, date of birth and address – are consistent with records on multiple databases. Altogether this verifies the person is who they claim to be and, end-to-end, takes two minutes.
We use a hybrid machine/human approach – the technology is able to automatically process the vast majority of documents, and the small number of outliers are passed to our expert human team for review. It means that human resource can be put to more effective use, and would heavily cut down on the 30,000 people employed by Citibank, for example, who just work on onboarding and compliance checks.
As a Millennial yourself, how much of a role do you think generations play on attitudes to banking?
Millennials are just so used to doing absolutely everything on their phone.
Fintechs have really monopolised the millennial market and they’re building the models to ensure they keep that market for the next 15-20 years. That’s where PSD2 becomes very relevant as a leveller of the playing field for the market – it’ll increase healthy competition.
Silicon Valley investors double funding for UK tech after Brexit (The Telegraph), Rated: A
Silicon Valley investors have more than doubled funding for UK technology companies this year, in a sign of strengthening links with the world’s biggest tech hub after the Brexit vote.
British start-ups received £884.8m from venture capital backers based in San Francisco and the Bay Area in the first nine months of this year, compared to £342m in the whole of 2016, according to London & Partners, the London mayor’s promotional agency.
London fintech firms set for record investment despite Brexit (Descrier), Rated: A
According to the latest figures from London & Partners (L&P), the Mayor of London’s official promotional firm, investors from around the world have backed London-based fintech firms to the tune of £825m so far this year. This is a positive sign for the industry after UK fintech investment plummeted by more than a third in 2016 as investors put off decisions in the wake of the Brexit vote.
One of the biggest London fintech success stories, currency exchange platform Transferwise, is reported to be in discussions with investors to raise a further £77m, which would value the company at more than £1.2bn.
What the peer-to-peer lending industry learnt from Lego (City A.M.), Rated: A
Strange as it may seem, using the analogy of Lego may be the best way to demonstrate why we believe the peer-to-peer (P2P) industry also isn’t – and can’t be – a one trick pony. While some see the industry as a fad that is set to become redundant, there are many reasons why this isn’t the case.
P2P platforms are exploring a range of new and old ways, and their aim is to create something which is more equitable, satisfactory and useful for everyone.
Homelyfe Raises £2.4M in Seed Funding (FINSMEs), Rated: B
Homelyfe, a London, UK-based insurtech startup, raised £2.4m in seed funding.
Uber appoints former Bank of England senior adviser as non-executive UK chair (Independent), Rated: B
Uber has appointed a former senior adviser to the Bank of England as non-executive chair in the UK, as it endeavours to clean up its image and “make things right” after Transport for London last month revoked the ride hailing company’s licence to operate in the city.
Laurel Powers-Freeling, who will take up the newly created position, is currently senior independent director at online lender Atom Bank.
Quantuma Joins UK Peer to Peer Finance Association (Crowdfund Insider), Rated: B
Quantuma, a corporate recovery and business advisory firm that works with several peer-to-peer lending platforms, has joined the UK Peer to Peer Finance Association(P2PFA). Earlier this year, the P2PFA announced the creation of Associate Membersto broaden its membership beyond strict lending platforms.
Alibaba-Affiliate Ant Financial Isn’t Itching to Go Public (WSJ), Rated: AAA
Flush with cash, Chinese financial-technology giant Ant Financial Services Group is putting on hold plans for an initial public offering while it steps up investments in everything from startups to artificial intelligence, according to a senior company executive.
Investors and analysts have been expecting Ant to go public sometime in 2018. The Hangzhou-based company last raised $4.5 billion from private investors in April 2016 in a deal that gave it a $60 billion valuation—and its business has since expanded significantly.
WeiyangX Fintech Review (Crowdfund Insider), Rated: A
51 CreditCard (u51.com), an online platform for credit card bill management, is reported to be listed on Hong Kong Exchanges and Clearing Limited (HKEX) in 2018, aiming to raise at least 500 million dollars.
According to a report of China Daily, the credit database of PBOC has collected credit information of more than 840 million individuals as well as more than 19 million companies and organizations by the end of April. Among these agencies, only 255 licensed micro loan companies have been connected to the company credit information system and 156 to the individual credit information system.
From November 1st, customers will be able to pay their train tickets by using WeChat Pay through the official booking website 12306.com or in the train station (booking office/self-service ticket machine).
