- Today’s main news: Circle seeks a banking license. Revolut has 2M users. Ping An looks beyond insurance. TransferWise partners with first big bank.
- Today’s main analysis: How microfinance is navigating the fintech revolution in Africa.
- Today’s thought-provoking articles: Where retail credit, charge cards are used the most. The case for a VRP strategy. A different type of Know Your Customer. LendingTree Monthly Mortgage Offer Report.
- Circle wants a banking license. This is big news for the crypto space, but there are clear implications for marketplace lending, as well. Circle wants to lend cryptocurrencies. This banking license will help, and if this happens, I think we’ll see a wave of crypto lenders moving in on the MPL space. It’s already started, but this could ramp it up.
- LendingTree’s monthly mortgage offers report. Purchase APRs are trending upward.
- Which places use the most retail credit, charge cards? This is interesting. McAllen, Texas isn’t that big a community. When this study says they have the highest number of people with retail cards, they mean per capita. 72% of the people in this small town have retail cards. Only 17% have credit card debt on those cards. These people are prime prospects for instant credit services like Klarna and Affirm.
- The case for a VRP strategy.
- Unchained Capital raises $3 million to lend fiat money to crypto HODLers.
- Court uphold sanctions against lawyers in payday lending case.
- LoanNow review.
- Payday lending on the blockchain.
- Renovate America named ‘Esoteric ABS Issuer of the Year’.
- Sallie Krawcheck thought she hated banking.
- White Oak Business Capital hires SVP, SBD officer.
- Revolut has 2 million users. Congratulations. Great milestone.
- A different type of Know Your Customer.
- The growing popularity of bridging loans for investors.
- TransferWise partners with first big bank. Already reported, but additional information on customer satisfaction per bank type in the UK.
- Startup Nation Ventures issues call for proposals.
- How fintech is disrupting personal loans market.
- Why robo-advisors won’t replace human advisors.
- Cambridge Centre for alt finance launches global research.
- United States
- Crypto Unicorn Circle Aims to Expand Into Regulated Banking (Bloomberg) Rated: A
- LendingTree Releases Monthly Mortgage Offer Report for May (PR Newswire) Rated: AAA
- CompareCards Study Reveals Which Places Use the Most Retail Credit and Charge Cards (Benzinga) Rated: AAA
- AQR MAKES THE CASE FOR A VRP STRATEGY (all About Alpha) Rated: AAA
- Unchained Capital Raises $ 3M To Lend Fiat To HODLers (Crunchbase News) Rated: A
- Court upholds sanctions against lawyers, KC firm in payday case (Kansas City Business Journal) Rated: A
- LoanNow Reviews: Beware Personal Loan Offers With Sky-High APRs (Student Loan Hero) Rated: A
- Startup Aims to Disrupt High-Interest Payday Lending With Blockchain (Thirty K) Rated: A
- Renovate America Named “Esoteric ABS Issuer of the Year” (PR Newswire) Rated: B
- Sallie Krawcheck thought she hated banking (Business Insider) Rated: A
- David Mitchell Joins White Oak Business Capital as Senior Vice President and Senior Business Development Officer (Globe Newswire) Rated: B
- United Kingdom
- UK fintech start-up Revolut reaches 2 million users (The Telegraph) Rated: AAA
- Going tribal: A different type of ‘know your customer’ (Mortgage Finance Gazette) Rated: AAA
- The growing popularity of bridging loans for investors (Property Week) Rated: A
- Chinese Giant Ping An Looks Beyond Insurance To A Fintech Future (Forbes) Rated: AAA
- European Union
- Klarna at Money 20/20: Banks are obsessed with themselves (Bobs Guide) Rated: A
- Auto1 Joins Deutsche Bank, Allianz in Fintech Car Financing Push (Bloomberg) Rated: A
- TransferWise just partnered with its first big bank (Business Insider) Rated: AAA
- StartUp Nation Ventures Announces the Israel-Florida Innovation Alliance’s First Call for Proposals (PR Newswire) Rated: A
- How Fintech Is Disrupting the Personal Loans Market (The Market Mogul) Rated: A
- Here’s why robo-advisors won’t replace human financial advisors (CNBC) Rated: A
- Cambridge Centre for Alternative Finance Launches Global Research (Crowdfund insider) Rated: B
- MICROFINANCE PAPER WRAP-UP: “How Microfinance is Navigating the Fintech Revolution in Africa” (MicroCapital) Rated: AAA
- The Trillion-Dollar Investment Trend You’ve Never Heard Of And How You Can Be A Part Of It (Indonesia Expat) Rated: AAA
Crypto Unicorn Circle Aims to Expand Into Regulated Banking (Bloomberg) Rated: A
The venture, partly backed by Goldman Sachs Group Inc., plans to seek a federal banking license to provide more services to customers. It also intends to pursue registration as a brokerage and trading venue with the Securities and Exchange Commission, so it can help investors buy and sell tokens deemed to be securities.
