- Today’s main news: WeWork, SoFi partner on student debt. Marlette Funding closes largest securitization in company history. Kabbage targets larger businesses with expanded credit lines. LendInvest adds 200 brokers to buy-to-let panel. Signicat builds out identity assurance as a service with $2M fundraise.
- Today’s main analysis: France’s alternative finance sector grows by 50% while equity crowdfunding shrinks.
- Today’s thought-provoking articles: How Noto found room at SoFi. Why banks should rethink fees. Why P2P lending should fill the void in SME financing in India. Indonesia’s fintech lending boom exploits bank loans shortfall.
- SoFi partners withWeWork on student debt. AT: “This initiative is targeted toward WeWork’s employees and members, moving beyond an organization’s payroll to gain access to its wider network. With thousands of organizations all across America, and of course, overseas, SoFi could have hit upon a winning expansion strategy.”
- How Noto found room at SoFi. AT: “I don’t think the interesting part here is Noto’s aspirations for chief executive status. Rather, the interesting thing is the Square-Twitter-SoFi competition triad. Noto, caught in the middle of that, had to choose sides. He likely chose the winning side.”
- Marlette Funding closes largest securitization transaction in company history. AT: “Congratulations. Huge milestone.”
- Why banks should rethink fee models. AT: “They should rethink business models.”
- Kabbage expands credit line. AT: “The claim is that this is the largest credit line for any online lender yet. This takes Kabbage to a new level.”
- An interview with Kabbage’s CEO.
- Elevate appoints former PayPal executive as chief credit officer.
- Judge rebukes Consumer Financial Protection Bureau.
- Should you buy a home with crowdfunding?
- Best investment funds of 2018.
- House committee on financial services to hold fintech marketplace hearing.
- LendInvest enrolls over 200 brokers to buy-to-let panel.
- Ranger Direct Lending expects arbitration decision by mid-April.
- Significat to build out identity assurance as a service after $2M fundraise.
- France’s alternative finance sector grows 50%.
- 3 things that could drive fintech investment through the roof.
- Investly seeks 500K GBP through Seedrs.
- CB Insights, The New York Times partner on best venture capitalists list. AT: “Includes a link to the Times’ list of top 20 VCs.”
- FinTech, RegTech, SupTech. AT: “I still don’t know what SupTech is.”
- United States
- WeWork Joins Forces With SoFi to Help Employees & Members to Tackle Student Debit (Crowdfund Insider), Rated: AAA
- How Twitter’s Noto Found Room at SoFi (Market Realist), Rated: AAA
- Marlette Funding Closes Largest Securitization Transaction in Company History (BusinessWire), Rated: AAA
- Why banks should rethink their fee models (Tearsheet), Rated: AAA
- Kabbage expands credit line, targeting larger businesses (AltFi), Rated: AAA
- The Tao of Rob Frohwein (LinkedIn), Rated: A
- Elevate Appoints Former PayPal, loanDepot Executive Brian Biglin as Chief Credit Officer (BusinessWire), Rated: A
- California judge issues stunning rebuke to CFPB (RESPA News), Rated: A
- Should you crowdsource to buy a home? (Bankrate), Rated: B
- Best Investment Funds Options For 2018 (FX Daily Report), Rated: B
- House Financial Services Committee to hold Jan. 30 hearing on fintech marketplace (The National Law Review), Rated: B
- United Kingdom
- Over 200 brokers join LendInvest BTL panel (Bridging&Commercial), Rated: AAA
- Ranger Direct Lending Expects Princeton Arbitration Decision Soon (London South East), Rated: B
- European Union
- Signicat Raises $ 2 Million to Build Out its Identity Assurance as a Service Technology (Finovate), Rated: AAA
- France’s Alternative Finance Grows by 50% – Equity Crowdfunding Shrinks (Crowdfund Insider), Rated: AAA
- 3 things that could drive fintech investment in Europe through the roof (again) (PitchBook), Rated: A
- Pan-European Marketplace Investly Now Seeking £500,000 on Seedrs (Crowdfund Insider), Rated: A
- CB Insights is working with The New York Times to identify the best VC professionals. (CB Insights), Rated: AAA
- FinTech, RegTech and SupTech (Finextra), Rated: A
- IFM Investors ups stake in digital provider Decimal (Private Banker International), Rated: A
- Why P2P should be empowered to fill the void in SME financing (ET Rise), Rated: AAA
- India’s flourishing fintech sector is craving the finance minister’s attention (Quartz), Rated: A
- Indonesia’s fintech lending boom exploits shortfall in bank loans (Reuters), Rated: AAA
- Bank, fintech, telco partnership’ll drive financial inclusion (Punch), Rated: A
WeWork Joins Forces With SoFi to Help Employees & Members to Tackle Student Debit (Crowdfund Insider), Rated: AAA
Online lending platform SoFi announced on Monday that it has joined forces with WeWork to help WeWork’s more than 3,000 employees and over 175,000 members take on their student loan debt. The lender revealed that this is its first SoFi At Work partnership to extend beyond a company’s employees to include customer base.