On October 18th, Trustdata released the long-awaited “Trustdata: China Consumer Finance Analysis Report (2017)”. The document presents a comprehensive review of consumer finance development in China, makes a deep analysis of payday loan, installment credit and consumer behaviors, and proposes a new concept called “Consumer Finance Development Index”. Statistics from the research notes that, by the end of last month, the credit scale of consumer finance in China has reached more than 110 billion yuan with 3.7 million registered users.
Chinese fintech firms set for flurry of IPOs in US, HK (China Daily), Rated: A
The phenomenon of “Chinese companies lining up for an IPO in the United States or Hong Kong” has re-surfaced recently, Tiger Brokers, an online brokerage helping Chinese investors trade US- or HK-listed stocks, told chinadaily.com.cn Thursday.
Beijing-based Jianpu Technology Inc, which is 100 percent controlled by RONG360 Inc filed its preliminary prospectus with the US Securities and Exchange Commission, without the estimated IPO price range, on Oct 20.
Prior to Jianpu, Chinese online small consumer credit provider Qudian Inc made its debut on the New York Stock Exchange on Oct 18. Qudian priced its IPO of 37,500,000 American depositary shares (ADSs) at $24.00 per ADS for a total offering size of about $900 million, according to Xinhua News Agency. Qudian closed at $26.39 Wednesday after diving 7.24 percent, still above its IPO price.
Total Volume of Renrendai Surpass 37.8 Billion RMB (Xing Ping She), Rated: AAA
Recently, Renrendai issued its performance report for the third quarter of 2017.According to the report, the cumulative turnover of the platform surpass 37.88 billion RMB, with 524 thousand transactions in total.
More details, Renrendai remained steady growth in the third quarter. The volume on the platform reached 6.51 billion RMB this quarter, a 109% increase over the same period last year, and the amount of money that investors earn is up 55% from the same period last year. In addition, the per capita borrowing amount on the platform is 80.8 thousand RMB, which represents the capital requirements of small business owners and self-employed people in the class, and always below the national regulations of loan balance ceiling of $200000.
Qudian Stock Fell Below its Offer Price (Xing Ping She), Rated: A
On 27th October, the shares of Qudian tumbled again, closing down $3.59 to $22.8, down 13.6% below the offering price of $24 a share.
The company has fall into constant questioning just after it landed in the SEC. Luo Min, the CEO of Qudian, responded several questions through an interview Qudian’s Luo Min Respond To All, but this move has raised more query. Many media and media outlets gathered to lambast Luo Min for “lying” in her response.
On 23th October, Luo Min avoided all the media interviews again. Since then, the shares of Qudian began to slump, which closed at $26.39 on 26th Oct, down nearly 20 percent from the opening price of $31.89 on Wednesday.
Chinese fintech Rong360 targets 0m US IPO for subsidiary Jianpu (Deal Street Asia), Rated: A
Jianpu Technology Inc, a wholly-owned subsidiary of Chinese fintech firm Rong360, has filed for a $200 million IPO in the US. Goldman Sachs, Morgan Stanley and JP Morgan are bookrunners for the deal, according to a stock exchange filing.
Read more at: https://www.dealstreetasia.com/stories/china-fintech-company-rong360-targets-200m-us-ipo-wholly-owned-unit-84998/
China to tighten regulation of fintech consumer loans (Financial Times), Rated: A
China is preparing to tighten regulation of online consumer lending as part of a campaign against financial risks, dealing a possible setback to Chinese fintech groups that hope to sell shares in the US.
Household debt in China remains low as a share of GDP, and authorities have encouraged growth of consumer credit as a way to rebalance the economy towards consumer spending, but now concerns are rising about irresponsible lending practices online.
Online consumer lending has replaced peer-to-peer lending as the trendy new area in Chinese fintech, as a regulatory crackdown on P2P reduced that sector’s profitability. Short-term consumer loans outstanding in China grew by Rmb1.49tn ($225bn) through the first nine months of this year, compared to an increase of Rmb830bn for all of 2016, according to PBoC data.
China a fast learner when it comes to artificial intelligence-powered fintech, experts say (SCMP), Rated: A
Chan also said the rapid growth of new fintech services, such as peer-to-peer lending marketplaces and online money market funds, was made possible by a lack of innovation by the country’s traditional banks in addressing the needs of not only the average consumer, but also many small and medium-sized enterprises.
