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Wednesday January 10 2018, Daily News Digest

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India

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News Summary

United States

LendingClub (NYSE: LC) today announced that on January 2, 2018, its Board of Directors (the ‘Board’) received another letter from IEG Holdings Corporation (‘IEG’), which had previously commenced an unsolicited tender offer for LendingClub’s stock in July 2017 and withdrew the tender offer less than a month later. IEG’s letter states its intention to acquire up to 4.99% of the outstanding common stock of LendingClub on the basis of 13 shares of IEG common stock for each share of LendingClub common stock. On January 5, 2018, IEG announced the commencement of its proposed exchange offer. The Board believes there is no rational economic basis upon which LendingClub stockholders should accept IEG’s proposed exchange offer, which appears intended to mislead investors into mistakenly tendering into a discounted offer. The Board has unanimously concluded the offer is grossly inadequate, is not in the best interests of LendingClub and its stockholders and urges stockholders not to be misled into tendering into the offer.

Citi unleashes single digital platform for mortgages (Banking Tech), Rated: AAA

Citi has made dual agreements to integrate its suite of US mortgage products into a single digital platform for its clients.

A new front-end digital solution, LoanFx, from Digital Risk, a provider of technology platforms and services, will be complemented by a new loan origination system, LoanSphere Empower, from Black Knight.

The bank says this development will enable its mortgage clients to go through the full loan cycle, from research to application, processing, scheduling appraisals, handling title, to closing, “through the channel of their choice – and at their own pace”.

LendingTree Personal Loan Offers Report – December 2017 (LendingTree), Rated: AAA

I wanted to let you know we just released the inaugural monthly LendingTree Personal Loan Offers Report.

Excellent credit (760+ score): Loan offers to consumers with a credit score of 760+ averaged over $24,000 in December.

  • The average best APR offered to all borrowers with credit scores of 760 or above was 7.54%, an increase of 17 basis points from the prior month, and a drop of 24 basis points from the same period one year ago.
  • At $24,177, the average loan amounts offered with the best APRs to all borrowers with a score of 760 and above was down almost 2% ($451) from November, and up 26% ($6,179) from the same period one year ago.
  • The top 10% of offers, presented to borrowers with the best profiles within this group, had APRs of 5.07% on average, and loan amounts of $41,768. A borrower with this APR and loan amount would save $3,407 by consolidating debt with a 10% APR over a three-year term.

personal loan APRs

Good credit (680 – 719 score): Loan offers to consumers with a credit score between 680 and 719 averaged over $15,000 in December.

  • The average best APR for all borrowers with credit scores of 680 – 719 was 15.91%, down 1.5% from last month, but up 2% from a year earlier.
  • At $15,468, borrowers with scores of 680 – 719 saw the amounts offered with the best APRs drop by 4% ($624) in the last month, but rise by 343 basis points ($530) over the last year.
  • The top 10% of offers, presented to the borrowers with the best profiles within the 680 – 719 credit score range, saw an average best APR of 7.37%, offered with an average loan amount of $25,385. A borrower with this APR and loan amount would save $3,306 by consolidating debt from a 15% APR over a three-year term.

personal loans LendingTree

Credit card debt hits all-time high of $ 1.023 trillion (American Banker), Rated: AAA

U.S. revolving consumer debt reached an all-time high of $1.023 trillion in November, according to Federal Reserve Board data released Monday.

The card market’s previous peak came in April 2008, when $1.021 trillion in revolving consumer debt was outstanding.

Will Consumer Lenders Benefit from the Removal of Tax Benefits for HELOCs? (Lend Academy), Rated: AAA

Since a HELOC is backed by an asset, interest rates are typically lower than an unsecured loan, such as the ones offered by LendingClub and Prosper. There was an added benefit to a HELOC with the ability to deduct the interest, something that differentiated HELOCs from pretty much all other loan products. Now that this benefit is, in many cases, removed with the new tax code, we may see homeowners opt for other loan types. It is important to remember that the interest deduction only benefited individuals who itemize their deductions, which tend to include individuals with higher incomes.

Unsecured Lenders May Benefit

As the deduction benefit is removed, other options which offer a pleasant user experience look even better. Platforms like Goldman Sachs’ Marcus charge no origination fee and currently offer fixed rates as low as 6.99% for the best borrowers. Another player in the unsecured consumer lending space called LightStream offers loans as low as 2.49% depending on the use of proceeds. This could lead to the very best borrowers moving to products offered by these companies while borrowers with a less than perfect credit history, who would qualify for a higher rate, may rely on HELOCs.

