Daily News Digest Featured News

Thursday February 22 2018, Daily News Digest

Servicing portfolio recurring revenue
Source: LendingClub

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United Kingdom


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News Summary

United States

Fourth Quarter 2017 Results (LendingClub), Rated: AAA

Servicing portfolio recurring revenue
Source: LendingClub

View the reported Q4 2017 earnings results from LendingClub right here.

Q4 2017: An update from our CIO (Lending Club), Rated: AAA

A core strength of LendingClub’s marketplace model is the ability to incorporate data insights quickly in order to responsibly adapt for the benefit of borrowers and investors.

From 2009 to 2014, credit supply was tight, so consumer loans experienced better-than-average loss rates. Since then, credit supply has increased, and the industry has seen a return to long-term average delinquency rates and higher losses in higher risk populations.

As a result of cumulative actions taken, our loss forecast for newly originated loans remains unchanged in aggregate compared to last quarter.

Economic backdrop

U.S. economic growth remains slow but steady, with annual GDP growth rate increasing to 2.6% in the fourth quarter of 2017. A primary driver of GDP growth since the financial crisis has been a historically low unemployment rate, which is down to 4.1% from its peak of 10% in 2009.

Updated pricing and return forecast

We continuously refine our methodology and recalibrate interest rates based on shifts in risk across the portfolio. This quarter, interest rates are increasing for certain subgrades in grades D and E.

Loss forecasts are remaining stable in aggregate for the platform relative to last quarter.

Platform Summary and Projections as of February 20, 2018

LendingClub loans
Source: LendingClub

Judge Nixes LendingClub Investor Bid For Underwriter Docs (Law360), Rated: AAA

Morgan Stanley, Goldman Sachs and the other underwriters of LendingClub Corp.’s $1 billion initial public offering for now don’t have to produce roughly a thousand documents sought by a class of investors suing the peer-to-peer lending company for alleged stock fraud, a California federal judge ruled Tuesday.



LendingTree Ranks Best Places for a Fresh Start in 2018 (PR Newswire), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today released the findings of its study on the best cities for those seeking a fresh start.

First, the study looked at eight elements to consider when going through a financial recovery, such as the local median income and rents, and if the state has laws to protect debtors from aggressive collections and penalties, in case methods like debt consolidation or refinancing to lower rates aren’t enough to manage liabilities.

Next, to determine what opportunities there might be for people seeking a solid job and income, the study looked at the percentage of people in these metros who are between the ages of 35 and 64, single, employed, have health insurance coverage and are currently enrolled in school.

Lastly, to get an idea of how well people in an area are recovering from financial calamity, LendingTree calculated how quickly credit scores are rising after a bankruptcy by using proprietary data on the average credit score, on a geographic basis, of LendingTree customers who declared bankruptcy between three to four years earlier.

1. Buffalo, N.Y. – 67.6
At $738Buffalo has the lowest median rent among the 50 cities reviewed, and 94 percent of adults over the age of 35 are insured (second highest). Residents who declare bankruptcy have an average credit score of 664 three years on, tied for the second highest score for the cities reviewed, suggesting that conditions are favorable for financial recovery. However, Buffalo ranks poorly in two metrics: at $52,303, median income is the seventh lowest, and only one other city has fewer students over the age the 35.

2. Minneapolis – 62.9
At just 3.7 percent, the exceedingly low unemployment rate for citizens in Minneapolis between the ages of 35 and 64 helps push the city to the No. 2 spot. Not only are most over-35s employed, but they also earn a median salary of $70,915, the eighth highest in the cities reviewed, 94 percent have health insurance and median rents are relatively low at $963.

3. Salt Lake City – 62.6
Only two other cities have more over-35s enrolled in school (Virginia Beach and Washington), and only five have more unmarried over-35s (New Orleans has the most). That could be due to the lowest unemployment rate for over-35s of any city reviewed (3.6%), and higher-than-average median income of $64,564 for that same group. That combines nicely with a moderate median rent of $967.

Source: LendingTree

The full report is available here: https://www.lendingtree.com/home/best-places-for-a-fresh-start/.

Why faster payments mean faster fraud (Tearsheet), Rated: AAA

Less than a month ago Early Warning Services, the network that powers peer-to-peer payments platform Zelle, touted $75 billion in funds moved through its bank-supported platform with plans to expand its member network. One member bank, however, also reported a fraud rate of 90 percent shortly after implementing Zelle last year, said someone familiar with the statistics who wished to remain anonymous.

