- Today’s main news: 3 Reg CF portals no longer FINRA-approved. Zopa launching a bank. LexinFintech completes $108M IPO. European banks prep for PSD2. Australia releases second MPL survey.
- Today’s main analysis: PeerIQ’s MPL Loan Performance Monitor.
- Today’s thought-provoking articles: 2017 was a wild ride for alternative lending. Is Congress expanding credit for the poor or enabling high-interest rates? Megatrends in Indian fintech. Financial inclusion in Thailand.
- 2017 was a wild ride for alternative lending. AT: “From PYMNTS, this a very good, long read. Probably the best read today, but, sorry, no charts. However, it IS a rehash of 2017 news.”
- MPL Loan Performance Monitor. AT: “Great charts.”
- Is Congress helping the poor or payday lenders? AT: “Another excellent read, but slanted in favor of payday lending opponents.”
- Three Reg CF portals no longer approved by FINRA.
- Why one small business borrower went to Kabbage.
- Interview with Camilo Concha of LendingUSA. AT: “Lend Academy podcast.”
- P2Binvestor CEO predicts 2018 for marketplace lending.
- Modo creates payments data highway.
- PayPal CEO discusses fintech.
- Getting smart about thin file student graduates.
- Real estate investing trends that picked up speed in 2017. AT: “#2 will gain more steam in 2018.”
- Can real estate crowdfunding solve homelessness? AT: “Here’s a creative idea.”
- EquityStat focuse on cloud-based portfolio management.
- FindBob closes $1.26M seed round.
- Fintechs, alternative lenders that faded away this year.
- In 2018, banks will move toward AI.
- Interested in P2P lending?
- Lendio opens franchise office in Rochester, New York.
- LendingTree makes new executive appointment.
- Zopa launching a bank.
- Moneywise investation leads to removal of platforms from P2P comparison websites.
- A helping hand for small businesses.
- P2P business borrowers are not deposit takers.
- Business trends to look for next year.
- LexinFintech raises $108M in IPO.
- LexinFintech surges.
- China IPOs rebound to 16.
- CreditEase CEO sees where the money is.
- Golden Bull to go after $9M in U.S. IPO.
- Banks get ready for overhaul through PSD2. AT: “The big question on the table is whether open banking in Europe will filter over into the U.S. I think it will, but it will take some time. Americans don’t like changes that place quickly.”
- How PSD2 will make personal lending more competitive.
- Hive Project after the ICO.
- Key megatrends this year.
- Retail lending will scale up in 2018.
- P2P lending will drive the next phase of growth.
- How P2P lending can disrupt MSME.
- Paynear penetrates small towns.
- Funding successes.
- United States
- The Wild Ride In Alternative Financing In 2017 (PYMNTS), Rated: AAA
- MPL Loan Performance Monitor (PeerIQ), Rated: AAA
- Is Congress expanding credit for the poor or enabling payday lenders? (Salon), Rated: AAA
- Three Reg CF Crowdfunding Portals are No Longer FINRA Approved (Crowdfund Insider), Rated: AAA
- After the tech wake-up call… (Banking Exchange), Rated: A
- Camilo Concha of LendingUSA (Lend Academy), Rated: A
- P2Binvestor CEO Krista Morgan on Marketplace Lending: What to Expect in 2018 (Crowdfund Insider), Rated: A
- Modo Creates A Payments Data Highway Between The World’s Largest Financial Institutions (Benzinga), Rated: A
- PayPal CEO Dan Schulman talks Fintech on Capitol Hill with Georgetown’s Chris Brummer (MENAFN), Rated: A
- Getting Smart About Thin File Student Grads and Their Credit Card Worth (PaymentsJournal), Rated: A
- 3 Real Estate Investing Trends That Gained Steam in 2017 (Realty Biz), Rated: A
- Can real estate crowdfunding help the homelessness crisis? (Curbed), Rated: A
- EquityStat Brings Portfolio Management To The Cloud (Benzinga), Rated: A
- FindBob Closes $ 1.26M USD Seed Round (Business Insider), Rated: A
- Fintechs that flamed out or faded in 2017 (American Banker), Rated: A
- Fintech Outlook For 2018: US Banks Look To AI (The National Law Review), Rated: B
- Anyone invest in p2p lending? (blind), Rated: B