LendingTree Releases Monthly Mortgage Offer Report for May (PR Newswire) Rated: AAA
LendingTree 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.
- May’s best rate offers for borrowers with the best credit profiles had an average APR of 4.35% for conforming 30-year fixed purchase loans, up from 4.26% in April.
- Refinance loan offers for borrowers with the best profiles were up 12 bps to 4.35%.
- For the average borrower, purchase APRs for conforming 30-yr fixed loans offered on LendingTree’s platform were up 10 bps to 5.02%. The loan note rate of 4.91% was also up 10 bps.
CompareCards Study Reveals Which Places Use the Most Retail Credit and Charge Cards (Benzinga) Rated: AAA
CompareCards by LendingTree today released the findings of its study on the places that use the most retail credit and charge cards. The study found that some metro areas are home to heavy users of retail cards while other locations have a population who use retail cards more sparingly.
Nationally, 61.3 percent of credit card owners have at least one retail card. Of those who have at least one retail card, 30.4 percent carry a balance on a retail card, representing 11.4 percent of outstanding balances. The average balance on a retail card in the U.S. is $2,699.
Highlights from the report:
- Residents of McAllen, Texas are by far the highest users of retail credit and charge cards. The metro earned a final score of 87.2 and ranked first in these categories:
- The number of people who have retail cards (72%)
- The number of retail card owners who carry a balance on their retail cards (45%)
- And the percentage of credit card debt carried on a retail card (17%)
- People in Charleston, S.C. have this retail card claim to fame: They carry the highest balances on their retail cards among all 100 metros, with an average balance of $4,026and a median balance of $1,746. Meanwhile, Albany, N.Y. had the lowest average balance ($2,420).
- Honolulu has the lowest retail card usage, with a final score of 9.4. Although it didn’t rank last in any individual category, it ranked extremely low in all.
AQR MAKES THE CASE FOR A VRP STRATEGY (all About Alpha) Rated: AAA
AQR Capital Management, the Greenwich, CT-based global investment firm, has posted a new discussion of thevolatility risk premium and of the advantages of strategies based thereon.
In principle the premium would disappear if markets efficiently estimated the probability of significant losses. But it remains, because investors are risk averse and tend to overestimate the probability of substantial losses.
QR models an investor who was hypothetically long the S&P 500 from 1996 to 2016, while hedging his position with a continuously rolled one-month 5% out-of-the-money put. The hedged strategy will in fact lessen portfolio volatility as measured against simply being long in the S&P without the hedge. Vol falls from 16.1% in the latter case to 14.7% in the former.
But, as noted, this risk aversion comes at a hefty cost. Average portfolio returns decline from 5.1% to just 1.8%.
Unchained Capital Raises $ 3M To Lend Fiat To HODLers (Crunchbase News) Rated: A
Austin-based crypto-finance startup Unchained Capital has raised nearly $3 million in seed funding. Unchained’s first product is a crypto asset-backed loan, which is like borrowing against one’s home—except the company lends against digital assets such as bitcoin and ethereum.
The round includes $2.4 million in new capital and $595,000 of SAFE notes converting.
Court upholds sanctions against lawyers, KC firm in payday case (Kansas City Business Journal) Rated: A
A federal appeals court upheld $150,000 in sanctions levied against Stephen Sixand Austin Moore of Stueve Siegel Hanson LLP in Kansas City, Darren Kaplan of the Darren Kaplan Law Firm PC in New York, and their respective law firms.