High-flying start-up Ant Financial Services Group, which runs online payments service Alipay and money market fund Yu’ebao, has made AI a key driver for expanding its businesses and improving customer service.
China was the world’s second-biggest investor in AI enterprises last year, injecting US$2.6 billion into the sector, according to the state-run think tank, Wuzhen Institute. The United States topped the list with US$17.9 billion in investments.
Sesame Credit, fintech and social credit scores in China (Technode), Rated: AAA
What would your reaction be if you wanted to get a loan and your bank asks to go through your Facebook profile? In China, this is already happening on a large scale, but it’s not banks that are doing the rating—it’s the country’s burgeoning fintech companies. And it’s not Facebook they are looking at—its social platform WeChat and shopping website Taobao.
Social credit scoring analyses data from non-traditional sources: social media, online shopping, payment apps, cell phone accounts, and more. This type of scoring is meant to fill a gap for people who want a loan but don’t have any way of proving they can repay one. In order to gauge whether you are creditworthy or not, the score can take into account a number of variables: who your friends are, what you buy, whether pay your bills on time or even how much time you spend reading the user agreement. It’s like FICO but decidedly more creepy.
Alibaba was once a kind of shadow lender too. The company first started building its own credit scoring model to provide loans to Taobao vendors. For this, it relied solely on the platform’s ability to gather big data—transactions, user ratings, market positioning, and others.
Sesame Score (screenshot above) tracks five areas: identity information, such as information on users’ education and work, ability to keep financial obligations, credit history, behavioral preferences like shopping, money transfers, and connections with other people. In return, it offers deposit-free bike and power bank rentals as well as other benefits.
China’s Social Credit System And P2P Lending: An Opportunity For Yirendai (Seeking Alpha), Rated: A
Yirendai (YRD) is a Chinese fintec company focused on facilitating unsecured loans. Leveraging the experience of its parent company, CreditEase, Yirendai has facilitated more than RMB 47 billion (US$7 billion) of loans since commencing operations in March 2012.
Financials and performance
Yirendai’s core business has seen rapid growth, facilitating over RMB 20 billion(US$3 billion) in loans in 2016, up 112% from 2015. The most recent forecastfrom the company expects loan volume to continue to grow through 2017, with RMB 35-37 billion (US$5.3-5.6 billion) this year. Earnings have been strong and growing as well, with net income for the six months ending June 30, 2017, rising from RMB 392 million to 620 million (US$58.9 million to 93.2 million) over the same prior-year period, translating to diluted earnings per ADS of RMB 6.71 to 10.26 (US$1.01 to 1.54) for the same periods.
China’s upcoming Social Credit System
Presently, eight companies have been licensed to develop algorithmic SCS scoring systems, including China Rapid Finance, a partner of social network TenCent (OTCPK:TCEHY) and Sesame Credit, which is run by Ant Financial, an Alibaba (BABA) affiliate.
Italian peer-to-peer lender launches its own fund, targets €100m raise (AltFi), Rated: A
Italian P2P firm BorsadelCredito.it has followed in the footsteps of its UK antecedent Funding Circle by launching a closed-end fund. The unlisted fund, which is called Colombo, hopes to raise €100m to invest across a 5 year timespan, and is managed by BorsadelCredito.it (through a vehicle named ART SGR SpA). The fund’s custodian bank is Caceis Bank.
By investing in Italian SME loans, originated exclusively by BorsadelCredito.it, the fund will target a yield of 5 per cent (5.5 per cent pre-tax).
Europe’s fintech lenders don’t want to become banks (yet) (AltFi), Rated: A
José Rego, who runs Portuguese P2P firm Raize, sees the issue as black-and-white.
“By definition, if you become a bank, you stop being an alternative lender,” he said. “Becoming a bank is an extremely complex and very expensive strategic decision which typically takes into consideration other elements besides the equity value generated by the alternative lending. Only a select number of platforms are likely to have the opportunity to become banks (if they wish so). So, in reality, I don’t think it should be something we’re thinking about within the industry.”
CLP Initial Coin Offering Announcement (Cointelegraph), Rated: B
Crypto Lending Project (CLP) announces its crowdsale campaign.
