Daily News Digest Featured News

Wednesday February 7 2018, Daily News Digest

MONEY-LAUNDERING-BY-ACTIVITY
Source: Fintech News

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China

European Union

International

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MENA

News Summary

United States

SoFi Named Official Presenting Sponsor of the Big Ten Men’s Basketball Tournament (BigTen.org), Rated: AAA

The Big Ten Conference and Big Ten Network announced a multi-year agreement naming SoFi as the presenting sponsor of the Big Ten Men’s Basketball Tournament. SoFi, a modern finance company taking an unprecedented approach to lending and wealth management, will not only be the on-site tournament sponsor, but also present the on-air coverage of all 10 tournament games televised on BTN.

Equifax launches data sharing solution to support SME lending (AltFi), Rated: AAA

Information solutions company Equifax has launched a new solution that provides back up for the government’s Commercial Credit Data Sharing (CCDS) initiative, which is seeking to boost the economy by encouraging new entrants into the SME lending sector.

According to the platform, the new solution “gives lenders a comprehensive picture of a business’ financial health to facilitate faster and more informed lending decisions”.

Equifax was designated as a credit reference agency under the CCDS initiative, giving it access to new data sets from leading business banks, including cash flow activity and debit and credit turnover. The data will be provided to lenders through Equifax Business Insights.

Banks Shutter 1,700 Branches in Fastest Decline on Record (WSJ), Rated: AAA

The number of branches in the U.S. shrank by more than 1,700 in the 12 months ended in June 2017, the biggest decline on record, according to a Wall Street Journal analysis of federal data.

bank branches
Source: The Wall Street Journal

Branch numbers fell again in the second half of 2017, according to related data submitted to bank regulators and reviewed by the Journal. That would add to the thousands of locations closed following the financial crisis, and is the longest stretch of closures since the Great Depression.

Many of the closings were in big cities and surrounding suburbs, where branches were consolidated largely because of falling foot traffic. Others were in rural areas, where some large regional lenders are leaving town altogether.

From mid-2012 to mid-2017, Capital One Financial Corp. cut 32% of its branches, SunTrust Banks Inc. 22% and Regions Financial Corp. 12%.

bank branch closings
Source: The Wall Street Journal

What a scrappy Oklahoma bank can teach the industry about branch strategy (Tearsheet), Rated: A

Citizens Bank of Edmond is trying to get closer to small business customers by providing space, guidance and almost anything else they might need — besides, of course, a loan.

The one-branch community bank in Edmond, Oklahoma once had another branch, 12,000 square feet located one block away from the main space, with a drive-thru window and some executive offices. But recently the bank decided to consolidate it into a single location and has now turned it into a “business social” co-working environment, called Vault 405, for its small business customers that includes wireless charging stations, conference rooms and a podcast studio.

Ideally, by creating an environment that would bring customer and community relationship returns, as well as grow deposits and loan volume. Citizens currently charges monthly rates between $400 and $1,000 for offices and $175 to $275 for desks and shared spaces. It also offers day passes.

Citizens is also addressing cash pickups for small business customers, one of the most compelling cases for banks thinking of repurposing their branches, using as much readily available technology as possible.

Why Digit is over chatbots (American Banker), Rated: A

Now, Ethan Bloch, founder and CEO of the San Francisco startup, believes his company has been offering the wrong primary user interface. “We think [chatbots] haven’t lived up to their promise,” he said. “So we are done believing they will.”

While the premise of Digit is still the same — use the service to automatically transfer funds from checking to savings every few days in amounts its algorithms believe a person can afford — Bloch believed the chatbot model is terribly flawed in its inefficiency to find out information.

Lendio Franchise Announced in Seacoast Region (Lendio Email), Rated: B

Lendio, the nation’s leading marketplace for small business loans, today announced the opening of a new Lendio franchise in New Hampshire’s Seacoast Region. Through the Lendio franchise program, David Hartnett will help local businesses in the community apply for loans, review their options and secure funding, easing the financial hurdles for small business owners.