The plaintiff filed a class-action lawsuit that wasn’t against the online payday lending companies themselves, but against four nonlender financial institutions — Generations Federal Credit Union, BMO Harris Bank, Four Oaks Bank & Trust Co. and Bay Cities Bank — that processed the debit transactions and were paid fees.
LoanNow Reviews: Beware Personal Loan Offers With Sky-High APRs (Student Loan Hero) Rated: A
That’s where online lender LoanNow comes in. LoanNow reviews your application even if you don’t have strong credit.
Here are the ranges for APRs and repayment terms in the six states that LoanNow operates in as of June 6, 2018. Double-check the LoanNow website for the latest rates.
|State||Loan amount||APR||Repayment term|
|Alabama||$2,500 – $5,000||29.00% – 229.00%||12 – 48 months|
|California||$2,500 – $5,000||29.00% – 229.00%||12 – 48 months|
|Georgia||$3,100 – $5,000||29.00% – 59.00%||12 – 48 months|
|Missouri||$1,000 – $2,500||29.00% – 299.00%||9 – 24 months|
|New Mexico||$2,600 – $5,000||29.00% – 229.00%||12 – 48 months|
|Utah||$1,000 – $2,500||29.00% – 299.00%||9 – 24 months|
Startup Aims to Disrupt High-Interest Payday Lending With Blockchain (Thirty K) Rated: A
Meje Tuyo thinks the payday loan industry is ripe for disruption and he wants to do it using blockchain technology. Specifically, Tuyo wants to deliver more equitable access to loans through Owo, a startup venture set to debut this fall. The company’s name means “money” in the West African language of Yoruba.
Tuyo, a native of Nigeria, is looking to, at first, address the challenges of African Americans, a population that relies more on payday loans than other groups. Another from 2012 found that 12 percent of African-Americans had taken out payday loans, compared with 4 percent of whites and 6 percent of Hispanics.
The company plans to launch an app called Pazima, which will allow consumers to request loans that will be automatically repaid when they receive their paychecks.
Renovate America Named “Esoteric ABS Issuer of the Year” (PR Newswire) Rated: B
Renovate America, a leading provider of home improvement financing, has been recognized as “Esoteric ABS Issuer of the Year” in the 2018 U.S. Securitization Awards announced by GlobalCapitalmagazine. The award recognizes Renovate America’s position as a leader in the esoteric ABS market, which includes not only PACE, but also equipment leasing, containers, marketplace lending, whole business, solar, and cell tower deals, to name a handful.
Sallie Krawcheck thought she hated banking (Business Insider) Rated: A
- Sallie Krawcheck spent years as a Wall Street exec, commonly called “the most powerful woman on Wall Street.”
- But when she got her first investment banking job in her early 20s, she hated it, and even went back to business school to transition into her dream jobs in media.
- It wasn’t until she asked herself what she loved about media that she could find in banking that she found a place in equity research, which launched her into a series of executive roles on Wall Street.
David Mitchell Joins White Oak Business Capital as Senior Vice President and Senior Business Development Officer (Globe Newswire) Rated: B
White Oak Business Capital, Inc. (“WOBC” or White Oak), an affiliate of White Oak Global Advisors, LLC, today announced the appointment of David Mitchell to the role of Senior Vice President and Senior Business Development Officer, responsible for expanding business in the Southeast and Mid-Atlantic markets.
UK fintech start-up Revolut reaches 2 million users (The Telegraph) Rated: AAA
London fintech start-up Revolut has announced that it has grown to 2m users following its launch in 2013.
Revolut said that it has now signed up 2m customers in Europe ahead of plans to launch in the US this year. Customers have also made over 100m transactions, the company said, with a monthly transaction volume of $2bn (£1.4bn).
Going tribal: A different type of ‘know your customer’ (Mortgage Finance Gazette) Rated: AAA
The fintech industry is coming of age. Global investments in the sector have grown from $20 billion in 2014 to $39 billion in 2017, according to Fintech Global. Fintechs like Transferwise, Nutmeg, Revolut, Starling Bank and Funding Circle in the UK have grown rapidly over the last five years. A large reason for this success is attributable to the way fintechs are able to develop deep relationships with their customers who rally around them in an almost tribe-like manner. Successful firms manage to convert isolated customers into communities and finally highly engaged ‘tribes’.
