Daily News Digest Featured News

Tuesday November 23 2016, Daily News Digest

CEO optimism

News Comments

United States

United Kingdom

European Union

International

Asia

News Summary

United States

SoFi, Lending Club gear up for busy quarter (GlobalCapital), Rated: AAA

Up to four transactions from marketplace lenders SoFi and Lending Club are slated to hit the market this quarter, including prime and non-prime consumer and student loan refinancing offerings.

SoFi is preparing to bring at least one consumer loan offering and possibly one more refinanced student loan offering over the next two months. The planned offerings could be in the range of previous transactions, said a source familiar with the company’s plans.

Twitter slides after news that online lending startup SoFi may poach its operations chief (Business Insider), Rated: A

Shares of Twitter dipped on Monday after it was reported that Twitter’s chief operating officer, Anthony Noto, may leave the company for an offer to become the CEO of Social Finance, or SoFi, an online lending company.

Twitter’s stock was down 1.16% on Monday at $23.39 per share.

LendingTree Reveals Which Used Car Brands Borrowers are Stretching the Most to Buy (Business Insider), Rated: AAA

A recent LendingTree survey found that 27 percent of Americans plan to purchase a car in 2018. To discover if consumers are more likely to stretch their available incomes to own certain brands, LendingTree looked at people who found auto loans on the LendingTree.com platform in 2017 to buy used vehicles.

Contrary to popular assumptions, the results revealed that people aren’t going broke to buy used luxury cars. In fact, buyers of the most expensive cars seem to handily afford them.

On the other hand, LendingTree found Buick owners have the hardest time affording their car payments — not because they’re indulging in particularly expensive vehicles but because their income tends to be on the lower side, meaning they use a larger share of take home pay to cover their monthly payments.

Car Makes Borrowers Stretch the Most to Buy Used

Rank

Make

Estimated Monthly Payment as a Percent of Estimated Monthly Income

Average Estimated Monthly Payment

Average Estimated Vehicle Price

1

BUICK

10.9%

$418

$18,597

2

CHRYSLER

10.9%

$440

$18,497

3

NISSAN

10.6%

$405

$18,231

4

DODGE

10.6%

$454

$22,290

5

CHEVROLET

10.2%

$437

$20,930

6

KIA

9.7%

$368

$17,357

7

HONDA

9.4%

$389

$18,053

8

HYUNDAI

9.3%

$356

$17,216

9

MITSUBISHI

9.0%

$370

$17,205

10

CADILLAC

8.8%

$480

$25,294

11

FIAT

8.8%

$341

$16,543

12

FORD

8.6%

$424

$21,648

13

GMC

8.3%

$466

$25,077

14

JEEP

8.1%

$414

$21,885

15

VOLKSWAGEN

8.0%

$363

$16,909

16

MAZDA

7.8%

$355

$18,326

17

TOYOTA

7.7%

$385

$19,788

18

JAGUAR

7.6%

$503

$27,734

19

INFINITI

7.6%

$454

$24,728

20

BMW

7.4%

$476

$25,038

21

MERCEDES-BENZ

7.3%

$519

$28,792

22

SUBARU

7.2%

$361

$19,219

23

ACURA

7.0%

$409

$22,623

24

AUDI

6.8%

$482

$26,725

25

LEXUS

6.7%

$459

$25,393

26

LINCOLN

6.6%

$396

$22,205

27

LAND ROVER

6.2%

$569

$31,704

28

VOLVO

6.1%

$400

$20,877

29

MINI

5.7%

$355

$17,728

30

PORSCHE

5.0%

$635

$42,173

31

TESLA

4.6%

$818

$54,234

Fintech lender Fundbox shows how open banking can be done (American Banker), Rated: AAA

The online small-business lender Fundbox says it is integrating its automated lending service with several software programs commonly used by its borrowers — and it’s a move that could hold a lesson for banks.

What’s striking about what Fundbox is doing, and the reason bankers could learn from it, is it is capitalizing on the concept of open banking — allowing a piece of a lender’s products and services to be accessed through a third party — in a way that few U.S. banks have.

Capital One comes the closest — its application programming interfaces let third parties offer services like prequalifying customers for Capital One credit cards and sharing its reward information.

Square is like ‘Amazon or Google in their early days’ (Business Insider), Rated: A

When Wall Street compares one of Jack Dorsey’s two public companies to Amazon and Google, you’d expect them to be talking about the one in the tech sector — Twitter. But on Friday, Nomura analyst Dan Dolev said that Square, Dorsey’s payments company, is the one that resembles today’s tech giants in their early days.