Name: CLP coin
Start Date: 1st November, 2017
End Date: 30th November, 2017
Global Assets under Management set to rise to $ 145.4 trillion by 2025 (Finchannel), Rated: AAA
In a new report ‘Asset & Wealth Management Revolution: Embracing Exponential Change’, PwC anticipates that global Assets under Management (AuM) will almost double in size by 2025, from US$84.9 trillion in 2016 to US$111.2 trillion by 2020, and then again to US$145.4 trillion by 2025.
By 2025, AuM will have almost doubled – rising by 6.2% a year, from US$84.9 trillion in 2016 to US$145.4 trillion in 2025, with the fastest growth seen in the developing markets of Latin America and Asia Pacific.
While active management will continue to grow and play an important role, reaching $87.6 trillion by 2025 (60% of global AuM), PwC predicts growth in passive management to reach $36.6 trillion by 2025 (25% of global AuM).
If current growth is sustained, the industry’s penetration rate (managed assets, as a proportion of total assets) will expand from 39.6% in 2016 to 42.1% by 2025.
PwC anticipates assets growing at 5.7% a year in North America from 2016 to 2020, slowing to 4.0% per annum from 2020 to 2025, lifting assets from US$46.9 trillion to US$71.2 trillion over the nine years. Similarly, Europe is projected to grow at 8.4% and 3.4% per annum respectively over the two periods, with assets rising from US$21.9 trillion to US$35.7 trillion.
Banks need to fear Amazon’s finance ambitions: McKinsey report (American Banker), Rated: AAA
McKinsey said that the industry needs to continue its digital makeover to protect the up to 40 percent of revenues at risk by 2025 and prepare for competition from so-called platform companies like Bezos’s Amazon.com Inc.
As he extends Amazon’s reach, the Seattle-based company has had discussions with banking regulators about financial innovation, according to lobbying disclosures reviewed by American Banker. And it already has a small-business lending arm that has doled out more than $3 billion to more than 20,000 of the merchants on its e-commerce platform.
The global banking industry, which had an 8.6 percent return on equity last year, could offset the loss of profits from price competition by partnering with platform companies and generating more revenue from their data. Banks that go further by creating their own platforms could elevate their ROE to 14 percent, according to the report. ROE is a measure of profitability.
How Mobile Phones and the Internet are Changing Banking (The Merkle), Rated: A
Furthermore with smartphone prices of $30 to $50, Asian markets maintain a robust mobile market. 76% of Taiwan is connected to mobile, and 70% of Myanmar is connected.
Experts estimate Asia as the region to become the fastest growing Internet region by 2020. And while their internet industry is flourishing, only 27% of Southeast Asians have a bank account. In 2017, China has 731 million internet users. That is only 53.1% of the population. China represents internet development at a fast pace, but it still has 21% unbanked. Internet traffic growth in Myanmar is at 58%, yet Myanmar is one of the lowest banking rates in Asia with over 70% of adults (aged 15+ years) unbanked.
P2P Lending Will Change the Way Credit Is Dispensed Globally (Crytocoins News), Rated: A
As an example OECD research points out that financial sector works constitute 19% of the top 1% earners but the share of finance in the overall employment is only 4%.
In developed world, there are huge reserves of money lying in banks at sub zero, zero or miniscule interest rates. On the other hand in the developing world where there is a dearth of credit, loans can only be had at rates as high as 20-30%.
Karma plans to use the blockchain in such a way that individuals as well as legal entities can make the most of profitable relationships with each other. This will entail creating a community of participants, who will be able to lend money, borrow money, insure against default, Score loans and carry out assessments and even collections. All of this will be fuelled by the Karma token that will be at the centre of this new ecosystem.
The sale of Karma tokens is legal in all jurisdictions including the United States and China. Qualified US investors can participate. The basic price of Karma Token is US$ 0.01. Early investors can get discounts of 50% till US$ 1 mln is collected, thereafter 30% discount is available till US$3 mln is collected and 15% till US$ 8 mln is collected. There is a hard cap of US$ 10 mln on the token sale.
Click, pay, study – how fintech is impacting international education (The PIE News), Rated: AAA
Though fintech can take many forms, “I think the disruption is really in the payer experience,” says Sharon Butler, EVP, education at Flywire, a global payment solutions company. “Essentially we are leveraging banking infrastructure. I think really what fintech is, is sort of the blend of the old and the new.”