Fintechs that have successfully demonstrated that they can generate a sense of community within their customer base share the following six characteristics.
- Transparency-or at least the perception of it – is a great way to build trust and attract younger customers. Transferwise publishes its rate card in full on its website for instance.
- Reachability-In general, fintechs are much more in tune with what their customers want to be developed next. Revolut got this formula right from the start – this has helped them to grow to a $1.7 billion company in just 33 months.
- A sense of purpose-A large part of fintechs’ success in tribe-building is their ability to generate the sense of a greater purpose. Fintechs are typically focussed on achieving a specific goal which on its own, is mundane and something on the lines of – ‘help you transfer money cheaply’. However, this mundane goal is transformed into a grandiose vision when put into the intended context— ‘transfer money cheaply and beat the big banks at their game’. An origin story is the final touch required to transform this vision into a sense of purpose for the community – ‘transfer money cheaply, beat big banks and be a part of something meaningful’.
The growing popularity of bridging loans for investors (Property Week) Rated: A
This trend has only been exacerbated by Brexit as the ongoing uncertainty around Britain’s exit from the EU leaves borrowers, banks and new lenders without a clear picture of the next few years.
In light of this, bridging loans are increasingly popular as a short-term solution for investors and a way for high-net-worth individuals to see a return on capital.
Although the recent rise of bridging loans is associated with specialist lenders, particularly in the commercial space offering non-FCA regulated loans, the product originated as an option for property buyers to bridge a gap between exchanging contracts and completion of a sale where you needed to purchase a property in the interim but did not have the capital.
Chinese Giant Ping An Looks Beyond Insurance To A Fintech Future (Forbes) Rated: AAA
Ping An Insurance is China’s biggest insurer, with $94 billion in premium revenue. It reigns supreme as the industry No. 1 by profit and return on equity. Its market capitalization, at $180 billion, is 74% larger than the country’s old standard, China Life, and 64% above the largest listed pan-Asia insurer, AIA. By this measure it is the world’s largest insurer except for Berkshire Hathaway.
To make sense of these startling numbers — and of Ping An’s rise to No. 10 on the Forbes Global 2000 list — look beyond the stodgy insurance business and into the realm of high technology, whose tentacles reach into every aspect of commerce in China and eventually show up in the mobile handsets of Chinese consumers.
Klarna at Money 20/20: Banks are obsessed with themselves (Bobs Guide) Rated: A
In a presentation entitled ‘Banking on the CX factor’, Klarna CEO Sebastian Siemiatkowski spoke to a packed crowd under The Big Top at Money 20/20 EU, Amsterdam, today, taking the opportunity to open fire on the banks.
The audience heard insight from Klarna on customer experience, including the fact that, according to the Happiness Index, consumers are more stressed and unhappy than ever before.
Auto1 Joins Deutsche Bank, Allianz in Fintech Car Financing Push (Bloomberg) Rated: A
The three partners together own more than 50 percent in a new company called Auto1 Fintech, that will offer refinancing loans and insurance products to car dealerships buying SoftBank Group Corp.-backed Auto1’s vehicles, co-Chief Executive Officer Hakan Koc said Wednesday in an interview.
TransferWise just partnered with its first big bank (Business Insider) Rated: AAA
UK-based cross-border money transfer company TransferWise has announced a partnership with France’s second-largest bank, BPCE Groupe, that will take effect at the beginning of 2019. Under the partnership, TransferWise will provide international money transfer services for BPCE Groupe’s customers, enabling them to send money in different currencies with TransferWise’s low standard fees.
StartUp Nation Ventures Announces the Israel-Florida Innovation Alliance’s First Call for Proposals (PR Newswire) Rated: A
StartUp Nation Ventures (“SUNV”) in partnership with the Israel Innovation Authority (“IIA”) is proud to announce the initial Call for Proposals through the Israel-Florida Innovation Alliance (“Innovation Alliance”).
The Innovation Alliance was created to support Israeli innovation companies in the discovery and selection of Florida as their destination to establish U.S. headquarters—a gateway for expansion into the U.S., and Latin America markets.