- Lendio Announces New Franchise in Rochester, New York (Crowdfund Insider), Rated: B
- LendingTree,Inc. (NASDAQ:TREE) Files An 8-K Departure of Directors or Certain Officers (Market Exclusive), Rated: B
- United Kingdom
- Zopa to launch a bank (Monzo), Rated: AAA
- Sites remove misleading peer-to-peer comparisons after Moneywise investigation (Moneywise), Rated: A
- A helping hand for small businesses (Money Week), Rated: A
- New rules clarify P2P business borrowers are not deposit takers (P2P Finance News), Rated: A
- 10 business trends to look out for in the coming year (inside.co.uk), Rated: B
- China’s LexinFintech Completes $ 108M Listing As Sixth Chinese Fintech IPO In US (China Money Network), Rated: AAA
- Chinese online lender LexinFintech surges in US market debut (China Economic Review), Rated: A
- China IPOs In New York Rebound To 16 In 2017, Online Lender Lexin Aces Nasdaq (Forbes), Rated: A
- Fintech Pioneer Sees Money in the Masses (Caixin), Rated: A
- Chinese peer-to-peer lender Golden Bull sets terms for $ 9 million US IPO (NASDAQ), Rated: A
- European Union
- Europe’s banks brace for a huge overhaul that throws open the doors to their data (CNBC), Rated: AAA
- How PSD2 will make personal lending more competitive (IT ProPortal), Rated: A
- Hive Project buzzing after ICO (Bankless Times), Rated: A
- ASIC releases second marketplace lending survey (Lexology), Rated: AAA
- The True Threat to Aussie Banks (Money Morning), Rated: A
- Digital payments, P2P lending among key mega-trends of the year gone by (The Hindu Business Line), Rated: AAA
- How retail lending is set to scale up in 2018 (Financial Express), Rated: A
- The P2P Lending Segment will Drive the Next Phase of Growth of the Indian Fintech industry (BW Disrupt), Rated: A
- How can P2P lending disrupt MSME sector in India? (MENAFN), Rated: A
- Fintech start-ups tap small-town users (Business Standard), Rated: A
- Funding Galore: Indian Startup Funding Of The Week [18-23 Dec] (Inc42), Rated: B
- Financial inclusion is in your hands (National Multimedia), Rated: AAA
- FintruX partners with blockchain data exchange DataWallet (Cryptoninjas), Rated: A
The Wild Ride In Alternative Financing In 2017 (PYMNTS), Rated: AAA
But as 2017 pulled into the station, it became clear that a decade-long era in financial services was officially drawing to a close, other than this transitional year between what was and what’s next.
It became clear that Act I of digital era financial services was drawing to a close – and that Act II is getting warmed up backstage.
The CFPB has spent a year generating surprising questions – with even more surprising answers.
Moreover, there was some thought that the federal courts might render much of the discussion moot, by ruling the CFPB’s independent structure rendered it unconstitutional in the CFPB v. PHH case.
That ruling was thrown out by a three-judge panel of the D.C. Circuit court of appeals, and a final ruling is still awaited.
The Congressional Review Act (And The Fate Of The Old Rules)
The 20-year-old law, which had only been used once before 2017, has been used 15 times since January of last year to undo Obama-era rules.
The law was effectively used to bounce the CFPB’s arbitration rule from going into effect. That rule would have made it illegal for financial services companies to insert mandatory arbitration clauses into consumer contracts, thus forcing consumers to surrender their right to form class-action lawsuits.
A similar maneuver was attempted to block controversial rules the CFPB passed regarding the regulation of prepaid cards. The House approved the CRA resolution, but the bill was unable to garner majority support in the Senate. That means going forward, prepaid cards that offer overdraft protection will be regulated as though they are credit cards, as opposed to debit cards.
The Future Of Innovation Instead Of Regulation
Affirm, founded by PayPal’s Max Levchin, built a POS financing product dedicated to offering consumers an honest, transparent way to pay for items on installment.