Dolev thinks that these new initiatives will massively increase the number of payments Square processes by a long-term compound annual growth rate of 20%. Dolev also says that this growth will provide a 40% to 45% boost to earnings margins.

Square

CashCall to pay $ 10 mln, CFPB request for $ 287 mln denied (Reuters), Rated: A

In a decision on Friday, U.S. District Judge John Walter ordered California-based CashCall to pay $10.3 million instead, ruling that the CFPB did not justify the larger amount.

defi SOLUTIONS Lands $ 55 Million (Finovate), Rated: A

Loan origination solutions company defi SOLUTIONS just closed on $55 million in funding. The Series C round comes from Bain Capital Ventures, offering social proof along with a stamp of approval for defi’s suite of loan services. This is the Texas-based company’s first round of financing.

The primary capital portion of the investment will be used to accelerate product development, expand resources and facilities, and grow the number of employees by nearly 50% this year.

A Bird’s Eye View of What We Achieved (YieldStreet), Rated: A

Yieldstreet
Source: YieldStreet

Ohad Samet of TrueAccord (Lend Academy), Rated: A

Ohad Samet is the CEO and Co-founder of TrueAccord. They are a new kind of debt collection company that uses a data driven approach and digital first communications.

US Banks Suffer 20 Percent Jump in Credit-Card Losses (Newsmax), Rated: A

U.S. banks have reportedly recently suffered a 20 percent jump in credit card losses.

The soaring bad debts has fueled fear about the financial health of middle America, the Financial Times explained.

Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5 billion hit from soured card loans last year, about $2 billion more than a year ago. The FT reported.

Reuters recently warned that U.S. banks, already under pressure from slower loan growth and low interest rates, could be facing yet another challenge as a rising number of Americans fall behind on their credit card payments.

U.S. consumer credit outstanding rose in November by the most in 16 years as credit-card balances surged, recent Federal Reserve data showed, by $11.2 billion, to $1.023 trillion.

Credit Card Startup Petal’s Latest Funding Round Signals NYC Fintech Upturn (Crunchbase), Rated: A

Last week, alternative credit card issuer Petal closed its $13 million Series A led by Peter Thiel’s Valar Ventures. It was announced just four months after Petal’s $3.6 million seed round.

The news marks a significant month for Manhattan’s sometimes-struggling fintech scene, with MoneyLionhaving raised a whopping $42 million during its Series B in early January. And while these numbers are a drop in the bucket compared to the U.S. fintech industry surpassing $5 billion in Q3 ’17, the momentum is already being felt, and it comes as a welcome change for the city.

Do You Need a Personal Financial Advisor or Will a Robo-Advisor Do? (Nerdwallet), Rated: A

At the top end, some personal financial advisorscharge an annual fee plus investing expenses as a percentage of your assets under management, typically about 1% to 1.5%. As a result, these advisors often require that new clients have an account minimum of $250,000 in assets.

By comparison, robo-advisors — which use algorithms to build and manage a client’s investment portfolios and require little human interaction — charge fees from 0.45% to 0.70% of the amount managed. And many will take on new clients with $0 to open an account.

The downside of robo-advisors: Investment choices are more limited — often a small selection of low-cost index funds or exchange-traded funds — than the asset choices that full-service brokers and advisors may provide. And while many offer financial advice via email, chat or phone consultations, those hybrid services are likely to come at an additional cost.

What to Know About Peer-to-Peer Lending Apps Like Yahoo’s ‘Tanda’ (Lifehacker), Rated: A

The Tanda app, launched by the company Friday and available on Android and shortly on iOS, does exactly what its name implies. It lets you join groups of people to work toward savings goals together, in tandem: Each user pays an agreed-upon amount into a pot, choosing when they receive the money. Those who need it soonest pay a fee, and those who wait the longest receive a two-percent bonus. Yahoo Finance takes eight percent of the first payout and seven percent of the second payout, according to Android Police.

Yahoo Finance isn’t the first to think to monetize a more formal version of this sytem—the site eMoneyPool has been available to the public since 2013, servicing over $3 million, and the apps KyePot and Cashare serve a similar purpose. On Tanda, users receive a trust score, with higher scores allowing users access to larger money pools, up to $2,000.

Lending Tree: Dayton home market isn’t so competitive (Dayton Daily News), Rated: B

In a national ranking, Dayton ranks relatively low for factors Lending Tree deems indicative of a competitive housing market. Prospective buyers in this area have relatively low average down payments, among other factors Lending Tree placed in the ranking.