Lendio is an online service that helps business owners find the working capital they need to grow their business through the company’s network of over 75 lenders. Funding options include SBA loans, startup loans, equipment loans, commercial real estate loans and more. In the last fiscal year alone, Lendio facilitated more than $300 million in funding.

According to Edelman Intelligence, more than 40 percent of small business owners need additional funding for their business each year. Roughly 70 percent of small business owners aren’t aware that alternative lending sources exists.

6th Avenue Capital adds trio to executive ranks (Bankless Times), Rated: B

6th Avenue Capital, a provider of small business financing solutions, announced the appointment of three senior members to their business development team. Mitchell (Mitch) Levy, Marc Seidel and Gary Lockwood were named to lead the sales teams. The new hires follow last year’s appointments of Christine Chang as CEO and Darren Schulman as COO and a $60 million commitment in capital from a large institutional investor.

US states team up to streamline fintech licensing (Finextra), Rated: A

Currently, firms offering services such as money transfers and cryptocurrency trading have to apply individually to operate in each of the 50 US states.

Under the new compact, if one of Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington reviews key elements of licensing – IT, cybersecurity, business plan, background check and Bank Secrecy Act compliance – the other six will accept the findings.

Wela Partners with In-Fi to Bring AI-Powered Bot to Insurance Agency Platform Website (GlobeNewswire), Rated: A

Wela, a fintech company that blends artificial intelligence (AI) with human advisors, today announces a partnership with In-Fi, an insurance agency management company specifically for financial institutions. Wela’s AI-powered chatbot, personified as Benjamin, is now fully integrated into In-Fi’s website, with the function of creating a more cohesive and engaging experience for their customers. Integration into In-Fi’s website is a pivotal step for Wela, which aims to place Benjamin at the center of financial decisions for families by integrating across a variety of financial service providers.

How the payday lending industry shapes academic research (American Banker), Rated: A

The hotly contested question of how to regulate payday lending is partly about ideology. How far should the government go to save repeat borrowers from their own worst habits? Your answer will depend on your political beliefs.

But this debate, like a lot of fights involving financial regulation, is also about facts. Do payday customers indeed suffer economic harm when they get into a cycle of repeat borrowing? That is an empirical question that unbiased researchers should be able to answer.

Inside Aspiration’s ‘values-based’ marketing strategy (Tearsheet), Rated: A

SoFi, whose earliest ads told people, “Don’t Bank. SoFi” has softened its marketing efforts, realizing the smart thing is for it to become a bank itself. Transferwise once ran provocative anti-bank ads but now advertises its own borderless account. But Aspiration isn’t shy about ruffling the feathers of the big banks. When Bank of America yanked its “free” checking accounts last month, moving them to its core checking account product that comes with a monthly $12 fee, Aspiration used it as a rallying point to get customers to bring their business to Aspiration, offering a $12 credit if they did. It claims its marketing has influenced “tens of thousands” of customers to leave B of A for Aspiration. Bank of America declined to comment for this story.

A fruitful journey from the attic to an angel investor (domain-b.com), Rated: A

Pear venture capital has helped some aspiring entrepreneurs build their foundations from scratch. How did the idea behind Pear fructify and what is the significance behind its name?
We actually started out as an angel investor. Around 2009-2010, I felt that there was no institution to help founders from ground zero. Given my background and network, I thought I could build an institution, which would help founders in their early stages to work on their ideas, which would stay in the business for generations.

Today Pear is an early stage seed fund and we invest in founders who are building category defined companies and that which focus on solving a big problem in the market.

As a venture capitalist, how do you identify potential entrepreneurs before signing them a cheque? What sectors and businesses do you look at? Considering the humongous number of aspirants, how do you identify a viable idea and that which is worth your support and funding?
If I look back at the last 18 years, there are some traits which are quite common among exceptional founders. We like those individuals who are looking to solve big problems in the market. They should either be close to the problem that they are trying to solve or they should have lived through their problem.