Preceding the growth in cross-border tuition fee payment services, which track the money and file it instantly with minimum costs involved, were more staff resources sifting through multiple transactions and matching them to the student, coupled with uncertainty from the student’s side about when or whether the money would actually have arrived.
Improvements in payment services is one of the biggest ways fintech has benefitted students, agrees Devie Mohan, founder of fintech research company, Burnmark.
Fertile ground in China
Financial technology as an industry has grown globally at an unprecedented scale. Last year, fintech reaped $17.4 billion of venture capital investment – a colossal increase on the $2.5 billion it received just four years ago.
And $7.7 billion of this investment went to China, seeing it overtake the US as the top investment market for fintech companies for the first time.
The mobile payment industry is one which has grown particularly quickly in China in comparison with other countries around the world, predominantly led by Alipay and WeChat Pay. These two platforms combined saw $2.9 trillion in transactions overall last year.
Modernising student loans
But it was Prodigy Finance that entered the loan market specifically to serve international students. Since its inception in 2007, the platform has lent over $310 million to international students all around the world to study overseas, and is expanding its services.
Ethercash Aims to Revolutionise Three Core Functions of Finance (Coinidol), Rated: B
Financial services startup Ethercash has proudly announced its Pre-ICO Campaign, which will raise funds to develop its blockchain-backed financial platform. The Ethercash platform aims to revolutionise three core functions of finance to bring greater transparency and security in the way we lend, send and spend. The Etherecash platform will allow its users to leverage their cryptocurrency holdings to acquire fiat currency loans without the need for credit history, through the application of lawyer-backed smart contracts. The Etherecash Pre-ICO campaign will run from October 25th, 2017 until November 7th, 2017 and ICO campaign will begin November 15th, 2017 and finish on December 19th, 2017.
NZ prepares to join the ‘open banking’ revolution (Stuff), Rate: AAA
Andrew Sieprath is among the first people in the Europe to embrace “open banking” as a customer.
His chosen banking provider is Revolut, which isn’t even a bank.
Revolut is just one of three “open banking” services due to launch here in the next few months. They will lead New Zealand into something of a banking revolution which threatens to do to banks what Uber is doing to taxi firms, and ultimately put more pressure on them to cut staff or close branches.
There are many emerging open banking models, but as a starting point, think internet banking that’s slicker, more intuitive, and allows users to see and manage accounts from multiple banks in a single place.
Robo-advice raises alarm (Financial Standard), Rated: A
While the technology behind robo-advice is making it cheaper to invest, it doesn’t mean it is actually providing advice let alone the right advice, says the Association of Real Return Investment Advisers general manager Rebecca Jacques.
She told a recent Calastone forum that she put a few global and domestic robo-advisers to the test by giving each the same simplistic target: to pay her young children’s private school fees.
Every robo asked for a country of origin; only one asked for a tax bracket – but what was “scary” was that not one asked if the funds would be used for private school tuition, she notes.
COBA conference 2017: small banks need to work together on tech (The Courier Mail), Rated: A
IN the competitive fight against the big banks, smaller lenders such as credit unions find themselves hopelessly outgunned in terms of technology budgets.
But the chairwoman of the Customer Owned Banking Association said smaller lenders were taking opportunities to collaborate on budgets and spruce up their technological offering.
3 apps helping Australians buy real estate in ways that traditional banks can’t (Business Insider), Rated: A
But the report found property transactions made up a very small part of that alternative financing industry, making up just $49 million, or 8%, of the $609 million dealt out in 2016.
Australia lags behind the Asia-Pacific average (excluding China) of 17% of alternative financing going towards real estate. The popularity of peer-to-peer property financing in South Korea is a big contributor to the high average.
The $49 million alternative lending spent on real estate in Australia is made up of $36 million in peer-to-peer lending and $13 million in crowdfunding. In the US, peer-to-peer is worth $1 billion and crowdfunding $800 million.
- CrowdfundUP – The startup has so far allowed 2,000 people invest in 17 projects, with individual investments typically ranging from $5,000 to $2 million.
- BrickX – BrickX, as previously reported by Business Insider, allows everyday folk to invest in fractions of a residential property through units called “bricks”, which can cost as little as $66.