Americans Don’t Understand Auto Loans, Millennials Understand Less (instamotor), Rated: A

In order to find out what people know and don’t know about auto financing, we surveyed 800 Americans who have applied for auto loans about their auto financing knowledge and found:

Many Americans are qualifying for auto financing, but aren’t sure how.

  • Nearly 4 in 5 (79%) were approved for the last auto loan they applied for
  • More than half (51.9%) can’t name the 3 major credit bureaus
  • An overwhelming majority of respondents (94%) weren’t aware that auto lenders often use a specialty credit score, called an Auto FICO, when evaluating auto loan borrowers
  • Nearly 3 in 5 (60.9%) think lenders consider age and marital status when evaluating loan applicants

Most Americans don’t know how to properly evaluate an auto loan offer.

  • Nearly 3 in 5 (59.9%) don’t understand the relationship between loan term and interest.

What Americans Think is the Most Important Factor When Evaluating a Loan

  • All factors considered holistically – 47.9%
  • Interest rate – 21.9%
  • Monthly payment – 14.3%
  • Loan amount (price of car) – 7.9%
  • I don’t know – 2.4%

Most Americans are unaware of a common, yet deceiving auto dealing practice.

  • 2 in 3 respondents didn’t know dealers can add interest to your loan to make more profit. in fact, more than 2 in 5 (41.3%) believed this practice was illegal

Other concepts people don’t understand? Being “upside down” and gap insurance.

  • More than 2 in 5 (42.6%) don’t know what it means to be “upside down” or “underwater” on your loan
  • More than 3 in 5 (62.1%) don’t know what gap insurance is

 

Community Banks Aim To Amplify Competitive Edge With FinTechs (PYMNTS), Rated: A

Community banks approved 49 percent of SMB loan applications in November, according to the latest data from the Biz2Credit Small Business Lending Index.

But small business lending is only one part of the banking puzzle. SMBs demand access to robust solutions, from mobile banking to advisory services.

The Fed released a report, “Community Banking in the 21st Century,” last October, which surveyed more than 600 FIs. While analysts found small business lending dropped by 2.2 percent in 2016, the decline was significantly smaller than that at larger banks, which reduced SMB lending by 5.1 percent.

Finance Professionals Preparing For Technological Innovation & Disruption (Crowdfund Insider), Rated: A

On Monday, TD Bank released its 2017 Treasury Management Survey, which revealed that technological innovation and disruption is set to greatly influence the investment priorities and business plans of financial executives.

The survey noted that disruptive technologies are top of mind for the participants, who also cited that they are preparing for changes in the treasury management industry by:

  • Leveraging solutions from fintech providers (31%)
  • Developing in-house technology for competition (23%)
  • Hiring more tech-savvy employers (15%)

Meet the First 100 Speakers (LendIt), Rated: A

LendItFintech USA speakers
Source: LendIt

Read speaker bios here.

Payday rule will protect, not harm, vulnerable consumers (American Banker), Rated: A

Criticism of payday lenders is well-earned. They have devised a system that rolls customers into one 300% annual interest loan after another, until those customers very often reach a point of serious financial desperation — they may lose their bank accounts and are more likely to declare bankruptcy than nonpayday borrowers.

In 2015, over 83% of Florida payday loans went to borrowers stuck in seven or more loans, based on data from the office of the regulator himself. The average annual interest rate is still 278%, and these unscrupulous lenders drain $311 million out of the economy every year, disproportionately affecting African-American and Latino communities and a growing number of seniors.

The New York Institute of Credit & Financial Poise Announce BUSINESS BORROWING BASICS (Benzinga), Rated: A

This webinar series provides a guided tour of the various borrowing options available to businesses, from both a business and legal perspective. Major topics covered include asset-based lending, P/O Finance, Factoring, Merchant Cash Advances, and Market Place Lending / Fintech.

The first episode of the series, Understanding the Lending Landscape, airs on January 17th at 2:00 PM CST (Register Here) and features Moderator Jonathan Friedland of Sugar Felsenthal Grais & Hammer.

Future episodes in the series include “Asset-Based Lending,” airing on February 21st, “Purchase Order Finance” airing on March 21st, “Factoring,” airing on April 18th, “Merchant Cash Advances” airing on May 23rd, and “Marketplace Lending/Fintech,” aring on June 20th.

Marlette Funding Names Mark Elbaum as Chief Financial Officer (BusinessWire), Rated: B

Marlette Funding, LLC, the parent company of Best Egg, is pleased to announce the appointment of Mark Elbaum as the company’s new chief financial officer (CFO). As CFO, Elbaum will join the executive management team and lead the finance, accounting and capital markets activities from the company’s headquarters in Wilmington, DE.