We also like those who have ability to track talents, are paranoid in a healthy way, have a vision and tend to question themselves every day. I also like CEOs who are captains of the ship,. the ones who usually stay till the end when the ship is sinking. Overall, we also look at size of the market. It’s fine if things don’t work out today as long as it’s going to be massive when it works. If you look at our portfolio companies, some of them have started in the unconventional space. As VCs, you live for those moments where you want to break the rule and partner with outliers.

LendingTree Releases Monthly Mortgage Offer Report for January (Guru Focus), Rated: A

LendingTree, the nation’s leading online loan marketplace, today released its monthly Mortgage Offers Report which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network. The purpose of the report is to empower consumers by providing additional information on how their credit profile affects their loan prospects.

Purchase Mortgage Offers by Credit Score

Purchase

FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans

4.55%

$63,411

$238,518

82%

$199,109

760+

4.41%

$84,354

$262,661

79%

$191,975

720-759

4.45%

$59,193

$239,111

83%

$194,007

680-719

4.70%

$39,883

$217,590

86%

$206,818

640-679

5.04%

$63,301

$203,176

76%

$224,533

620-639

5.12%

$57,566

$191,642

76%

$228,749

*To enable comparison, lifetime interest is calculated for the average loan amount for all loans using the rates for each credit score bucket.

Refinance Mortgage Offers by Credit Score

Refinance

FICO Range

Average APR

Average Down Payment

Average Loan Amount

Average LTV

Lifetime Interest Paid*

All Loans

4.46%

$2,739

$244,540

62%

$199,427

760+

4.33%

$4,014

$250,651

59%

$192,669

720-759

4.38%

$3,073

$249,678

64%

$195,262

680-719

4.58%

$1,294

$238,579

64%

$205,712

640-679

4.79%

$907

$223,812

60%

$216,814

620-639

4.89%

$212,813

59%

$222,147

*To enable comparison, lifetime interest is calculated for the average loan amount for all loans using the rates for each credit score bucket.

The hottest cities where it’s good to be a home seller but not so much a buyer (The Washington Post), Rated: A

LendingTree, an online loan marketplace, recently analyzed 1.5 million purchase mortgage loan requests that came in through its system from the 100 largest cities in 2017. The study identifies the locations where buyer competition is the toughest based on three criteria:

The top 10 cities with the most competitive buyers based on those criteria include:

  • San Francisco
  • San Jose
  • Denver
  • San Diego
  • Ventura, Calif.
  • Los Angeles
  • Seattle
  • Honolulu
  • Portland, Oregon
  • Sacramento

The three cities on the bottom of the list, where homes are more accessible to buyers and competition is less aggressive, are Youngstown, Ohio; McAllen, Tex.; and Scranton, Pa.

For the full report, click here.

CBC National Bank Among LendingTree’s Top 10 Highest Customer-Rated Mortgage Lenders in Fourth Quarter (PR Newswire), Rated: B

CBC National Bank, headquartered in Fernandina Beach and with branches in Fernandina BeachOcala and The Villages, Fla., and Beaufort and Port Royal, S.C., today announced that it has been named by LendingTree as among the Top 10 highest customer-rated mortgage lenders in the fourth quarter of 2017. It also achieved this prestigious designation in the first quarter of 2017.

rateGenius Awarded Top 3 in Auto Customer Satisfaction by LendingTree for 7th Consecutive Quarter (PR Newswire), Rated: B

rateGenius is pleased to announce that it has once again been named Top 3 in Auto Customer Satisfaction by LendingTree.