Fraud detection in banks, however, is no longer just about building a wall to keep outsiders out; cybersecurity teams need to install a filter that can identify who can and should enter the system.

Bank of America will spend $600 million this year on cyber defense alone, its chief operations and technology officer Cathy Bessant recently told Tearsheet. In December Menlo Security, a company that provides malware isolation solutions, raised $40 million in Series C funding, bringing its total funding to $85 million. JPMorgan Chase, HSBC and American Express Ventures are among its investors.

Greenlight raises $ 16m for kids’ debit card (Finextra), Rated: A

Greenlight Financial Technology, the startup behind an app and debit card for kids and college students, has raised $16 million in a Series A funding round joined by SunTrust Bank, Ally Financial and the Amazon Alexa Fund.



Companies like Better Mortgage, Blend and LendingHome are reengineering the way mortgages are applied for and underwritten. While Cadre and Fundrise are moving real estate investments from Excel spreadsheets to the digital world.

GreenSky offers on-the-spot loans of up to $65,000 for home improvement projects with generous zero-interest promotional periods. Lemonade offers urban renters and homeowners insurance for as little as $5 and $25, respectively. LendingHome provides financing for house flippers, and more recently, homeowners.

Enodo delivers quantifiable insights for property investors (Realty Biz News), Rated: A

With the Enodo platform investors can cut to the chase with a platform that supports their decision-making through acquisition all the way to renovation, with features including rent price forecasting. In other words, Enodo is a real estate investing platform that provides quantifiable data, meaning investors no longer have to rely on hunches alone.

Enodo allows investors to carefully analyze any property in the country using basic physical and investment parameters. Users can also identify comparable properties, predict operating expenses and more. Parameters include things such as the year the home was built, number of units, amenities, market demographics and more.

Savings and Deposit Rates in a Rising Rate Environment (Lend Academy), Rated: A

This thread called Cash Parking on the Lend Academy Forum was created back in December 2016 and since then, forum members have discussed opportunities at banks and credit unions.

The discussion caught my eye when one user posted a 3% 5 year CD which happened to be offered by my local credit union.

Signing Up for a Savings Account at Marcus

Marcus by Goldman Sachs has been near the top of the list since I began checking. We last did a piece on savings account rates back in June 2017 when Goldman Sachs’ deposit accounts were still branded under GS Bank. Rates are now 30 basis points higher at 1.5% on Marcus accounts.

Their investment has paid off and it was recently reported that they had $17 billion of deposits. Since Goldman Sachs acquired GE Capital’s retail deposits, deposits have grown a whopping 90%.


Kabbage’s Kathryn Petralia Talks Small Business Loans (LendEDU), Rated: A

She’s been hailed by Forbes as one of the most powerful women in the world, and TechCrunch recognized her for “crushing it” last year. Both sources refer to her success as a leader at Kabbage, Inc. which has financed over $4 billion to more than 130,000 businesses to date.

Q: What sets Kabbage apart from other online small business lenders?

A: Our focus on real-time access to third-party data and our ability to stay connected to our customer’s data all the time. This technology allows us to provide an automated experience.

Q: So, user experience seems to be a big advantage for non-traditional lending sources. While that’s an advantage, what disadvantages does a lender like Kabbage have against a traditional lender?

A: There are lots of things. First, traditional lenders like banks have well-known brands; they have access to really cheap capital. They have a lot of customers already. They already have access to a framework which they operate with the ability to move funds. 

The only thing they don’t have is the ability to serve the market, because it’s too expensive for them to serve our customers with the type of product they need.

Q: Was there a typical small business customer that you would lend to? Do you lend to certain business more often than others today?

A: Well, we got our start making loans to eBay sellers which you may or may not know. The reason we started there was because that’s where the first API was available, so we could get information on a business’ performance. Then as more APIs became available, we were able to expand our business. So for a long time, all of our customers were eCommerce businesses.

But about three years ago, we began expanding to service brick & mortar businesses, and today, about 85% of our customers are brick & mortar businesses. 

Q: Over the last 5 years, fintech lending has grown to take up more of the small business lending market. Where do you see the market share in 5 years? Where’s Kabbage in this equation?