- CoVESTA – The real estate on offer includes residential, commercial and even agricultural properties, with investors requiring to contribute at least 5% of the purchase price if they wish to be a tenant in the property. For passive ownership, just 1% ownership is required.
RBI Regulations For P2P Lending Industry: A Win Win Situation For Both Platforms And Consumers (Inc42), Rated: AAA
It has been observed that, when the P2P lending industry or any other industry is prudently regulated, it attracts more participation. In terms of P2P, the regulation will increase entry of investors as well as borrowers. This is a reason why RBI regulating the NBFC-P2Ps is a long-term positive for the Indian P2P lendingindustry.
RBI regulating the sector means dead-end for players that are looking only to generate money without adding any value.
P2P regulations: A missed opportunity (Livemint), Rated: A
However, the potential social benefits of P2P lending are contingent on a facilitative and proportionate regulatory ecosystem. A review of the P2P regulations issued by the RBI leaves much to be desired in that sense. Saliently, the P2P regulations delegate potentially arbitrary discretion to RBI in gatekeeping, impose high market-access barriers that would inhibit innovation in a technology-intensive sector, and lack clarity around critical issues like leverage ratio.
A. Excessive regulatory discretion: One of the principal governance issues of a modern state is injecting accountability into regulatory discretion.
B. Disproportionate minimum capital requirements: The RBI has prescribed a mandate that would require a minimum net-owned fund (NOF) of Rs2 crore.
C. Lack of clarity around critical issues like leverage ratio: Leverage ratio is defined as “total outside liabilities divided by owned funds, of the non-banking financial corporation in P2P (NBFC-P2P)”. This leverage ratio has been capped at 2.
Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India (BW Disrupt), Rated: A
The current marketplace for financial products in India is still highly inefficient, time-consuming & uncertain for customers – especially the SMEs and the MSMEs. When they require loans as working capital or for expenditures like purchase of raw materials, payment towards wages etc. to achieve scale and growth, approaching a bank directly or even visiting loan aggregator websites becomes challenging in terms of time & information. Also, due to varied risk appetite of traditional financial institutions, many SME and MSME entrepreneurs are often puzzled in terms of documentation requirements; different banks and lenders have their own set of risk parameters which they assess while sanctioning a lending facility. This results in high rejection rates within the loan ecosystem.
Why online lending is emerging as an enabler for India’s MSME industry
New-age fintech lending marketplaces endeavor to revolutionize the country’s financial lending patterns by changing the way it works. They are enabling easy access to loans by connecting these small businesses to financial institutions on a consolidated platform for quicker sanctions. Such neutral platforms, with customer-centric features offering a wide range of loan products and end-to-end loan fulfillment, enable MSMEs to concentrate on building their businesses rather than worrying about finances to fulfill the gap in their cash flows or fund their expansion and growth.
I2I Funding cofounder Neha Agarwal: Saw significant business growth post-demonetisation (Financial Express), Rated: A
While the Reserve Bank of India’s (RBI) guidelines for lenders and borrowers on peer to peer (P2P) lending platforms are important cautionary moves, caps on lending should ideally be linked to lenders’ incomes, Neha Agarwal, co-founder of i2ifunding, told Shritama Bose. The company has disbursed more than Rs 3 crore so far in FY18 and has a full-year target of Rs 10 crore, she added.
We have had more than 30,000 registrations on our platform so far, of which around 25,000 people are registered as borrowers and around 5,000 as lenders. Since launch, around 500 loans have been disbursed and we have around 2,000 active lenders.
The average loan size is about Rs 1.5 lakh.
Almost 90% of the lenders have invested more than once. Around 40% of lenders are lending regularly on our platform.
Five platforms which were a boon during demonetization (Business-Standard), Rated: A
P2P Gold Lending, Bullion, and Physical Crypto Storage (Palisade-Research), Rated: A
Gregor has a company in Singapore where individuals can securely store their gold and silver.
Using peer to peer lending you can withdraw up to half of your holdings in loans at low-interest rates. For example, if you have $100k worth of gold you can deposit and take out a loan for 50k at around 3.5% interest per year.
The fast growing Fintech industry is another feather in the cap of rising Asia. According to EY FinTech Adoption Index 2017, there is a palpable global shift of fintech activities from the UK and the US to Asia.