On the list of 100 cities with the “most competitive home buyers,” Dayton ranks overall at 96, below Augusta, Ga. and above El Paso, Texas. Youngstown Ohio is last on the list at No. 100. San Francisco, Calif. is first.

FormFree Celebrates Its Tenth Year of Operations (Send2Press), Rated: B

In 2016, Fannie Mae named FormFree its first designated vendor for automated asset verification as part of the Day 1 Certainty initiative. Since then, FormFree has signed more than 800 lender clients, including 70 percent of the nation’s top 40 mortgage originators, and accepted over 1.25 million orders for the company’s flagship AccountChek® Asset Report. The company also increased its total number of technology integrations and reseller partnerships to over 100, making AccountChek available for more than 90% of mortgage transactions nationwide.

recent announcement from the U.S. Department of Veterans Affairs (VA) makes even more loans eligible for automated asset verification through AccountChek. On December 29, the VA published Circular 26-17-43 confirming that the VA permits the use of automated asset verification services like AccountChek.

United Kingdom

RateSetter to Focus Solely on Asset Backed Lending for Commercial Loans (Crowdfund Insider), Rated: AAA

Peer to peer lender RateSetter said its commercial lending vertical will focus solely on secured lending in its commercial finance vertical. Following a review of its commercial finance operations, RateSetter said it would move to “simplify” its commercial finance by funding only property backed or asset backed loans.

RateSetter said it will continue to maintain a diversified approach to lending into consumer, business and motor finance markets, however, the commercial finance offer will no longer include unsecured business finance.

RateSetter exits unsecured business loans market (P2P Finance News), Rated: A

Business borrowers will now only be able to access property-backed development and investment loans or asset-backed hire purchase deals.

All existing unsecured business applications will be processed and will continue to repay in line with their schedule, the platform said.

The targeted annual return for its basic Zopa Core product has increased from 3.7% to 4% while the higher risk Zopa Plus product now has a targeted return of 4.6%, up from 4.5%.

Monzo to phase out popular prepaid cards by April (Financial Times), Rated: AAA

Challenger bank Monzo has announced it will close its popular prepaid Mastercard in early April, although its half a million customers can still enjoy valuable travel perks if they upgrade to Monzo’s current account.

Until this month, Monzo cards also offered fee-free cash withdrawals from foreign ATMs. However, this has now been capped at £200 of overseas withdrawals within a rolling 30-day period, and customers pay a 3 per cent fee if they exceed this limit.

The UK is leading the way in crowdfunding and P2P lending as the rest of Europe plays catch-up (City A.M.), Rated: A

While the UK remained the largest alternative finance market in Europe by far, at €5.6bn (£4.9bn), the rest of Europe began to play catch-up as it grew its own market by 101 per cent, the data from the university’s Centre for Alternative Finance showed.

Excluding the UK, Estonia ranked first for alternative finance volume per capita for the second year in a row, at €63, followed by Monaco and Georgia.

Start-up revolution shows signs of fatigue after years of growth (Financial Times), Rated: A

Britain’s start-up revolution is stalling, with the number of businesses created last year falling for the first time in almost a decade.

There were 5.5 per cent fewer start-ups in 2017 compared with 2016, according to research by DueDil, a financial analysis company. It found that 647,923 new businesses were started last year — down from 685,928 in 2016, bringing to an end what had been annual increases since 2008.

Investly Plans to Raise 2M GBP on Seedrs (P2P-Banking), Rated: A

Investly is currently pitching on Seedrs to raise between 500K and 2M GBP in a crowdfunding for equity campaign. To become a shareholder, the required minium investment amount is 13 GBP.

What are the three main advantages when investing in the invoices?

Liquidity – Investly is quite different compared to most platforms because the investment period is only 30 to 40 days on average.

Return – Historically investors have earned 11-12% annually on invoices.

What ROI have investors made on average on the platform in the past?

The net return on Estonian invoices has been 11.2% annually and in the UK it’s been 12.6% annually.

Loans to help poorest families avoid poverty premium (Third Force News), Rated: A

A £600 loan repaid over six months would typically cost an extra £330 to repay to a door step lender and over £500 to repay via a payday lender. Repaying via a social lender could easily halve this cost.

Hollywood actor and social activist Michael Sheen has supported the launch of a new £1 million fund set up by the Carnegie UK Trust and features in a new short film called Speaking out for Fair Credit.

“The need for ethical alternative providers is clear, whether they be on our local high streets or available online. But it’s not just about creating more providers – we need to do more to enable them to compete with the high cost providers and to provide vital financial support to communities across the UK, putting people before profit.”