A: If you’re talking about businesses seeking less than half or a quarter million dollars, I think it’ll stay the way it is with largely non-traditional players, like Kabbage, filling that space. And I think banks could serve that market through partnerships, but overall, I think it’s going to look much the same as it is now.

The Expanded Military Lending Act Regulations (The National Law Review), Rated: A

The Military Lending Act’s (“MLA”) lending restrictions are expanded to apply to consumer credit card issuers and unsecured consumer lenders. Compliance in most areas was mandatory as of October 3, 2016, but as to credit cards the mandatory compliance date is October 3, 2017.

The MLA applies to active-duty military personnel, active Reserve and National Guard personnel serving on Title 10 orders, and their dependents with a valid military identification card.

How to Invest in Private Loans (The Student Loan Report), Rated: A

The $1.45 trillion student loan market is made up of public and private student loans.

We now live in a world where crowdfunding and P2P investment opportunities are everywhere. The student loan market is no different. Companies like Sofi are shaking up what it looks like for both students and investors alike.

Sofi (short for Social Finance) has funded over $25 billion in student loans, with over 437,000 members around the country.

As challenger banks seek to enter the US, the business model still faces hurdles  (Tearsheet), Rated: A

European digital banks N26 and Revolut will launch in the U.S. later this year, and there are reports that U.K. challenger bank Monzo is mulling a move into the U.S. market. Meanwhile, three U.S. banking startups — Varo Money, Square and Moven — recently announced plans to apply for or acquire U.S. banking licenses.

For N26, winning means customers loving N26 like in Europe. U.K.-based Revolut, which plans to launch in the U.S. later this year with a multi-currency bank account, said winning means acquiring millions of customers, particularly those who travel often; and to San Francisco-based Chime, a win is to bring large numbers of customers away from traditional institutions.

Why BankMobile has launched an online magazine (Tearsheet), Rated: B

BankMobile has launched a content marketing website called Paradigm Money to help customers navigate personal finance.

The site, which launched this month, includes news, opinion pieces, interviews and advice.

BankMobile, which was born as the mobile-only offshoot of Customers Bank which sold it last year, has 1.8 million customers to date and opens about 300,000 new accounts each year.


Competition within the alternatives sector for family office investments is at an all-time high, as these investors get more comfortable with the range of assets available to them and their general understanding of alternatives rises. Fund managers want to win these wealthy investors over, but often find they are unsure of how best to pursue them. The family office client is increasingly demanding a more tailored approach to wooing them over. Managers who can adapt their prospecting tactics stand a better chance of winning a partnership with these prized investors.

A Q4 2017 research study, “Single-Family Offices and Alternative Investments,” by Institutional Capital Network, provides a framework for the changing dynamics in family office activity within the alternatives space. Some of the research findings that stand out in particular include:

First-generation founders have a “stay-rich” mentality, while second-generation are more likely to have a “get-richer” perspective.

About 40% of second generation single-family offices are investing 15% or more of their total portfolios into alternatives, compared to 20% of first generation single-family offices that are investing at similar levels. In 2017, 71% increased their direct allocations relative to 2016, and 82% intend to do so in the future.

33% of Americans do not have more savings than credit card debt (KHOU), Rated: A

In the latest survey by personal finance site Bankrate.com, 33% of Americans say they do not have more emergency savings than credit card debt. That includes 21% who say their credit card debt exceeds their emergency savings and 12% who indicate they have no savings or credit card debt.

While one in three Americans are financially ill-equipped for an emergency, that is down from 41% in 2017 and 43% in 2016 and is the lowest level in the eight years of the survey.

Fifty-eight percent say their emergency savings fund exceeds their credit card debt, which is up from 52% in the last two years and ties 2015 as the best seen in eight years.

US Mobile Payment Market to Reach $ 3 Trillion by 2020, Fintech Stocks Lead the Way (Investing News), Rated: A

A new Market Research Reports Search Engine report states the US mobile payments will grow from $550 billion in 2015 to reach $2.8 trillion by 2020, representing a compound annual growth rate (CAGR) of 39.1 percent over the course of that period.

Marlette Funding Named a Finalist in Top Consumer Lending Platform in LendIt Fintech Industry Awards Competition (Business Wire), Rated: B

LendIt Fintech, the world’s leading event in financial services innovation, announced today that they have selected the Best Egg Personal Loan Platform provided by Marlette Funding, LLC, as a finalist in the Top Consumer Lending Platform category for the LendIt Fintech Industry Awards. The Top Consumer Lending Platform finalists were selected from companies that demonstrate a combination of loan performance, volume, growth, product diversity and responsiveness to stakeholders.