Most recently, Mark was the CFO of Merrill Lynch, Bank of America’s Wealth Management business. Prior roles included 18 years in the mortgage industry as CFO of Bank of America’s mortgage lending division, appointed to the position after the company’s acquisition of Countrywide Financial. At Countrywide he held the position of CFO of the Residential Lending Division. After starting his career at Price Waterhouse, Mark worked at Aames Financial Corp, a midsize consumer finance company, where he helped upgrade the finance capabilities to post IPO requirements. Mark has a Masters in Accountancy from University of Southern California and is a CPA and experienced in FP&A as well as capital markets.

LendingTree, Inc. to Present at the 20th Annual Needham Growth Conference (Business Insider), Rated: B

LendingTree, Inc. (NASDAQ: TREE), operator of LendingTree.com, the nation’s leading online loan marketplace, today announced that it will participate in Needham & Company’s 20th Annual Growth Conference at the Lotte New York Palace Hotel in New York City.

The Company is scheduled to present on Wednesday, January 17 at 10:00am ET.

Enacomm, Advantel Partner on AI Conversational Banking and Next-Generation IVR (GlobeNewswire), Rated: B

Enacomm, Inc., a provider of intelligent interactions and customer authentication technologies for banks, credit unions and credit card companies, has teamed up with Advantel, a technology solutions provider deploying integrated voice and data solutions for clients around the world. Through the partnership agreement, Advantel will make available to financial institutions both VPA (Virtual Personal Assistant) banking and the Enacomm Financial Suite (EFS), which includes a hosted, dynamic interactive voice response (IVR) system for personalized customer interactions.

United Kingdom

The House Crowd achieves FCA authorisation (P2P Finance News), Rated: AAA

THE HOUSE Crowd is looking to unveil a new website and auto-lending option after achieving authorisation from the Financial Conduct Authority (FCA) at the end of last year.

The property peer-to-peer lending platform had first applied for full permissions in October 2015 and had previously expressed concerns about delays.

Innovative finance Isa comparison site launches (FT Adviser), Rated: AAA

A new Isa comparison site, including Innovative Finance Isas, has been launched directly to potential investors.

Apples for Oranges will allow customers to shop around for Isas and be able to see the different returns from stocks and shares, cash and innovative finance Isas in the same place.

Figures last Autumn showed that investors had put just £17m into Innovative Finance Isas in their first year in existence, according to data from HM Revenue & Customs, significantly less than both stocks and shares Isas and cash Isas, which had £22bn and £39bn put into them respectively during 2016 to 2017.

Fintech firm Marqeta has hired its first UK employee as it prepares to launch in Europe (Business Insider), Rated: A

The 180-employee company has hired Ian Johnson, formerly the European commercial director at payments processing firm Wex, to be Marqeta’s Head of European Growth, and there are plans in the works to open a formal office in London and hire further staff later this year. The company has also appointed a head of international strategy, Renata Caine (who also previously worked at Wex), who will be based in the San Francisco Bay Area.

UK Direct Lender Goji Nabs Multi-Million Pound Anthemis-Led Round (Crowdfund Insider), Rated: A

Goji, the UK-based specialist direct lending investment manager and platform, secured an undisclosed multi-million pound funding round from investors including Anthemis’ Venture Fund 1 (AVF1) and AXA Strategic Ventures (ASV).

Investors in alternative investments driving change in manager behaviour, says SEI survey (hedgeweek), Rated: A

Released today and based on a survey of 70 alternatives investors, “How to Meet Operational Challenges while Pursuing Opportunities in Alternative Investing” illustrates the alignments and disconnects between those investors and the managers with whom they allocate capital.

The trend toward greater transparency is well established, but expectations continue to outpace reality, as many investors remain dissatisfied with the level of transparency available to them. While 67 per cent of managers surveyed thought existing levels of transparency surrounding operating expenses were sufficient, only 25 per cent of investors agreed. Additionally, almost nine out of 10 investors say it was important (or extremely important) that they are given the opportunity to negotiate fees, yet this negotiation occurred far more often with the larger investor than with those at lower asset levels: 73 per cent of investors with more than USD25 billion of assets reported they had success negotiating fees compared to only 29 per cent of those with less than USD1 billion of assets.

China

Jack Ma’s Ant Apologizes for Baiting Users Into Credit System (Bloomberg), Rated: AAA

Ant Financial, the internet finance behemoth controlled by billionaire Alibaba founder Jack Ma, has apologized for roping unsuspecting users into its fledgling but fast-growing credit-score system.