How Twitter’s Noto Found Room at SoFi (Market Realist), Rated: AAA
Given SoFi’s ambitions and the ambitions of Square (SQ), the company run by Twitter CEO Jack Dorsey, Noto and Dorsey appear to be on a competition course. SoFi and Square both have ambitions of becoming full-service banks. And Noto, a former Goldman Sachs (GS) banker, has made it clear that this is a course he would like to pursue once he joins SoFi.
Square, which supplied $303 million in loans to customers in 3Q17 and has supplied over $1.8 billion in loans overall, already faces competitive pressures from Amazon.com (AMZN) and PayPal (PYPL) in the alternative lending market.
Marlette Funding Closes Largest Securitization Transaction in Company History (BusinessWire), Rated: AAA
Marlette Funding, LLC, the parent company of Best Egg, announced today it closed its fifth proprietary “MFT” securitization. Approximately $495 million of Best Egg loans were financed via $464.3 million of MFT 2018-1 Notes with four classes and one class of Certificates, with certain loan sellers retaining risk on a portion of the Notes and/or Certificates.
This is the first securitization of 2018 bringing the total program issuance to date to $1.7B, with capital provided by a broad set of investors. The transaction was significantly oversubscribed, upsized and successfully priced, reflecting Marlette’s differentiated product offering and superior credit performance. Underwriting the transaction were Goldman Sachs, who served as the structuring agent, Citi, Deutsche Bank and Morgan Stanley. The Class A, B, C and D fixed-rate Notes were rated AA (sf), A (sf), BBB (sf) and BB (sf), respectively, by Kroll Bond Rating Agency (KBRA).
Year over year, Best Egg has demonstrated impressive scalability – 66% year-over-year growth in originations with only 9% growth in year-over-year fixed operating expenses and 29% reduction in marketing cost per loan.
Why banks should rethink their fee models (Tearsheet), Rated: AAA
If free checking accounts aren’t already a thing of the past, perhaps they should be, now that consumers are demonstrating that if something is valuable to them, they’ll pay for it.
About 77 percent of people have a “free checking account” at their bank, according to a studyfrom Cornerstone Advisors’ Ron Shevlin published last week. But nearly every free checking account holder paid at least one fee in the 12 months leading up to the survey. Out of 1,555 surveyed, 26 percent paid a third-party bank ATM fee and 25 percent paid an overdraft fee. They also paid fees to replace lost or misplaced ATM and debit cards, rush fees for those replacements, non-sufficient funds fees, wire transfer fees, international transaction fees, fees for overdraft protection and “extended overdrawn balances,” for stop payments and for statement copies, check copies and check image services.
But banks have been reporting flat fee income for the past six quarters. Service charges on deposit accounts have hardly moved in several years and banks are changing their overdraft programs to improve customer relationships, which eats into that fee income.
Bank of America has one of the most competitive mobile and digital banking offerings and no longer needs to give people an incentive to bank digitally instead of at branches (those were the terms of the account; those who wanted branch banking and paper statements paid an $8.95 monthly fee that was waived for customers who agreed to do all their banking digitally).
Almost 60 percent of people indicated they would consider switching accounts if their primary financial institution offered a hypothetical Amazon-like bundled checking account — which would include basic checking account services plus cell phone damage protection, ID theft protection, roadside assistance, travel insurance and product discounts — for a $5 to $10 monthly fee, Shevlin found.
Kabbage expands credit line, targeting larger businesses (AltFi), Rated: AAA
After previously securing a $200m asset-backed revolving credit facility from Credit Suisse in 2017, Kabbage has announced it will be offering lines of credit of up to $250k in an effort to attract larger businesses.
The expanded product will provide large businesses with greater purchasing power for longer-term investments, and is the largest credit line available from any online lender yet.
A recent survey of 800 small businesses conducted by the platform showed that more than 73 per cent of businesses expect to increase their revenue by more than 20 per cent in 2018.
The Tao of Rob Frohwein (LinkedIn), Rated: A
“Getting easy access to your data allows you to see your data and know if someone has compromised it.”