Affirm’s mission to expand consumer access to honest financing will rev into high gear next year, on the heels of a $200 million capital raise on an estimated $1.6 billion valuation, and now with the ability for any consumer to take advantage of its credit option at any merchant.
LendUp wants to calibrate financial services to what it calls “the new average consumer” or the “emerging middle class.”
EVEN’s new partnership with Walmart is a new tool to help smooth the income volatility for its workers by allowing them to be paid in real time for the hours they have already worked, instead of having to wait for the traditional payday.
“This isn’t that people just don’t have the money to pay their bills in general, but that they are forced to make bad decisions because the money they have already earned by working is not available to them at the right time,” EVEN CEO Jon Schlossberg told Karen Webster. “That adds up to a $100 billion industry a year in payday loans and late fees. That’s crazy; we can fix that and we should fix that.”
So EVEN – now with Walmart as a partner – is fixing it, both by giving customers access to their funds early, but also by providing access to financial management software so they can better control their money.
Millennials, she noted, tend to enter the credit system with a bang once they start having families.
MPL Loan Performance Monitor (PeerIQ), Rated: AAA
This week, we introduce our redesigned MPL Loan Performance Monitor where we track the delinquency rates, cumulative losses, and transition matrices on public marketplace lending data that is comprised of loans originated by LendingClub and Prosper.
Is Congress expanding credit for the poor or enabling payday lenders? (Salon), Rated: AAA
Ken Rees has made a fortune selling loans with triple-digit interest rates to borrowers with poor credit history or no credit history.
But in 2008, federal regulators ordered First Delaware to stop working with payday lenders — including ThinkCash — so Rees changed his company’s name to Think Finance and started striking deals with Native American tribes, which, as sovereign entities, are also exempt from state usury laws. Think Finance denies that the order applied to their relationship with First Delaware.
In 2014, the state of Pennsylvania filed a still-pending lawsuit claiming Think Finance used the tribes as a front to make deceptive loans. Think Finance denies the charges and Rees started a new company, Elevate Credit, which operates from the same building in Fort Worth, Texas. Elevate deals in online installment loans, a cousin to payday loans, and partners with a Kentucky-based bank to offer lines of credit with effective annual interest rates much higher than would otherwise be allowed in some states.
Sponsors say the Protecting Consumers Access to Credit Act facilitates bank partnerships by ensuring third parties like debt buyers and rapidly growing financial technology firms can buy, and collect on, loans originated by federally regulated banks regardless of state laws governing interest rates. These partnerships can help make credit available to those left out of the traditional banking system, primarily low-income individuals, backers say.
“The bill covers every flavor of online lending,” said Adam Levitin, a consumer law professor at Georgetown University. “Some members of Congress have gotten snookered that they are fostering innovation, but a loan is just a loan whether you do it online or not.”
But now more payday-style lenders are moving online and donning the friendly face of a tech startup. Some, like LendUp, a lender charging more than 200 percent on some loans and counting Google Ventures among its investors, have attracted mainstream support. Like many high-interest online lenders, LendUp says it is “a better alternative to payday loans” because they use alternative data sources to determine interest rates but consumer advocates say the product, a high-interest loan that can quickly lead to a cycle of debt, is essentially the same thing.
Elevate said in an email it is committed to lowering rates further, and said its loan terms are more transparent and it doesn’t charge expensive fees associated with payday lenders.
Elevate’s installment loan called RISE is licensed in 17 states that don’t impose interest-rate caps and charges annual interest rates as high as 299 percent. Elevate says repeat borrowers can eventually qualify for interest rates as low as 36 percent on subsequent loans.
Three Reg CF Crowdfunding Portals are No Longer FINRA Approved (Crowdfund Insider), Rated: AAA
Ufunding was the first to depart FINRAs list of approved platforms. In hindsight it is a wonder the platform was ever approved. The action by FINRA took place a little over a year ago as “potential for fraud” was evident on Ufunding as was “an almost complete failure to follow disclosure and filing requirements.”
