- Today’s main news: GreenSky sets shares at $23 each, sold 38M. Elevate Credit doubles floor space. Tandem hits 100K clients. Lidya raises $6.9M in Africa.
- Today’s main analysis: PeerIQ recounts TransUnion Summit 2018.
- Today’s thought-provoking articles: An orthodontist racks up over $1M in student loans. CompareCards releases credit card fee report. The worst is over for Chinese microlenders.
- GreenSky raises over $800 million. Notable is the price of each share at $23 and the number sold at 38 million. Nice round. Congratulations.
- Elevate Credit doubles floor space in Addison, Texas. This represents significant growth.
- Dodd-Frank reform leads to VantageScore win. PeerIQ recaps Dodd-Frank reforms and the TransUnion Summit 2018, which includes some interesting reports on delinquencies and refinancings.
- One orthodontist racks up over $1 million in student loans. I didn’t see a mention of any specific lenders, but it seems “easy credit” is taking the blame for this. Still, an interesting read.
- CompareCards releases credit card fee report. An interesting look at which types of credit cards have the highest fees.
- Silver Hill Funding targets the underserved in small business lending.
- Affirm adds another San Francisco office.
- Kabbage tells small businesses when to expand.
- Are algorithmic advisors better than traditional financial advisors?
- Are we in the golden age of Fintech? Ron Suber thinks so. Great TV interview.
- Can a side gig fund retirement?
- RBC Wealth Management launches digital alternative investments platform.
- Alabama targets a crypto lender.
- 69% of millennials aren’t saving for retirement.
- Tandem reaches 100,000 clients. Awesome. Congratulations.
- SMEs are neglected opportunity for big banks. A huge opportunity for alternative lenders.
- Why scaleups shy away from debt, equity growth funding.
- Department store numbers fall by quarter.
- United States
- Fintech GreenSky raises more than US$ 800mln in its IPO (Proactive Investors) Rated: AAA
- Elevate Credit doubles space with ‘super floor’ in Addison office building (Dallas Business Journal) Rated: AAA
- VantageScore win, TransUnion Summit 2018 (PeerIQ), Rated: AAA
- Mike Meru Has $ 1 Million in Student Loans. How Did That Happen? (WSJ), Rated: AAA
- Silver Hill Funding’s Leslie Smith is Targeting the Underserved in the SBL Space (Commercial Observer) Rated: A
- Fintech adds another S.F. office (San Fransciso Business Journal) Rated: A
- Does Your Business Need More Space? A Lender Weighs In On Why And How To Expand (Forbes) Rated: A
- For Your Money, Which is Better: The Algorithm or the Adviser? (Kiplinger) Rated: A
- Are we in the Golden Age of Fintech? (Fintech TV), Rated: A
- Can your side gig fund retirement? (CU Insight) Rated: A
- CompareCards Releases 2018 Credit Card Fee Report (PR Newswire) Rated: AAA
- RBC Wealth Management – U.S. launches new digital alternative investments platform (PR Newswire) Rated: B
- Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up Operation (Bitcoin News) Rated: B
- 5 Ways to Get ‘Free’ Money From Your Employer Without a Raise (Student Loan Hero) Rated: B
- United Kingdom
- Tandem reaches 100,000 clients, signs for Form3 paytech (Banking Tech), Rated: AAA
- SMEs: a neglected opportunity for UK big banks (SME Magazine) Rated: AAA
- Why scaleups still shy away from debt and equity growth funding (Real Business) Rated: A
- Department store numbers fall by quarter (Drapers) Rated: B
- Worst Is Past for Microlenders — Analysts (Caixin Global) Rated: AAA
- Credible Lab CEO Stephen Dash likens ASX to ‘junior Nasdaq’ (Australian Financial Review) Rated: A
- How the Fintech Industry is Drawing Young Talent in the Country (Entrepreneur) Rated: AAA
- Acko Gets $ 12 mn funding from Amazon, others (Elets Online) Rate: A
- Singapore Has Fintech Dreams, But It’s Short on Tech Talent (Bloomberg) Rated: A
- Lidya Scores $ 6.9 Million in Series A Investment (Finovate), Rated: AAA
Fintech GreenSky raises more than US$ 800mln in its IPO (Proactive Investors) Rated: AAA
The online lender priced its shares at US$23 each, raising a total of US$874mln in its first day of trading. The company sold 38 million shares, surpassing its expectation of 34 million shares.