“One of our goals is to make it more advantageous to be a small business than a large business.”
Elevate Appoints Former PayPal, loanDepot Executive Brian Biglin as Chief Credit Officer (BusinessWire), Rated: A
Elevate Credit, Inc. (“Elevate”), a tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced the appointment of Brian Biglin as Chief Credit Officer, effective immediately. Elevate also said it has granted inducement stock awards as part of Mr. Biglin’s employment.
He served as Chief Credit Officer at Bill Me Later when it was acquired in 2008 by PayPal, and he continued until 2014 as Chief Credit Officer at PayPal, where he helped grow the portfolio from $400 million to $6 billion and managed credit through the Great Recession. Mr. Biglin subsequently was Chief Risk Officer at loanDepot.com and at Intuit. At loanDepot he built a new consumer lending platform and helped create the first personal loan securitizations for the company; at Intuit he reduced fraud losses, improved customer experience, overhauled operations and increased efficiencies.
California judge issues stunning rebuke to CFPB (RESPA News), Rated: A
The Consumer Financial Protection Bureau’s (CFPB) first enforcement action against an online lender has ended with a judicial rebuke nearly as stunning as its case against the Accrediting Council for Independent Colleges and Schools.
Although a California district court ruled in favor of the CFPB in the case, it declined to confirm the CFPB’s request for restitution from the lender defendants, instead cutting the penalty award to a Tier One violation of the Consumer Financial Protection Act.
Should you crowdsource to buy a home? (Bankrate), Rated: B
Only a small handful of companies currently offer mortgages through this method. One of most well-established, SoFi, offers mortgages in 29 states and the District of Columbia through its peer-to-peer lending platform, which is a type of crowdsourcing where individual investors contribute through a lending platform, and in return earn interest on their investment, paid for by the borrower.
Feather the Nest offers a crowdfunding registry, where friends and family can donate toward your real estate goals. Every donation to your registry is charged a percentage of the amount given as a transaction fee.
Best Investment Funds Options For 2018 (FX Daily Report), Rated: B
#8: Peer to Peer Lending
Peer-to-peer lending platforms such as the Lending Club allow you to loan small amounts of money to individuals and earn a decent return of 6 percent or more. As a peer-to-peer lending investor, you are helping other people reach their goals. The good thing about this is that you are not giving large amounts of money to people who you do not know at all. According to experts, the benefits of investing in peer-to-peer lending platforms include the following:
• Easy to sign up and started
• Five to Seven percent returns
• Starting investment can be as small as $1,000
House Financial Services Committee to hold Jan. 30 hearing on fintech marketplace (The National Law Review), Rated: B
On January 30, 2018 at 10 a.m., the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee will hold a hearing, “Examining Opportunities and Challenges in the Financial Technology (“Fintech”) Marketplace.”
The Committee Memorandum states that the hearing “will examine the current regulatory landscape [for fintech], the need to amend or modernize the regulatory landscape or the necessity to amend existing financial laws or develop new legislative proposals that would allow financial services entities to use fintech to deliver new products and services to consumers.”
Over 200 brokers join LendInvest BTL panel (Bridging&Commercial), Rated: AAA
The lender launched the BTL product – which is only available via intermediaries – in late November.
LendInvest believes that assembling a panel of this size in just 10 weeks demonstrates the appetite brokers have to get behind the product.
Ranger Direct Lending Expects Princeton Arbitration Decision Soon (London South East), Rated: B
Ranger Direct Lending Fund PLC said on Monday it expects arbitration against Princeton Master Fund to conclude by mid-April.
Signicat Raises $ 2 Million to Build Out its Identity Assurance as a Service Technology (Finovate), Rated: AAA
Identity Assurance as a Service (IDAaaS) innovator Signicat has won phase two funding from Horizon 2020, the EU framework program for research and innovation. The $2 million grant (€1.6 million) will enable Signicat to continue development of its IDAaaS toolbox for use in Europe, and takes the company’s total funding to $3.9 million.
France’s Alternative Finance Grows by 50% – Equity Crowdfunding Shrinks (Crowdfund Insider), Rated: AAA
The annual Alternative Finance & Crowdfunding Barometer compiled by KPMG for the French Crowdfunding Association (Financement Participatif France, FPF) shows that in 2017 the French Alternative Finance market grew by 50%, driven by SME lending growth, and came close to the billion euro mark, at €940 million. Crowdfunding, as a subcategory of alternative finance open to retail investors, grew slightly slower at 44%, and equity crowdfunding shrank.