Another report provided by KPMG and CB Insights says in 2016, investments in Fintech companies in Asia hit $8.6 billion across 181 deals.
In light of this, fintech innovation labs and fintech accelerator/incubator spaces are rapidly growing throughout Asia, especially in Hong Kong. The FinTech Innovation Lab Asia-Pacific is collaboration between Accenture and leading financial institutions including Bank of America, Merrill Lynch, Goldman Sachs, HSBC, J.P. Morgan, and Standard Chartered, etc.
A bout of high-profile mega-rounds in the Chinese market has also played a vital role in uplifting Fintech investment. One such activity was a whopping US$4.5 billion funding round by Ant Financial, an affiliate of Alibaba group. The other smaller but successful funding rounds in China during 2016 were: US$73 million to Quant Group, and US$30.4 million to China Rapid Finance.
According to a recent research conducted by Startupbootcamp FinTech Mumbai and PwC, it was found that more than 95% of financial service companies are seeking partnership with Fintech startups through collaboration rather than competing with them.
Another report regarding Indian Fintech ecosystem is more interesting. It says Indian Fintech market is expected to double from current US$1.2 billion to US$2.4 billion in 2020.
VCs call on startups to set sights on SE Asia (The Investor), Rated: A
Tan, who formerly partnered with Sequoia Capital Asia, said his Singapore-based fund is looking for ambitious, strong Korean tech startups to invest in what could become the next unicorn.
He believes Asian-based VCs have a competitive advantage over established VCs from Europe or the US in the region as they can effectively tackle the needs of startups.
Fintech and software as a service, especially targeting small and midsized businesses, are the buzzword in Southeast Asia, according to Yoo Jung-ho, investment manager at Korea Investment Partners.
“In many of these countries, payment, banking abd finance, are still in a nascent stage with only 10 percent of the population utilizing credit and banking services,” said Yoo. “There is a great demand for firms that provides peer-to-peer lending and payment services. “So companies that target small and medium enterprises that make up the majority in Southeast Asia, will have a fighting chance.
The Credit Crisis in Malawi (Maravipost), Rated: A
According to recent reports, only 12 percent of households in Malawi have access to credit. With 65 percent of the population living under the poverty line, the rural population is especially vulnerable to the limitations of credit.
In today’s modern age, a physical bank is no longer needed to conduct financial services. Virtual and automated banking is expected to replace 30 percent of bank roles in the next ten years. These virtual banks even the playing field for Malawians by allowing consolidated rates, 24/7 access to services, and a location for information about other services. Some of these alternative, virtual services include:
- Personal Loans: To find a personal loan, Malawians can use search sites such as this example from Finland.
- Peer to Peer Loans:Rather than receiving a loan from a financial institution, peer to peer loans allow people to receive a loan directly from an individual financer. In order to apply for a loan, you must visit a peer to peer lending platform such as Prosper or Perform, and the online marketplace will match borrowers and lenders. Although the site still uses credit scores, individuals may have more sympathy towards you and your situation as opposed to a national bank.
- Crowdfunding:Another way to finance an opportunity is through crowdfunding. Crowdfunding is a fairly recent innovation that utilizes crowdsourcing as a way to raise funds for a project or business.
The change in financial technologies in the coming years will have a great impact in Malawi, and create more access to services for the entire population.
CANADIAN LENDERS ASSOCIATION & INNOVATIVE LENDING PLATFORM ASSOCIATION LAUNCH SMART BOX IN CANADA (Canadian Lenders Association), Rated: AAA
The Canadian Lenders Association (CLA) and the Innovative Lending Platform Association (ILPA) today announced the introduction of the SMART Box™ into Canada – a model pricing disclosure and comparison tool that will enable Canadian small businesses to better assess and compare their finance options. Top small business lenders in the country, including Company Capital, Evolocity Financial Group, IOU Financial, Lendified, Merchant Advance Capital, OnDeck and Thinking Capital, have committed to adopt the tool for use by their customers.
Canadian Small Business Lender Lendified Secures $ 60 Million Credit Facility From ClearFlow (Crowdfund Insider), Rated: A
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.
Finn.ai Raises $ 3 Million in Institutional Financing Round (Finn.ai), Rated: A
Finn.ai, the award-winning, AI-powered virtual assistant built for banking and personal finance, today announced it has raised $3 million in its recent institutional financing round.