It is estimated that around 150,000 people in Scotland borrow £250m from high cost lenders like pay day loan firms, door step lenders and rent-to-own shops annually.

European Union

European online alternative finance is growing (Cambridge Network), Rated: AAA

Excluding the United Kingdom, which remained by far the largest alternative finance market in Europe at 5.6 billion euros, online alternative finance grew 101 per cent in Europe to 2.06 billion euros from 1.02 billion euros a year earlier. The UK’s market share in Europe declined to 73 per cent in 2016 from 81 per cent a year earlier as other markets grew faster.

France (444 million euros), Germany (322 million euros) and the Netherlands (194 million euros) are the three largest European alternative finance markets outside the UK, followed by Finland (142 million euros), Spain (131 million euros), Italy (127 million euros) and Georgia (103 million euros).

Peer-to-peer consumer lending is the largest alternative finance segment in Europe for the third year in a row, at 34 per cent, followed by peer-to-peer business lending (17 per cent), invoice trading (12 per cent), equity-based crowdfunding (11 per cent) and reward-based crowdfunding (nine per cent).

International

CEO optimism booms despite increasing anxiety over threats to growth – New content available (The News Market), Rated: AAA

Fifty seven percent of business leaders say they believe global economic growth will improve in the next 12 months.

Optimism in global growth has more than doubled in the US (59%) after a period of uncertainty surrounding the election (2017: 24%). Brazil also saw a large increase in the share of CEOs who are optimistic global growth will improve (+38% to 80%). And even among the less optimistic countries such as Japan (2018: 38% vs. 2017: 11%) and the UK (2018: 36% vs. 2017: 17%), optimism in global growth has more than doubled since last year.

CEO optimismFintechs Haven’t Reduced the Trade Finance Gap – So far (American Express), Rated: A

According to a September 2017 report from the Asian Development Bank (ADB), the trade finance gap remained relatively steady at $1.5 trillion in 2016 compared to a record high $1.6 trillion gap the year prior.1 MSMEs remain hardest hit by gaps in trade finance: the ADB report attributed 74 percent of rejected trade finance requests to MSMEs and midcap firms in 2016, compared to just 57 percent in 2015.2

ADB says this is despite fintech investment in trade finance that exceeded $13 billion in 2016 – more than half of the estimated $24 billion in total 2016 fintech investment cited in a separate report from the International Chamber of Commerce (ICC).3 Some experts – including Steven Beck, Head of Trade Finance at ADB – say fintech efforts may need to be redirected before their impact on import-export trade finance can be fully realized.4

Longfin (LFIN) Launches Commercial Ziddu Smart Contracts on Ethereum Blockchain (StreetInsider), Rated: B

Longfin Corp. has announced that its Ziddu Smart Contracts are commercially available on the Ethereum blockchain.

Ziddu Smart Contracts are currently available for Trade Finance and FX markets, and Longfin is preparing to launch Smart Contracts for bullion financing within the second quarter of 2018.

Asia

Funding Societies Surpasses SGD 100 Million in SME Crowdfunding (Core Sector Communique), Rated: AAA

Funding Societies, the leading peer-to-peer (P2P) lending platform in Southeast Asia, welcomed the start of the year by crossing the SGD 100 million mark in total crowdfunded SME loans across Singapore, Indonesia and Malaysia. In line with the platform’s goal of responsible growth, Funding Societies expanded its crowdfunding book by 400% in 2017 while maintaining a default rate of 1.5%.

Increasing the Access of SMEs to Credit in Vietnam (International Policy Digest), Rated: A

According to statistics by the Ministry of Planning and Investment (MPI), SMEs contributed approximately 48% of Vietnam’s GDP in 2012. Moreover, based on research by the United Nations Economic and Social Commission for Asia and the Pacific, since SMEs are usually labour intensive they employed 77% of Vietnam’s labour force.

The Ministry of Planning and Investment in their survey in 2012 of SMEs ability to access financing indicated that approximately 30% of SMEs in Vietnam could not get any financing from financial institutions and another 30% that could get financing faced numerous difficulties in accessing funds.

The 2015 survey found that the percentage of firms having bank loans in 2015 for micro-sized firms was 40%, small firms 62%, medium firms 74% and 81% for large firms. Access to bank services in 2015 also took into consideration how common it was for these enterprises to give bribes to the bank staff: Micro (64%), small (56%), medium (49%) and large firms (39%). The percentage of firms that experienced how interest rates and other lending conditions applied to private businesses are always more difficult than those for SOEs: micro (74%), small (71%), medium (65%) and large (48%).

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

About the author

Allen Taylor

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