M Financial Group Partners with Plug and Play Insurtech to Enhance Client Experience in Life Insurance Space (PR Newswire), Rated: B

Plug and Play Insurtech welcomes M Financial as its 55th partner. Headquartered in Portland, Oregon and comprised of 155 Member Firms across the U.S., as well as the U.K. and U.A.E., M Financial is searching for startups to transform the life insurance industry for the clients they serve. Startups accepted into Plug and Play’s platform will have the opportunity to pilot their technology with M Financial and the other partners in the program. M Financial is the first Plug and Play partner that is both a distributor and reinsurer of life insurance products.

5 Passive Income Ideas That Still Work In 2018 (SavingAdvice), Rated: B

Peer to peer lending: The demand for credit is sure to continue for centuries to come. There is always someone in need of some quick business loan or a personal loan and this gives a quick opportunity if there is another person with the capital and risk appetite to back it up. With the current boom in crypto currency usage, you can take advantage and set up a peer-to-peer lending service. Alternative funding can very well give traditional banking a run for the money because some people need quick loans but cannot have the convenience of applying through the mainstream banking system. Peer-to-peer lending offers the keys to unlock instant liquidity to a wide online community and offers attractive rewards to those who supply the capital.

A great advantage to the lender is that once a peer to peer lending platform has been selected, the popularity of the wallet will ensure that there is exposure to a wider target of borrowers. Most banks often get restricted to lending to people within a certain country or state. Since peer-to-peer lending is blockchain-backed, anyone around the globe with access to the platform can lend money to another peer and start earning money over the duration of the loan contract.

United Kingdom

LendInvest completes £16m development deal in three weeks (Mortgage Introducer), Rated: AAA

Property finance lender LendInvest has completed a £16m financing deal with established development finance borrower, Yogo Group, in just three weeks.

Taking a Deeper Look into the Moving Average For Funding Circle Sme Income Fund Limited (Stock Press Daily), Rated: AAA

Funding Circle Sme Income Fund Limited (FCIF.L) are in focus today as the charts are revealing that the Mesa Adaptive Moving Average (MAMA) is holding steady above the FAMA, or Fractional Moving Average.  This environment typically indicates that there might be a buying opportunity aligning in technicals.  When there are crossovers between the FAMA and MAMA, the shares are often widely traded.  When the MAMA crosses above the FAMA, it means that the shares are likely to move higher.  Conversely the opposite occurs when the MAMA crosses below the FAMA.  The Mesa Moving Average was first mentioned by John Ehlers in a paper published in a 2001 edition of Technical Analysis of Stocks and Commodities Magazine.

Venture investment in UK fintech more than doubles (Financial Times), Rated: AAA

Fintech companies, such as TransferWise and OakNorth, raised $1.8bn of venture capital investment last year, up more than 150 per cent from $704m in 2016, the year of the UK’s vote to leave the EU, the data show.

The surge in UK funding contrasted with an 18 per cent drop in global fintech investments to $14.4bn, according to the report by Innovate Finance, the British fintech trade body.

The UK industry was boosted by handful of large fundraisings of more than $90m. The biggest was by TransferWise, a cross-border payments provider, which raised $280m. OakNorth, a digital lender to small businesses, raised $203m.

Banks divided on cryptocurrencies card purchases (Financial Times), Rated: AAA

British banks are debating whether to ban their customers from buying cryptocurrencies using their credit cards after Lloyds Banking Group and Virgin Money said they had imposed such a ban.

Barclays, the UK’s leading credit card issuer through its Barclaycard business, said it was “keeping this matter under close review” after holding a meeting to discuss whether to follow the lead of Lloyds on Monday.

Last week MasterCard said that cross-border volumes on its network were up 22 per cent, driven in part by customers using their credit cards to buy cryptocurrencies.

British banks are also shunning companies that handle cryptocurrencies by refusing to let them open bank accounts or closing their accounts, which has forced many of them to open accounts in Gibraltar, Poland and Bulgaria.

Lloyds Bank cutting 930 jobs (Fintech Futures), Rated: B

Lloyds is axing 930 jobs within its commercial banking, chief information office, community banking, insurance, and wealth and risk management.