Ant Financial’s Alipay kicked off a free service this week to help users generate a consumption profile based on their shopping history. But buried at the bottom of its landing page was a small box — checked by default — that automatically enrolled users to its Sesame Credit unless they opted out. The subsequent online uproar prompted Ant to change that setting and to call the move “extremely idiotic,” according to a post on its official social media account.

Jack Ma Debt Giant Grinds to Halt as China Curbs Micro-Loans (Bloomberg), Rated: AAA

After selling billions of dollars of debt backed by consumer loans last year, Chinese billionaire Jack Ma’s Ant Financial is pausing such fundraising as the government steps up curbs on micro lending.

The company hasn’t sold any asset-backed securities since early December, according to data compiled by Bloomberg and China Securitization Analytics. That marks an abrupt shift after it issued a record 238 billion yuan ($37 billion) in 2017 of such securities backed by consumer loans.

Ant Financial ABS
Source: Bloomberg

China moves to shutter bitcoin mines (Financial Times), Rated: A

China is moving to eradicate the country’s bitcoin mining industry over concerns about excessive electricity consumption and financial risk, reflecting authorities’ judgment that cryptocurrencies are not a strategic industry.

International

TransferWise begins private launch of its consumer borderless account and bright green debit card (TechCrunch), Rated: A

Money transfer company TransferWise has begun a private launch of its “Borderless account” for consumers. It marks the first time the European unicorn has offered a debit card (pictured below), a move that is bound to draw further comparisons with newer fintech upstarts such as Revolut.

Initially rolling out to a thousand customers, with several thousand more to be invited in the coming weeks and a full public launch pegged for Q1 this year, the online banking account gives you local bank details for the U.K., U.S., Australia and Europe, and lets you hold and convert 28 currencies.

If, like me, you receive income from abroad and in a different currency to your home bank account (as a contractor for TechCrunch, I’m paid in U.S. dollars), then you are very likely hit by extra bank charges and an uncompetitive exchange rate by your existing bank. This could be avoided if you had a local bank account in the country and currency you are paid in, and could then choose when and how to do the currency exchange.

100 Most Promising AI Startups Globally (CB Insights), Rated: A

The companies were selected from a pool of 2,000+ startups based on several criteria, including investor profile, tech innovation, team strength, patent activity, mosaic score, funding history, valuation, and business model.

AI startups
Source: Fortune

See CB Insights’ take on the 100 top artificial intelligence startups.

Nets Group Announces Partnership with Plug and Play (PR Newswire), Rated: B

Nets Group, the largest Nordic-based payment service provider, announced its newest strategic partnership with Plug and Play, a global matchmaker for startups, corporations, and investors. They joined Plug and Play FinTech’s innovation platform to engage in both the European and North American startup ecosystem. This collaboration will introduce Nets Group to top tier startups that align with their innovation strategy.

India

Peer-to-peer lending companies join hands to form the Association of P2P Lending Platforms (Economic Times), Rated: AAA

India’s leading peer-to-peer lending companies on Wednesday said they have come together to form the Association of P2P Lending Platforms. The first-of-its-kind association will act as a representative for its members, as well as the country’s P2P lending industry. In addition, the association will work in conjunction with the government and regulatory authorities in matters of compliance, and to further the cause of financial inclusion in the country.

The association also intends to undertake research and development, collect data and conduct surveys that will further the development of the P2P lending industry in India. The research and its findings will be shared publicly, and exchange of ideas will be encouraged through various conferences, lectures and sponsored events.

Other founding members include Bhavin Patel, Founder and CEO, LenDenClub and Bhuvan Rustagi, Co-Founder and COO, Lendbox.in who will be the association’s Secretary and Treasurer respectively.P2P lending, Vinay Mathews,Faircent.com,Shankar Vaddadi, i-lend.in, Bhavin Patel, LenDenClub,Bhuvan Rustagi, Lendbox.in

Ola, ICICI Bank partner (Outlook), Rated: A

Private sector lender ICICI Bank and ride-sharing app Ola have signed an agreement to offer a range of integrated services to their customers.

Through this alliance, ICICI Bank customers can book Ola and pay the fare by using the bank’s mobile banking applications, ‘iMobile’ and ‘Pockets’.

The facility will also help Ola customers to get small ticket digital credit instantaneously from ICICI Bank, on the Ola platform, a statement said, adding it will also enable digital payments to driver partners.

i2ifunding applies for NBFC-P2P licence

Peer-to-peer lending platform i2ifunding has applied for registration certificate from RBI to operate as non- banking financial company-peer-to-peer lending (P2P).

Fintech moves in the new year (livemint), Rated: A

The other pending issue is completing the formation of a Payments Regulatory Board, which was set up through an amendment to the Payment and Settlement Systems Act.