DreamFunded Marketplace has hit the exit. We are not certain exactly why DreamFunded left but, if one speculates, it is most likely due to the fact real estate investing is better suited for Reg A+ and Reg D crowdfunding rules which allow issuers to raise more money.
The other former CF platform is Crowdboarders out of Texas. Crowdboarders appears to have pivoted to more of a promotional platform.
After the tech wake-up call… (Banking Exchange), Rated: A
Not long ago, Indiana’s Peoples Bank SB had a business prospect come in who had a loan with Kabbage, the online lender, at 20%. “We reviewed their credit, and we got them into the bank at close to 5%,” says Benjamin Bochnowski, president and CEO at the $914.2 million-assets bank.
With credit that was worthy of a rate like that, the bank asked the customer why it had gone to Kabbage in the first place—and been willing to pay nearly 15 percentage points more for credit. Simple, the new customer responded. Kabbage was easy to use and delivered the proceeds of the loan quickly.
Camilo Concha of LendingUSA (Lend Academy), Rated: A
In this podcast you will learn:
- The founding story of LendingUSA.
- The different verticals they operate in today.
- How their point of sale lending process works.
- The typical terms on these loans.
- A profile of the typical borrower who uses LendingUSA.
- How they do marketing outreach to the merchants offering their loans.
- The different revenue streams they have.
- The scale that LendingUSA is at today.
- How their loan performance has been to date.
- Why LendingUSA is not competing as much on price as other consumer lenders.
- Their overall approval rate for loan applications.
- How they approach fraud prevention.
- Who is providing the capital for these loans.
- Where they are on the path to profitability.
- Why the marketplace lending challenges of 2016 did not impact LendingUSA that much.
- Why their cost of customer acquisition is going down.
- Their biggest challenge in getting their business to where it is today.
- Camilo’s long term vision for LendingUSA.
P2Binvestor CEO Krista Morgan on Marketplace Lending: What to Expect in 2018 (Crowdfund Insider), Rated: A
P2Binvestor CEO Krista Morgan founded P2Binvestor in 2012 with a mission to help growing businesses succeed. Morgan is not only CEO of a fast growing Fintech, she is also the cohost of the podcast “Women Who Startup Radio”, an ardent mentor to other women entrepreneurs who speaks regularly on business finance, fundraising, and scaling a startup.
I recently connected with Morgan via email to learn her 2018 predictions for the Marketplace Lending sector and more specifically, her predictions for P2Binvestor. Her observations follow:
- More focus will be placed on business models and profitability
- Platform mergers and shut downs will occur as equity investors remain on the sidelines
- Capital will start to look for shorter duration assets
- The conversation about diversity will continue
When asked what PB2i has in store for 2018, Morgan targeted the platform’s growth in four areas:
- More bank partnerships
- Tech focused on portfolio monitoring
- Tighter credit standards
Modo Creates A Payments Data Highway Between The World’s Largest Financial Institutions (Benzinga), Rated: A
Bruce Parker, Modo CEO: Modo creates interoperability in the payments industry by conducting the exchange of data between systems via our translation utility service. Modo allows clients to bring together capabilities from around the payments and commerce industry by directly solving for interoperability between different payment systems.
We’re doing this for some of the biggest names in the payments game: Bank of America Corp BAC, VeriFone Systems Inc PAY, FIS, Klarna, and Alliance Data Systems CorporationADS, and are proud to say that list is growing.
Who are your customers?
Banks, networks, payments providers and their partners.
PayPal CEO Dan Schulman talks Fintech on Capitol Hill with Georgetown’s Chris Brummer (MENAFN), Rated: A
Other topics touched on during the interview with Mr. Brummer included how fintech can and should improve financial inclusion—and the continued need to eradicate banking deserts—as well as the necessity to better coordinate and launch public-private partnerships. Despite PayPal’s notable profile and 210 million users, it operates in a $100 trillion industry with approximately 1% market share—and there are still nearly 2 billion people around the world who live outside financial mainstream.