Elevate Credit doubles space with ‘super floor’ in Addison office building (Dallas Business Journal) Rated: AAA
Elevate Credit Inc. will expand at Spectrum Center in Addison, doubling both the size of its footprint and the capacity for employees who can work in the office.
The fast-growing company is growing from 26,000 to 52,000 square feet in the 614,000-square-foot office complex.
VantageScore win, TransUnion Summit 2018 (PeerIQ), Rated: AAA
The House passed the Economic Growth, Regulatory Relief, and Consumer Protection Act which reforms the Dodd-Frank Act and provides significant oversight relief to small banks. Below are some of the main provisions of this bill:
- One of the most notable shifts lost in the headlines is that the legislation requires Fannie Mae and Freddie Mac to evaluate and consider alternative credit scores to FICO. The change introduces competition to the credit scoring market and is a big win for VantageScore.
- Regulatory Capital relief:
- The threshold for a Systematically Important Financial Institution has been raised to $250 Bn in assets from $50 Bn, which will exempt a number of regional banks. These banks will no longer be subject to onerous CCAR tests and reduce their compliance burdens. Banks with less than $10 Bn in assets are also exempt from the Volcker Rule – a win for Jeb Hensarling’s (R-TX) campaign to provide relief for community banks.
- Banks with less than $3 Bn in assets will have a lower frequency of regulatory exams, banks with less than $5 Bn in assets will have fewer reporting and compliance requirements, and all banks with less than $10 Bn in assets will have the same capital ratio.
- Lenders can now charge subprime borrowers higher rates for auto loans.
TransUnion Financial Services Summit 2018
Delinquencies in auto loans have picked up recently to 4.3%, with subprime auto doing worse. (The drop in auto performance can be attributed to longer auto loan terms, higher LTVs, lower used car re-sale prices, and the “Lyft effect”).
If a loan is prepaid before the 12-months mark the originator loses money as the net interest margin is not enough to compensate for the origination and servicing expenses. Only 23% of prepaid loans are refinanced, and most consumers go for a longer tenor loan with a higher balance.
Mike Meru Has $ 1 Million in Student Loans. How Did That Happen? (WSJ), Rated: AAA
Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much.
Silver Hill Funding’s Leslie Smith is Targeting the Underserved in the SBL Space (Commercial Observer) Rated: A
In March, Smith oversaw the formal launch of Commercial Direct, an online small-balance loan customization platform that’s a division of multibillion dollar real estate investment firm Silver Hill Funding, a subsidiary of Bayview Loan Servicing.
Commercial Direct’s lending strategy targets small business owners, entrepreneurs and investors who are relatively new to the commercial real estate arena or are looking to expand or diversify their portfolios. The platform finances commercial and residential condominiums, among many other asset classes, and closes loans in 30 days or fewer, according to Commercial Direct’s website.
With the backing of Silver Hill—which has funded more than 20,000 transactions since its founding—and Bayview Loan Servicing, the platform is off to a strong start.
Fintech adds another S.F. office (San Fransciso Business Journal) Rated: A
After snapping up a new headquarters last year, fintech company Affirm leased up 46,000 square feet in 550 Kearny St. in San Francisco with landlord Brickman.
The new space is around the corner from the company’s headquarters in 650 California St., where it leased 86,225 square feet.
In this post, I speak with Victoria Treyger of Kabbage, an automated lending platform that has helped more than a hundred thousand small businesses and consultants expand wisely. She considers several common scenarios in which a business might consider physical expansion, and shares her feedback on why and how it’s worth the risk.
Lena Katz: When is it best to move your creative business (photography, stylist, agency) from a shared workspace to one’s own office or studio?
Victoria Treyger: Shared workspaces are best when you’re seeking new ideas and collaboration. It’s great for businesses with limited budgets or smaller teams, or even for more established companies that can benefit from a hive of collective creativity. It’s typically time for a business to transition to its own office or studio once it’s amassed a large enough client base to support the costs, has enough projects that require dedicated focus without distractions, or built a team that needs dedicated space.