- Institutional SME lending grew by 157% to €215 million,
- SME crowdlending and crowdinvesting in SME debt grew by 102% to €195 million.
The market is heavily concentrated, with the top 5 platforms, Lendix, Credit.fr, Lendosphère, Unilend and Lendopolis accounting for more than 80% of the loans originated. Credit.fr, which was recently acquired by investment firm Tikehau Capital is growing fastest. Funded for more than 80% by non-retail money, Lendix captures more than half of the market. Most recently, the platform raised €120 million of a new €200 million investment fund designed to finance SME loans from 2018 on.
Consumer Lending Decelerates
Alternative consumer lending grew only by 17%, from €197 million to €231 million, three times more slowly than in the previous year. The market is dominated by Younited Credit which originated €227 million worth of consumer loans in France, Italy and Spain in 2017. Younited’s growth remained high in terms of number of loans (nearly +50%) but the growth in euros was slower because the company introduced smaller €1,000 to €3,000 loans and stopped promotional campaigns that were waving fees on large loans.
Equity Crowdfunding Shrinks
French equity crowdfunding raised a mere €58 million, 15% less than in the past year.
Read the full report here.
3 things that could drive fintech investment in Europe through the roof (again) (PitchBook), Rated: A
Last year, venture investment in European fintech companies more than doubled YoY to €2.8 billion, even though the deal count remained almost flat, per the PitchBook Platform.
The jump in money invested was boosted by some monster deals, including rounds of well over $200 million each into foreign exchange unicorn TransferWise and student loans startup Prodigy Finance.
Pan-European Marketplace Investly Now Seeking £500,000 on Seedrs (Crowdfund Insider), Rated: A
CB Insights is working with The New York Times to identify the best VC professionals. (CB Insights), Rated: AAA
We’re exploring additional rankings for other types of investors:
- Top Corporate VCs
- Top Seed-Stage VCs Brand
- Top VCs by Region (Asia & Europe)
Ranking Algorithm Factors:
- Performance Persistence
- Network Centrality
- Investment Discipline
- Illiquid Portfolio Strength
The Top 20 Venture Capitalists Worldwide (The New York Times)
FinTech, RegTech and SupTech (Finextra), Rated: A
Two–thirds of consumers between the ages of 18 and 29 have a mobile phone and use mobile banking.
FinTech improves the lending process by reducing the cost of underwriting through automation of the credit application process. That process includes the review of the credit application, credit score monitoring, and the collection of financial documents.
Credit standards and trading limits are monitored more efficiently as Fintech applications can be created that employ customized credit standards per the bank’s risk-management policies
Just as FinTech helps institutions manage their internal credit and trading standards, RegTech enhances their ability to adhere to the government’s regulatory rules set out by various agencies and The Federal Reserve Bank.
Fewer fines and litigation costs are possible with RegTech applications.
Adapting to new regulations faster can be achieved with RegTech as financial institutions can monitor changes in regulations in real-time.
Regulatory reporting times improve with RegTech.
IFM Investors ups stake in digital provider Decimal (Private Banker International), Rated: A
IFM Investors, an Australian fund manager, has increased its stake in local digital advice provider Decimal to 15%.
IFM acquired the additional stake through the placement of 28,900,000 ordinary shares at $0.03 per share.
Why P2P should be empowered to fill the void in SME financing (ET Rise), Rated: AAA
The Economic Survey 2017-18 tabled in the Parliament on Monday delivered an unsurprising, but troubling figure. The amount of credit or loans disbursed by banks amounted to Rs 26,041 billion as on November 2017, but 82.6% of this was pocketed by large enterprises. For millions of SMEs in the country, banks only lent out 17.4 % of the total credit.
RBI data show that NBFCs have increased their lending to the SME sector by giving out about Rs 680 crore to the micro, small and medium enterprises compared to Rs. 480 crore in 2016. These figures do not include the loans extended to SMEs by the P2P industry, which has been recently classified as an NBFC.
In 2015-16 more than 10,000 businesses across UK benefitted and an estimated 30,000 new jobs were created due to UK government’s favorable policies for the P2P lending sector.
Indonesia’s fintech lending boom exploits shortfall in bank loans (Reuters), Rated: AAA
Wimboh Santoso, head of Indonesia’s financial regulator (OJK), said while the trend was still a drop in the ocean of overall lending, more than 250,000 people had taken out loans through fintech. Around 30 P2P firms had extended 2.6 trillion rupiah ($193.8 million) in lending as of January 2018, compared with just 247 billion rupiah of lending in December 2016. Another 36 more firms were waiting to be approved, he added.