Getting Smart About Thin File Student Grads and Their Credit Card Worth (PaymentsJournal), Rated: A
The CARD Act of 2009 disrupted student credit card marketing with a means test and parental approval for certain types of accounts. The market, which used capture about 12% of total card consumer spend now only contributes a fraction.
The American Banker covered an interesting story about how BankMobile, a digitial only bank with 800 university partners, is attempting to build a model based on academic history and how they maintained their student bank accounts.
3 Real Estate Investing Trends That Gained Steam in 2017 (Realty Biz), Rated: A
In 2016, the real estate crowdfunding industry produced 3.5 billion dollars in a market that has largely gone unnoticed. It’s anticipated by 2025 that the industry is going to be valued at more than 300 billion. Three trends emerged in 2017 that can help the informed investor understand the best approach to this dynamic and explosive industry.
- Investors Move Toward Institutional Capital
- Non-Accredited Investors Gain Steam
- Consolidation allows for the emergence of new players
Can real estate crowdfunding help the homelessness crisis? (Curbed), Rated: A
In addition to commercial space and two market-rate residential lofts, the two-story Jolene’s complex will also contain an 11-room SRO, or single-room occupancy, a dorm-like living arrangement where each resident gets their own 100-square-foot bedroom and access to shared common space. Six of the room will be given to working homeless Portlanders, as part of a partnership with the Street Roots non-profit, while the other five will be rented out to the general population for $425 a month.
After seeing that 90 percent of the participants in Fair-Haired Dumbbell were from Portland, they experimented with a slightly different form of crowdfunding that allowed anybody in Oregon making $70,000 a year or more to invest $3,000 or more in the project (technically, it’s taking advantage of Rule 504 of Regulation D, qualified by the SEC and the Oregon Secretary of State).
EquityStat Brings Portfolio Management To The Cloud (Benzinga), Rated: A
What does your company do? What unique problem does it solve?
Karl Swierenga, founder: EquityStat is an online investment portfolio manager. It allows investors to track and manage their stocks, mutual funds and ETFs, online in the cloud. Many investors own a combination of stocks, bonds, mutual funds and ETFs.
Who are your customers?
Our customers are individual investors who own mutual funds, stocks, bonds and ETFs.
FindBob Closes $ 1.26M USD Seed Round (Business Insider), Rated: A
FindBob (https://www.findbob.io) announced today that its seed round is closed at over $1.25 million USD. Grinnell Mutual led the investment.
The capital will allow FindBob to grow its sales and marketing teams, expand into additional U.S. markets and execute on its multi-generational product roadmap.
FindBob champions better transition behavior among financial professionals and their firms in order to perpetuate and protect their most precious asset: their book of business. By allowing company principals to take control of their futures on a secure digital channel, FindBob helps them safely discover opportunities to buy, sell, merge, partner or address succession and to be confident in their plan for the business they worked so hard for.
Fintechs that flamed out or faded in 2017 (American Banker), Rated: A
Fintech Outlook For 2018: US Banks Look To AI (The National Law Review), Rated: B
With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:
- Artificial intelligence and machine learning
- Open banking
- Cybersecurity and biometrics
- Commercial banking innovation
Anyone invest in p2p lending? (blind), Rated: B
Just found out that I can earn annual returns of 6-12% by investing in p2p lending platforms like lendingclub and prosper. Way more than the measly 1.3% I get from my savings account.
Lendio Announces New Franchise in Rochester, New York (Crowdfund Insider), Rated: B
LendingTree,Inc. (NASDAQ:TREE) Files An 8-K Departure of Directors or Certain Officers (Market Exclusive), Rated: B
On December 19, 2017, our Board of Directors and Nikul Patel mutually agreed to change Mr. Patel’s position to Chief Strategy Officer, effective January 1, 2018. He currently serves as Chief Product and Strategy Officer, a position he held since November 2016.
Zopa to launch a bank (Monzo), Rated: AAA
It’s why we’re applying to launch our own next-generation bank. We’ve listened, and we’re confident that we can deliver the bank that will be the best place for your money.
Sites remove misleading peer-to-peer comparisons after Moneywise investigation (Moneywise), Rated: A
Leading comparison websites have removed potentially misleading information from their sites after a Moneywise investigation found peer-to-peer (P2P) investment products included in the same best buy tables as high street savings products.