Klarna North America to Highlight “Smoooth” Payment Products at eTail West 2018 (Klarna Email), Rated: B

Klarna, a global payments provider, is a sponsor of and will be exhibiting at next week’s eTail West 2018 in Palm Springs, Calif.

Carl Gish Joins Varo Money as Chief Marketing Officer (PRWeb), Rated: B

Mobile banking startup Varo Money, Inc. today announced the hire of Carl Gish as Chief Marketing Officer. Gish is a marketing and general management executive with more than 20 years of experience across well-known, high-growth consumer brands and e-commerce businesses, including Amazon, Unilever, Dyson, eBay and Affirm. He will lead all aspects of the company’s branding and marketing, and will work directly with CEO Colin Walsh to drive large growth in Varo’s customer base across multiple marketing channels and partnerships.

United Kingdom

Zopa warns over defaults as investor returns decline (Financial Times), Rated: AAA 

The UK’s oldest peer-to-peer service is warning investors that defaults on its recent loans will be running at a higher rate than during the financial crisis.

Fintech Raisin Crosses the Channel to Offer Services to UK Savers (Crowdfund Insider), Rated: AAA

Savings marketplace Raisin has launched in the UK.

Revolut’s Nikolay Storonsky on long hours and high staff turnover (Financial Times), Rated: AAA

Over the past three years, and with the backing of Balderton Capital and Index Ventures, two European venture capital firms, Mr Storonsky’s company has raised about £60m and had a valuation of £300m last year.


what fintechs do

How Startups Can Gain Traction In The Financial Services Market (Forbes), Rated: A

The United Kingdom’s financial technology sector attracted a record £1.34bn in venture capital  investment in 2017, with 90% of that money going to startup and early stage businesses based in London.

Those raising cash last year included peer2peer lending platform Funding Circle (£81.9m); payments company, Transferwise (£211m) and challenger bank, Monzo (£71m).

Last week I spoke to two fintech entrepreneurs – Ollie Purdue of online bank account provider, Loot and Jared Jesner, CEO of currency exchange, WeSwap – about their reasons for entering the fintech arena and how they hope to carve out a niche in a crowded market.

Lloyds Bank Marks $ 4.1B for Digital Strategy (Bank Innovation), Rated: A

British bank Lloyds has put aside £3 billion ($4.1 billion) for digital development and growth, the bank announced today.

The  £3 billion is a 40% increase on the spend Lloyd marked for its previous three-year expansion plan.

P2P lending to form part of inquiry into SME finance (P2P Finance News), Rated: A

POLITICIANS are going to consider the availability and uptake of peer-to-peer lending as part of an inquiry into finance for small-and-medium-sized enterprises (SMEs).


Ultimate guide to Innovative Finance ISAs: Part two (P2P Finance News), Rated: A

Lending to small- and medium-sized enterprises (SMEs) has soared in recent years. Members of the Peer-to-Peer Finance Association have cumulatively lent a total of £5bn to businesses versus £3bn to individuals, as of the end of 2017.

Loans to SMEs tend to produce a higher rate of return than loans to consumers, but they can also be riskier in some cases. The average size of loan is also much higher.

How Short Term Lender Wonga Went Worldwide (Silicon India), Rated: A

Today the brand eclipses its competition, with many of its 400 failing to survive in 2016 as fresh price caps on loan and repayment charges came into action.

With UK-domination taken care of, the lender has been expanding rapidly overseas, starting its journey by launching in Canada, South Africa and Poland, before going on to purchase and assimilate a number of foreign short term lenders as part of its global growth.

To launch Wonga Spain, the lender purchased Spanish credit agency Credito Pocket in 2013, going on to purchase German “pay later” payment firm BillPay (with two million users to its name) and a stake in Indian firm Nahar Credits Private in October of the same year.


China tries to bring order to sprawling online finance sector (Asian Review), Rated: A

China’s 1.2 trillion yuan ($189 billion) internet finance industry has reached a turning point as regulators tighten regulations after one too many cases of bankruptcy and fraud.

European Union

RaboDirect to quit Irish market in May (The Irish Times), Rated: AAA

RaboDirect Ireland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.

The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.