For Your Money, Which is Better: The Algorithm or the Adviser? (Kiplinger) Rated: A
The reality is, the rapid growth and early-stage adoption of financial technology (FinTech) indicates an industry disruption is underway. Algorithm-based, digital advisory technology has brought us the increasingly popular “robo-advisers,” which replace human advisers with software programmed to understand and advise on clients’ needs. Robo-adviser firms have witnessed triple-digit growth since 2013. Research firm Cerulli Associates reported they had about $60 billion in assets under management (AUM) at the end of 2016, and could amass an estimated $385 billion by 2021.
Are we in the Golden Age of Fintech? (Fintech TV), Rated: A
Dubbed the ‘Mayor of Fintech’, Ron Suber discusses the current fintech landscape, and what technology has him excited about the future.
Can your side gig fund retirement? (CU Insight) Rated: A
Almost 40% of respondents in a recent Betterment survey said they feel unprepared to save enough to maintain their lifestyle during retirement. As a result, they have become members of the growing gig economy by either supplementing their full-time job or relying solely on their independent work/temporary contracts.
According to “The Gig Economy and Future of Retirement” survey, 76% of those 55 and older were using earnings from a second job to save for retirement, as were 65% of people 35 to 54. In addition, 42% of gig workers under 35 say they’re moonlighting to help save for retirement.
Online lender Earnest gathered data from tens of thousands of loan applicants to learn just how much people are actually earning from their gig. They found 85% of people take home an average of $500 per month from their side hustles.
CompareCards Releases 2018 Credit Card Fee Report (PR Newswire) Rated: AAA
Highlights from CompareCards 2018 Credit Card Fee Report:
- Two cards — both no-frills credit cards from credit unions — had only a single fee. One card in the survey had as many as nine fees.
- Credit union-issued credit cards have 2.73 fees per card, lower than 4.48 fees for cards issued by banks.
- The most common fee levied by issuers is the late payment fee: 99.5 percent of cards impose this fee, averaging $36.02.
- The average balance transfer fee, among cards that allow them, is 3.46 percent.
- The average cash advance fee is 3.99 percent.
- Foreign transaction fees, overall, average 1.48 percent, including cards that have no fee. But if cards assess the fee, most of the time the fee is 3 percent of the purchase price.
- When compared with smaller credit card issuers, larger credit card issuers assess higher cash advance fees (4.11 percent, versus 3.86 percent) and balance transfers fees (3.49 percent versus 3.42 percent), on average.
- However, average foreign transaction fees are lower at larger credit card issuers (1.22 percent, versus 1.76 percent at smaller issuers).
RBC Wealth Management – U.S. launches new digital alternative investments platform (PR Newswire) Rated: B
RBC Wealth Management-U.S., one of the nation’s largest full-service wealth management firms, is taking some of the mystery and difficulty out of alternative investing with a new digital alternative investment platform for high-net worth clients.
Developed in partnership with Artivest, an award-winning alternative investment management and technology solutions provider, RBC Wealth Management’s cloud-based investment platform gives financial advisors and their clients access to leading private equity and hedge funds across sectors, stages and styles.
Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up Operation (Bitcoin News) Rated: B
Cease and desist letters have been sent to three Los Angeles based companies. The second firm form California, Leverage, has advertised itself as a crypto lending platform offering to investors a variable, daily interest. This case is again about an unlicensed security, the ASC said.
5 Ways to Get ‘Free’ Money From Your Employer Without a Raise (Student Loan Hero) Rated: B
2. Use your company’s 401(k) matching program
Saving for the long term can be a challenge: 69% of millennials surveyed are not saving for retirement, according to online lender Earnest. Although it can be hard to think about setting aside money when you have to manage student loan payments, it can help with future financial goals — especially if your employer offers a match on retirement plans.
Tandem reaches 100,000 clients, signs for Form3 paytech (Banking Tech), Rated: AAA
SMEs: a neglected opportunity for UK big banks (SME Magazine) Rated: AAA
Big banks are neglecting the SME market opportunity due to a variety of factors. One of the main problems is the onboarding process, where in many cases the ownership structure can be unclear, leading to difficulties around initiating relationships with SME businesses.
Second, the nature of the SME growth model makes it difficult for banks to determine the value of the business opportunity. This poses problems when it comes to granting credit facilities to SMEs, as they are seen as higher risk for conducting business with.
Third, banks follow bigger sources of revenue and SME profitability is lower than larger organisations.
Finally, existing legacy software systems prevent large banks from servicing SME customer demands which go beyond traditional offerings. For example, the desire to integrate P2P lending, blockchain, mobile wallets, and accounting and legal functionality all as one end-to-end service.