Moneywise looked at the UK’s leading product comparison websites and found issues with the four sites which offer P2P comparisons – Go Compare, Love Money, Money.co.uk and MoneySuperMarket.
A helping hand for small businesses (Money Week), Rated: A
A decade after the credit crunch, too many small and medium-sized enterprises (SMEs) in the UK still feel their potential is being hampered by a lack of access to appropriate financing. The government’s Industrial Strategy report, published at the end of November, identified financing issues as a clear problem for SMEs that are looking to grow; surveys of sentiment continue to reveal frustration.
Research from Hitachi Capital Business Finance shows that two-thirds of SMEs with growth plans for the year ahead fear that their expansion plans could be derailed if they cannot secure appropriate finance. A third of SMEs applying for finance aren’t securing enough funding to underpin their investment plans, according to similar research from Close Brothers Group; a quarter of SMEs think funding is still too dear.
New rules clarify P2P business borrowers are not deposit takers (P2P Finance News), Rated: A
In an announcement titled ‘protecting the future of P2P lending’, the Treasury said that no P2P business borrower needs to be regulated as a ‘deposit taker’ – often referred to as a ‘banking licence’ – unless that is their core business.
This clarification will be added to the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001.
10 business trends to look out for in the coming year (inside.co.uk), Rated: B
“I think we will see a strong increase in the number of Scottish businesses sourcing peer to peer lending, which matches borrowers directly with lenders, in 2018,” Hardie said. “Companies such as the Lending Crowd are currently the business world’s best kept secret, but their ability to deliver speedy transactions with attractive terms are firmly establishing them as strong alternatives to the banks.”
“A European directive being implemented in January 2018 will ban businesses from charging customers extra for making payments using a debit or credit card in the EU,” said Lynne Walker, head of business advisory at Johnston Carmichael.
China’s LexinFintech Completes $ 108M Listing As Sixth Chinese Fintech IPO In US (China Money Network), Rated: AAA
LexinFintech Holdings Ltd. (NASDAQ:LX), a Chinese online lender previously known as Fenqile backed by investors including Matrix Partners and JD.com Inc., has completed a listing on the NASDAQ to raise US$108 million.
Chinese online lender LexinFintech surges in US market debut (China Economic Review), Rated: A
Chinese online lender LexinFintech Holdings Ltd’s shares surged in their US market debut on Thursday, as investors brushed aside worries about Beijing’s recent crackdown on China’s booming microlending industry.
LexinFintech’s shares jumped 53% from its IPO price, which valued the Shenzhen-based company at $4.5 billion, to reach a high of $14.88.
The 16 Chinese companies in 2017 raised $3.7 billion or about 8 percent of the total $35.6 billion raised by 160 IPOs.
Chinese tech titans Tencent and Alibaba are behind some of this pick-up, as they backed recent new listers including Chinese search engine Sogou, e-book company China Literature, microlender Qudian and logistics company Best.
Squeezing in its IPO before the year, Chinese online lender LexinFintech Holdings listed on Nasdaq on Dec. 21, raising $120 million and trading upward on its opening day by 19.4 percent.
Fintech Pioneer Sees Money in the Masses (Caixin), Rated: A
China’s booming fintech sector will see growth come from small business loans, wealth management tools for the “affluent masses,” and technology that helps you sift through thousands of insurance products in minutes, according to Tang Ning, founder and CEO of financial conglomerate CreditEase.
As of September, the company’s wealth management business oversaw assets worth $20 billion for nearly 50,000 high net-worth customers in China. It also manages $1 billion through a venture fund, which is among the ten most active venture capital investors in global fintech companies, according to data provider CB Insights.
Caixin: What are the most promising fintech trends over the next decade?
Tang Ning: We see small business lending being a key area of growth. In the past 10 years, creative lending models have done a good job at serving individuals, but there is much more to be done for small businesses.
We also see the emergence of insurance tech.
How are Chinese investors’ needs changing?