Bizarre Buybacks and Expensive Takeovers (The Washington Post), Rated: AAA

In November, Swiss fintech company Temenos Group AG spent 150 million Swiss francs ($160 million) buying back its shares at an average price of 122 francs each. Weeks later, with the stock at 115 francs, it’s preparing to sell shares to fund a $1.9 billion takeover of British rival Fidessa Group Plc.


The return on invested capital looks set to be just over 6 percent in 2020, based on the stated cost synergies plus Fidessa’s forecast operating performance. That’s well below the target’s 9 percent cost of capital.

Temenos fidessa

Anyfin raises €4.8 million to refinance loans with a statement selfie (Finextra), Rated: A

Anyfin, a Swedish startup that offers to refinance consumer loans and credit card debt using a combination of artificial intelligence and a photo of the current statement and repayment terms, has bagged €4.8 million in Series A funding led by Accel and Northzone.

BNI Europa and Code for All partner to train new generation of IT developers (Finextra), Rated: A

BNI Europa, through Puzzle, its online credit brand, created a partnership with <Code for All_> to provide financial aid to anyone who wants to learn to become a IT developer.

This partnership provides an intensive code training program of 14 weeks supported by an online credit solution that offers special payment conditions to the program’s students.


What Is the Ripio Credit Network? (The Merkle), Rated: A

The Ripio Credit Network wants to offer a real global credit ecosystem which is more suitable than traditional solutions and even than similar peer-to-peer lending services. While that sounds like a tall order, the RCN protocol will connect lenders and borrowers all over the world via the native RCN token.

As is the case with any blockchain ecosystem, the Ripio Credit Network has its own native RCN token. It is the network’s payment channel first and foremost. Although credit transactions can be settled in any local currency, one does need RCN tokens to access the network and facilitate transactions.

Etherty launches blockchain-based, real estate trading platform (Construction Business News), Rated: A

A new investment portal, Etherty, has launched offering a real estate linked-crypto currency that enables investors to seize property investment opportunities all over the world, primarily in key markets such as Dubai, Mexico, and Australia.

500 Startups, Huobi Labs to Incubate Blockchain Projects (CoinDesk), Rated: B

500 Startups, the Silicon Valley startup accelerator, announced Tuesday it is partnering with cryptocurrency exchange Huobi’s incubator wing, Huobi Labs.

The two companies will support startups in various areas, including developing business plans, focusing on elements such as white papers, marketing strategies, community engagement and fundraising efforts, the accelerator said in a press release.

Australia/New Zealand

FMA opens applications for personalised digital advice (Scoop), Rated: AAA

The FMA is now open for applications from providers seeking to offer personalised financial advice to consumers through digital tools and platforms (so-called robo-advice).


P2P lending, payments platform JaldiCash to merge with parent firm Weizmann Forex (Financial Express), Rated: A

Weizmann Forex Limited (WFL), a foreign exchange and inward remittances platform, has approved the acquisition of its unit Weizmann Impex Enterprises Ltd (WISE). The proposed deal is supposed to take place on April 1st and will be done through a Scheme of Amalgamation, the company said in a press release. WISE is authorized by the Reserve bank of India to issue and operate semi-closed prepaid payment systems in India. The company owns ‘JaldiCash’, a payments platform that claims to have a network of more than 18,000 channel partners across 29 Indian states and more than 520 districts through their B2B model. JaldiCash works on a P2P model lending model, enabling loans for retailers, hotels and other services


ALAMI is on a journey to popularise sharia-based finance in Indonesia. (e27), Rated: A

Islamic banking assets is only 5.03 per cent of the total banking sector’s assets in the country, with a market share of IDR356.5 trillion (US$26.7 billion).

According to ALAMI CEO Bembi Juniar, this is due to the lack of infrastructure, support from key opinion leaders, and education on the benefits of sharia-based financial services.

So ALAMI offers a platform that serves as an aggregator for sharia-based financing for SMEs.


Wealthsimple raises $ 65 million in funding from Power Financial group of companies (Cision), Rated: AAA

Canada’s digital investor has raised a $65 million investment from the Power Financial group of companies, bringing their total investment in Wealthsimple to $165 million. Wealthsimple manages approximately $1.9 billion for over 65,000 clients in Canadathe United States, and the United KingdomMore than 80 per cent of people who use digital investing in Canada use Wealthsimple.


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