Why scaleups still shy away from debt and equity growth funding (Real Business) Rated: A
Some £2.9 billion was claimed in R&D tax credits during 2015-16, according to HMRC, with the average amount of relief claimed via the SME scheme increasing from £56,223 to £61,514.
Despite a dip in deal numbers in 2016, the crowdfunding boom returned. Beauhurst data claimed £8.27 billion was invested in 2017 – more than double the previous year.
Department store numbers fall by quarter (Drapers) Rated: B
A report by peer-to-peer lending platform Lendy found that the number of large department stores fell from 240 in 2009 to 180 in 2016. The total number of shops fell from 407,000 to 403,000 during the same period.
Lendy said department stores had been more negatively affected than the rest of the high street by online shopping, as the heavy debt burdens carried by their owners had hampered their own investment in ecommerce and store refurbishment.
Worst Is Past for Microlenders — Analysts (Caixin Global) Rated: AAA
Effects of a late-year regulatory crackdown on Chinese online lenders has most likely run its course by now, analysts said, even as shares of U.S.-listed companies continue to feel some lingering fallout.
Shares of online lenders Qudian Inc. and LexinFintech Holdings Ltd. have tumbled by 24% and 17% respectively since the firms released their first-quarter results a week ago, wiping out over $1.4 billion in combined market value. Yirendai Ltd., the first Chinese peer-to-peer (P2P) lender to list in the U.S., saw its shares fall by 4% a day after releasing its earnings results after trading on Thursday.
To curb excess in the 1 trillion yuan ($156 billion) unsecured short-term loan industry, regulators issued rules in early December that capped annual interest rates on loans at 36%, barred lenders from offering loans to borrowers with no source of income, and tightened scrutiny over funding sources.
Credible Lab CEO Stephen Dash likens ASX to ‘junior Nasdaq’ (Australian Financial Review) Rated: A
Credible Labs Inc founder and chief executive Stephen Dash said he had chosen an ASX listing for the company, which allows users to sort through US student loans, because a large number of the company’s early investors were based in Australia and Asia.
How the Fintech Industry is Drawing Young Talent in the Country (Entrepreneur) Rated: AAA
The fintech industry is creating new and exciting opportunities for the country’s workforce in such areas as payments, retail baking, peer-to-peer debt financing, personal finance, asset management, institutional investments, remittances, and financial research. However, the primary enabler for all these segments is data. The volume of data that is being generated and leveraged by the digital banking and financial services industry is massive and unprecedented. As a result, the demand for technically trained data scientists is growing rapidly among fintech companies. With an increasing number of people in the country consuming fintech products, data scientists are required to manage large, complex sets of data and organise them to facilitate faster and enhanced delivery of various services to consumers.
Acko Gets $ 12 mn funding from Amazon, others (Elets Online) Rate: A
Online insurance startup Acko General Insurance Co. has raised $12 million (around Rs 80 crore) in a new round of funding led by e-commerce giant Amazon, an official statement revealed.
The latest funding infusion that saw participation from Ashish Dhawan, angel investor and founder of private equity fund ChrysCapital and existing investor Catamaran Ventures, the family office of Infosys co-founder NR Narayana Murthy, takes Acko’s total external funding to nearly $42 million.
In recent times the online lender that has joined hands with cab aggregator Ola to offer in-ride insurance to riders is said to be exploring venturing into travel insurance and healthcare space.
Singapore Has Fintech Dreams, But It’s Short on Tech Talent (Bloomberg) Rated: A
Singapore’s goal of becoming a high-tech financial hub is running into real-world problems of labor supply and demand.
Technology startups in many countries are fighting to attract skilled workers like software engineers. Yet in the tiny city-state of Singapore, with a population of 5.6 million, the dearth of talent is particularly acute. The nation’s universities and polytechnic schools churn out what the government estimates are 400 graduates a year with the right qualifications, well short of plans to add 1,000 financial tech jobs annually, according to the Singapore Fintech Association.
Lidya Scores $ 6.9 Million in Series A Investment (Finovate), Rated: AAA
Nigeria-based digital bank Lidya landed a fresh round of funding this week. The bank pulled in a Series A round totaling $6.9 million, an amount that marks the round as one of Nigeria’s largest tech investments. Combined with the $1.25 million Lidya received last March, today’s round brings the bank’s total funding to $8.2 million.