Looking beyond traditional banks (Specialist Banking), Rated: A

I recently came across an article headlined: “8 in 10 SMEs still prefer traditional bank loans over alternative finance.”

It noted that 83% of financial directors preferred to go to their bank as their first port of call when seeking a loan, rather than finding an alternative, such as P2P lending or equity crowdfunding.

It claimed that a lack of understanding could be the reason for this, but pointed out that almost three-quarters of finance directors (74%) believed their knowledge of alternative finance was either “average or above average”.

Challenger Bank Tandem Partners with Cognitive Banking Company Personetics (Crowdfund Insider), Rated: A

UK Challenger bank Tandem has announced a partnership with cognitive banking company Personetics to provide users personalised insights on their spending across all of their bank accounts in one place, as well as warning people about unexpected fees and unusual activity on their accounts.

Are you holding too much cash in your ISA? (WhatInvestmen), Rated: A

In a survey of financial advisers by Octopus Investments, three-quarters of respondents said they believe their clients hold too much in their cash ISA relative to the rest of their portfolio.

The majority (83 per cent) feel their clients are put off investing in stock and shares due to the risk of losing money, followed by concerns of an overstretched (49 per cent) and volatile (46 per cent) market.

The Differences Between Short Term Loans and Payday Loans (SWNS.com), Rated: A

If you need to borrow money, a variety of options are available. Two of the most common short term borrowing options are payday loans and short-term personal loans, both of which provide immediate access to cash to help you pay bills, purchase items and run your financial life.

One of these borrowing options — payday lending — has been in the news a lot over the last few years, as new regulations make the industry more borrower friendly.

Short-Term Personal Loans

Most people use short-term loans for purchasing certain items or covering other major expenses.

From a borrower’s perspective, the advantages of short-term loans include lower overall costs than payday loans. However, the credit check process and approval period mean that loans of this type often aren’t instant enough to help borrowers deal with urgent financial needs.

Payday Loans

Most payday loans are for relatively small amounts of money, such as £200 to £500, and are aimed at providing cash until you get paid again.

Payday loans form a major part of the UK lending industry, with an estimated market value of approximately £2 billion.

Folk2Folk appoints chapter development manager (Bridging&Commercial), Rated: B

P2P lending platform Folk2Folk has appointed Claire Thayers as its chapter development manager.

In the newly created role, Claire will be responsible for raising Folk2Folk’s profile across the South West and Three Counties regions and improving awareness of its products to both borrowers and brokers.

China

The key to surviving in China’s P2P marketplace? Understanding regulations (Nikkei Asian Review), Rated: AAA

China’s increasingly competitive peer-to-peer marketplace requires players to understand government regulations and align their strategies accordingly, said Kevin Guo, co-founder and co-chairman of Dianrong, which specializes in making small loans over the internet.

European Union

Klarna partners with London College of Fashion (LeapRate), Rated: AAA

European payments provider, Klarna, has announced a UK partnership with London College of Fashion, UAL, in an exciting initiative to support the next generation of talent at the intersection of fashion and technology.

Fashion is now the UK’s largest online retail market segment, worth around £10.1bn, and this growth is only set to continue. By 2020, fashion will represent 28.8% of UK online spend.

With Klarna research showing 94% of retailers are investing in new technology to meet the needs of younger customers, opportunity for innovation in the sector has never been greater.

German digital business bank Penta raises €2.2m in seed funding (AltFi), Rated: A

Penta, a German digital bank for start-ups and small businesses, has secured €2.2m in seed funding, led by the UK-based and fintech-focused Inception Venture Capital .

Founded in May last year, Penta moved out of its private beta in December to a waitlist of over 3,000 local businesses. The platform has now opened its waitlist up to new users, and hopes to reach 10,000 businesses by the end of 2018.

P2P investors risk losses by lending to just one borrower (P2P Finance News), Rated: A

PEER-TO-PEER analysis firm 4th Way is urging investors to diversify after stress testing revealed the odds of losing money in a severe recession can be 10 times higher in some cases when lending to just one borrower on a P2P platform.