We are seeing the Chinese wealth management industry go through profound changes. It is moving from fixed-income investments to equity investment, from short-term speculation to long-term investment, from China-focused investment to global opportunities, from investing into single products, single opportunity to comprehensive risk management and comprehensive asset allocation, from managing this generation’s wealth to thinking about succession planning and inheritance.
Chinese peer-to-peer lender Golden Bull sets terms for $ 9 million US IPO (NASDAQ), Rated: A
The Shanghai, China-based company plans to raise $9 million by offering 2 million shares at a price range of $4.00 to $4.50. At the midpoint of the proposed range, Golden Bull would command a market value of $64 million.
Europe’s banks brace for a huge overhaul that throws open the doors to their data (CNBC), Rated: AAA
On January 8, banks operating in the European Union will be forced to open up their customer data to third party firms — that is, when customers give consent.
Banks will be required to build application programming interfaces (APIs) — sets of code that give third parties secure access to their back-end data.
HSBC has also made early moves toward meeting the incoming rules. In October, the bank launched a beta version of an app that lets customers see all of their bank accounts — including those from competitors — on one screen.
Several small lenders set up with the aim of competing with larger institutions are hoping to take advantage of the move toward a more open data infrastructure. U.K. firms Starling and Monzo, for instance, are want to make banking more like a “marketplace,” by connecting consumers with a number of products and services — including those from other providers — within their apps.
How PSD2 will make personal lending more competitive (IT ProPortal), Rated: A
Today, banks sell few unsecured personal loans to new customers – of seven of the UKs tier one banks only two offer personal loans to new customers – instead focusing on the needs and data of their own clients. The establishing credit risk and difficulties of pricing accurately has simply made it too complex to be competitive.
Also, although many peer-to-peer lending sites now have better protection for consumers as the industry became regulated by the FCA in April 2014, it can be argued this protection is greater for savers and lenders than it is for those borrowing and that the industry is still high-risk when compared with traditional routes.
This could all be about to change with the introduction of the intertwined The Second Payment Services Directive (PSD2) and open banking regulation.
First, XS2A will significantly improve the customer experience for loan applicants.
Hive Project buzzing after ICO (Bankless Times), Rated: A
After securing $8.95 million (BTC 2,087) from 2,234 participants through an ICO in August, Hive Project has released a demo version of their platform and completed an eight-market deal.
Hive Project uses distributed ledger technology to grant every issued invoice a unique fingerprint.
“In the Russian market alone there are 5.67 million SMEs with a combined turnover of €700 billion,” Mr. Soklic said.
ASIC releases second marketplace lending survey (Lexology), Rated: AAA
Key findings from the report are outlined below:
- there are three new marketplace lending platforms in the industry;
- with $300 million in loans written to consumers and SMEs, there was a doubling of activity in relation to the number of borrowers and total amount borrowed since 2015-16;
- the average reported default rate across the respondents was 2.2%;
- there are an additional 4,187 retail investors since 2016, representing $12 million of extra investment in the industry; and
- loan origination fees remained the primary source of revenue for marketplace lending providers.
The True Threat to Aussie Banks (Money Morning), Rated: A
The updated code of practice brings a number of changes. Most are simple consumer protections. Making it easier to cancel credit cards online, for example, and preventing banks from soliciting customers for credit limit increases.
Digital payments, P2P lending among key mega-trends of the year gone by (The Hindu Business Line), Rated: AAA
It was a great year for digitalisation and digital payments in the country.
Besides reducing the merchant discount rate for debit card transactions, the Centre announced a subsidy on transactions up to ₹2,000 via debit cards to expand the digital payment ecosystem.
P2P lending boost
Also, 2017 was a milestone year for the peer-to-peer (P2P) lending industry, as the RBI issued some guidelines in October.
Other defining changes
In April 2017, five associate banks of State Bank of India and Bharatiya Mahila Bank were merged into SBI, catapulting the latter into the league of top 50 global banks.
In May, the much talked about NPA ordinance giving greater power to the RBI to handle the bad loan crisis came about.