The joint collaboration between SUNV and the IIA establishes a scalable platform to support Israeli companies that have proven the feasibility of their technologies and have a minimal viable product or working prototypes for the U.S and Latin America markets in the following areas:
- Financial Technologies (FinTech), Blockchain, Cybersecurity, Augmented Reality/Virtual Reality (AR/VR) Entertainment, Cryptocurrency, Initial Coin Offerings (ICOs); and
- Tech Innovation related to smart contracts, supply chain, asset verification, certification, identity, health and financial transactions, digital and mobile payments; capital markets & investing, banking & corporate finance, financial platforms, crowdfunding & peer-to-peer lending, and personal financial management.
How Fintech Is Disrupting the Personal Loans Market (The Market Mogul) Rated: A
Lending has experienced one of the biggest changes in the traditional banking marketplace with financial technology startups, or simply, fintechs, introducing disruptive products to consumers. Peer-to-peer lending platforms have been at the forefront in this space, but recent developments suggest more could be about to unfold over the coming years.
Startup lending companies have managed to gain a substantial chunk of the market over the last few years. According to credit analysts, this growth has been driven by personal loans. In a report published by TransUnion late last year, it was established that fintechs continue to disrupt the personal loans market at an alarming rate. In the report titled Fact versus Fiction, the TransUnion study found that fintechs have grown from a mere 1% of personal loan originations in 2010 to one-third of the entire personal loan market in 2017.
The 32% market share for fintechs in the personal loans market was more than the 29% for banks, 24% for credit unions, and 15% for traditional finance. This clearly shows that fintechs are on the path to dominate the entire lending market if the momentum can be maintained.
Here’s why robo-advisors won’t replace human financial advisors (CNBC) Rated: A
Robo-advisors give retail investors access to automated investment strategies, creating portfolios and coming up with an asset allocation that’s based on client data points, including time horizon and risk tolerance.
As convenient as it may be, this technology doesn’t make human financial advisors obsolete, said Joe Duran, founder and CEO of United Capital.
That’s because robo-advisors fail to account for the complexity of financial planning, he says.
Cambridge Centre for Alternative Finance Launches Global Research (Crowdfund insider) Rated: B
Having now tracked alternative finance for five years, and from this relatively short perspective, the Centre has noted an emerging industry that has progressed quickly. Where once there were only handful of early adopters and innovators in a given country, they now see an “altfin” landscape that is growing rapidly, with an exponential number of new platforms driving competition and introducing new products.
In many regions (the EU, UK, USA) the Centre is also seeing their first cases of consolidation, but with continued diversification of products and services to customers.
MICROFINANCE PAPER WRAP-UP: “How Microfinance is Navigating the Fintech Revolution in Africa” (MicroCapital) Rated: AAA
We are also looking to provide insight for microfinance stakeholders into how MFIs can leverage Fintech solutions to remain competitive in the rapidly changing financial landscape in Africa. While it is still too early to present a definitive response to the opportunities and challenges of Fintech, we are
convinced that MFIs will need to adapt to succeed in this increasingly dynamic microfinancing environment in Africa.
Fintech is considered more as an enabler than as a disruptor.
- The MFIs surveyed perceived Fintech more as an opportunity than as a threat to their business (see graph 3: 88% consider it as a (very) great opportunity, while only 35% see a moderate to high threat).
- Few MFIs foresee increasing competition in the future from Fintech-based (B2C) companies. This is explained by the fact that most digital lenders enter relatively easy markets with a target audience that is tech savvy, literate and more urban and where data and technical infrastructure are already available. But to access more informal and rural client segments effectively, these Fintech players face a number of challenges, such as client acquisition, initial high write-offs and limited profitability.
Read the paper in full here.
The Trillion-Dollar Investment Trend You’ve Never Heard Of And How You Can Be A Part Of It (Indonesia Expat) Rated: AAA
You can support Indonesian micro businesses and help them grow and thrive by investing in their loans. A leading, Indonesia-based peer-to-peer lending platform lets you do just that in just a few simple steps. Mekar (PT Mekar Investama Sampoerna) connects you, the investors (also called ‘funders’ in Mekar) from all over the world, with micro businesses in many provinces in Indonesia that are in need of funding.
About 99% of the micro businesses that are seeking loans in Mekar are run by women. Loans in Mekar range from around Rp 2 million (US$ 140) to Rp 8 million. For the last couple of years 99.5% of these borrowers have repaid on time.