The research, released on Tuesday, applied international banking stress tests to P2P platforms it assesses such as Zopa, Funding Circle and RateSetter, and found when lending to 100 borrowers, investors have just a 0.1 per cent chance of losing 20 per cent or more of their original money.

Acquisition of 85% of Telenor Banka fails to win Serbia’s c-bank approval (SeeNews), Rated: A

Serbian online lender Telenor Banka said on Tuesday that Bulgaria-based investment fund River Styxx Capital has not received the consent of Serbia’s central bank for the acquisition of 85% of its share capital from Norwegian telecommunications group Telenor.

Telenor will support any further step that will contribute to the positive closure of the transaction, Ingeborg Ofsthus, CEO of Telenor Serbia and chair of the Telenor Banka board of directors said in a statement issued by Telenor Banka.

International

Revolut ditches Wirecard for in-house card issuing (Fintech Futures), Rated: AAA

Revolut will no longer be relying on Wirecard for card issuing as it has now brought this function in-house.

Asia Most Wanted Top Ten AML Cases (Fintech News), Rated: AAA

Over the last decade, the quantity of money laundered has been steadily increasing. According to The United Nations Office on Drugs and Crime, it is estimated that approximately USD $1.6 trillion or 2.7 percent of global GDP was laundered in 2009.

Even worse, less than 1 percent of this global illicit financial flow is ever seized and frozen, meaning that the criminals are winning.

Effective anti-money laundering (AML) regulations and processes are essential to countering such criminal activity. Yet due to tighter anti-money laundering regulations in the US and Europe, money laundering activity is moving into the Asia Pacific as a way to avoid detection.

MONEY-LAUNDERING-BY-ACTIVITY
Source: Fintech News

In December 2012, Standard Chartered was ordered to pay USD $330m to settle claims by United States government agencies that it had moved hundreds of billions of dollars on behalf of Iran. It was suggested that this practice exposed the international financial system to exploitation by to “terrorists” and “drug kingpins”.

Open banking role models: Fidor, Rabobank and BBVA (American Banker), Rated: A


Google accelerator focuses on emerging markets (IT Web), Rated: A

In its fifth year, Google Launchpad Accelerator is taking place in San Francisco this week. It focuses on start-ups that already have a product, with a good market fit, and are ready to scale.

OneFi has created Paylater, an online provider of digital financial services for the underbanked in West Africa.

Nubank is a financial technology company offering a fully digital and branchless experience, and Viva Real is an online real estate marketplace that connects buyers, sellers and renters with properties in Brazil. There is one other Brazilian start-up, Loggi, which creates new-wave logistics.

Kubo.financiero, a P2P lending platform, from Mexico.

Ayannah from the Philippines enables affordable and accessible digital financial services to be delivered to the world’s emerging middle-class.

Australia

Banks are exploiting loyal customers, warns Productivity Commission (The Guardian), Rated: AAA

The Australian financial system is uncompetitive, allowing banks and insurers to boost profits by exploiting loyal customers and adding up to $87 a month to the average mortgage repayment.

That is the conclusion of the Productivity Commission’s highly critical draft report into the sector, which finds it is “unquestionably strong” but calls for greater transparency to compare financial products and for regulators to gain powers to promote competition.

Australia gives regulator sweeping powers over bank bosses’ pay (Reuters), Rated: A

Australia has given its financial regulator sweeping powers to cap bank bosses’ pays, delay their bonuses and even ban them from the industry if found guilty of non-compliance, as it scrambles to restore trust in the scandal-hit sector.

MENA

ADGM is region’s 1st Fintech regulator, says Al Sayegh (WAM.ae), Rated: AAA

In the future, Fintech will be the most important aspect of financial services in the world, according to Ahmed Ali Al Sayegh, the Chairman of Abu Dhabi Global Market, ADGM.

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

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