Finally, RBI’s guidelines on peer-to-peer (P2P) lending need further refinement to bolster the nation’s growing fintech credentials. The rules have confusing eligibility criteria, are ultra-conservative in lender exposure limits and allocate too much discretionary power to the central bank without spelling out specific trigger points for regulatory action.

Muthoot Pappachan plans strategic investments in fintech start-ups (livemint), Rated: B

Muthoot Pappachan Group, a Kerala-based lending and financial services conglomerate, plans to make strategic investments in fintech start-ups as part of a larger digital transformation exercise to drive synergies and profitability among its business units, as it chalks out a plan to list its flagship lending arm Muthoot Fincorp Ltd, a top company executive said.

The group may look to invest $1-5 million in each deal, he added.

A key focus is technology solutions that will help the organisation disburse loans faster and conveniently to its target low-income customers. This will be achieved by exploring non-traditional data sources for credit appraisal, innovative repayment models and assistive technology solutions at branches.

Muthoot Pappachan recently invested in two start-ups: peer-to-peer lending platform Faircent and RemitGuru, that offers online money transfer service to Indians settled abroad.

Asia

KK Fund backs founders with an ‘unfair advantage’, says founder Saito (Deal Street Asia), Rated; A

Koichi Saito, the Founder and Partner of KK Fund, a Singapore-based venture fund with roots in Japan, is bullish on the opportunities that ASEAN offers, with the inflow of Chinese and Japanese capital into the region providing more opportunities for deal flow and exits.

In terms of the KK Fund, can you discuss the funds it currently manages? 

We started fund one in early 2015, which has a corpus of a few million dollars, so it was a micro fund. From that fund, we made 13 investments in online marketplaces in the e-commerce space. At the time, we were investing between $50,000 and $200,000. Then we closed a second fund at the end of 2016, a $20-million fund. We’re still focusing on seed-stage startups.

P2P lending platforms are a proven model in the US, China and Japan, as well as in Southeast Asia. However, there is a lack of credit scoring data, so with the need for alternative financing solutions in the region, there are substantial opportunities.

Besides the founders, what do you look for in terms of the business concepts?

Let’s say, in the Philippines, there are a lot of remittances players. Now, I reckon only about 10 per cent of people in the Philippines have a bank account. They need a platform for admittance to a bank. If there is a solution that addresses such an issue not only in the Philippines but across Southeast Asia, then I am impressed.

MENA

Egyptian Fintech Startup Moneyfellows Secures Investment (Forbes), Rated: AAA

Egypt-based fintech startup Moneyfellows has raised a $600,000 investment from a group of investors led by Dubai Angel Investors and 500 Startups, the company’s founder Ahmed Wadi revealed.

Moneyfellows is a web and mobile-based platform allowing users to create, manage and track money circles online with members of their social networks. The startup makes money by charging users a small fee when they withdraw their payout from their money circle.

Although rarely recognized by mainstream financial institutions, money circles have long given people who lack access to the formal banking system the ability to save money and take small loans. This type of finance is known by many different names. In Egypt, it’s called gameya while in India, it’s a chit fund. In North America, it would be a rotating credit and savings association, or ROSCA.

To date, Wadi reports Moneyfellows has had 2,600 paying users and about 240 active circles.

Africa

Entrepreneurs and innovators to watch out for (The Nation), Rated: AAA

So many fintech companies have birthed, including , Startcredits.com, to provide   online loan marketplace for  entrepreneurs to fund their  start-ups, promoting financial inclusion in the bid to fix the access to credit problems. A fintech  to watch  is Social Lender, a  digital   lending solution based on social reputation on mobile, online and social media platforms.  Social Lender is designed to bridge the gap of immediate fund access for people with limited access to formal credit. Social Lender uses its own proprietary algorithm to perform a social audit of the user on social media, online and other related platforms. Loans are guaranteed by the user’s social profile and network allowing users to then borrow from banks and other financial institutions based on their social reputation.

Flutterwave, a payments platform is  making  it easier for banks and businesses to process payments across Africa. U.S. investors  have  invested  $10 million into it.

Canada

TD Bank’s first fintech acquisition is an AI company (Digiday), Rated: AAA

TD Bank just bought its first technology firm, Toronto-based artificial intelligence startup Layer 6.

The Canadian banking giant, also based in Toronto, invested an undisclosed amount in Layer 6 to help it “continue to transform itself” in the industry shift from mobile-first to AI-first customer experiences, said Rizwan Khalfan, TD’s chief digital and payments officer. The transaction was completed Tuesday morning.

Authors:

George Popescu

Allen Taylor
Allen Taylor

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