The other key decision of the RBI this year to improve transparency in the system was the move to make it mandatory for the banks to disclose in their balance sheets the extent of divergences between the gross NPAs in their book and those determined in RBI inspection. Private sector lenders such as Axis Bank, YES Bank and ICICI Bank were found to have under-reported their bad loan assets in recent years, prompting the central bank to take this decision.
How retail lending is set to scale up in 2018 (Financial Express), Rated: A
Major factors like steady decline in lending rates, strong focus and performance on growth and credit metrics in retail lending, investor interest in the segment, P2P regulation formalising the new category, increased focus on digitisation and path-breaking initiatives towards affordable housing are helping set a strong base for retail lending. Some of the big trends I see in the New Year are:
Contrary to the slowdown in credit offtake by the corporate sector, retail credit segment has registered a strong growth of around 20% this calendar year.
Mobile: India today has more than 300 million smartphone users, removing geographical constraints of access to financial products. New venture investments will drive experiments in alternate lending.
Growth in MSME lending
With around 55 million MSME units employing over 80 million people, this sector contributes about 8% to the national GDP. Around 90% of these units are classified as micro businesses.
Growth in affordable housing segment
With home loan to GDP ratio of just 9%, the Indian housing finance sector remains relatively under-penetrated when compared to its Asian peers like China (20%), Thailand (17%), and Malaysia (34%).
The P2P Lending Segment will Drive the Next Phase of Growth of the Indian Fintech industry (BW Disrupt), Rated: A
With the much-awaited legitimacy, the sector is only at growth radar and trust in the segment is developing at a much faster pace. With more and more people moving towards online payments and transactions, the P2P lending space will witness a remarkable rise in the number of borrowers as well as investors. The growth will not only arrive from the urban India but also from Tier II and Tier III cities, leading the country towards the national goal of financial inclusion.
As predicted by NASSCOM, the Indian fintech space is expected to reach $2.4 billion by 2020, 2018 will act as a major contributor towards this direction.
How can P2P lending disrupt MSME sector in India? (MENAFN), Rated: A
There are more than 5 crore MSMEs in India and their contribution to the Indian economy is quite significant. The Micro, Small and Medium Enterprises are creating massive employability i.e. up to 12 crore people which is close to 33% of Indias manufacturing output. But still MSMEs suffer from an incredible capital shortage that amounts to Rs. 32 trillion as per the International Finance Corporation.
Fintech start-ups tap small-town users (Business Standard), Rated: A
Paynear, a fintech start-up, has more users in small towns than in the metros. The Hyderabad-based firm, which provides a platform to traders for accepting digital payments, has seen a surge in growth from small towns. Of its 50,000 merchants, two-thirds are in small towns.
Funding Galore: Indian Startup Funding Of The Week [18-23 Dec] (Inc42), Rated: B
This week 19 Indian startups raised about $41 Mn in funding altogether in the Indian startup ecosystem.
Financial inclusion is in your hands (National Multimedia), Rated: AAA
Aside from offering new innovative financial services to their existing customers, the use of Fintech also allows banks to serve potential |customers – those considered “underbanked” and “unbanked” – who in the past did not have access to financial services due to costs, lack of credit or access. The ability for the banks to serve everyone is known as “financial inclusion.” According to the World Bank, around 2 billion people don’t use |formal financial services and over 50 per cent of adults in the poorest households are unbanked.
A report from Thailand’s Ministry of Finance in 2016 shows that 56 per cent of Thais received micro finance from special financial institutions and less than 9 per cent from commercial banks. Clearly, most Thais often turn to non-bank providers for small sums of money.
The K Plus Shop is an example of fintech for financial inclusion from KBank. It is a mobile application designed to be a one-stop solution for micro businesses such as small shops and street vendors. The app is a point of sale, sales tracking, sales reports and PR tool combined into one app that anyone can download and use free of charge on any smartphone – iOS or Android. With K Plus Shop, the vendor can receive QR payment from any customer using K Plus, other mobile banking or e-Wallet applications via the standard QR for PromptPay, as well as from WeChat Pay and Alipay.
FintruX partners with blockchain data exchange DataWallet (Cryptoninjas), Rated: A