- Today’s main news: SoFi partners with Ladder to offer life insurance. LendingClub has a new chief lending officer. BlueVine offers credit to QuickBook customers. Tencent, Alipay lose $1B due to payment rules. CreditEase Fintech Investment Fund ranked 3rd globally.
- Today’s main analysis: PeerIQ Marketplace Lending Loan Performance Monitor, May 2018.
- Today’s thought-provoking articles: JPMorgan, Wells Fargo mobile banking trends. Home price inequality. China’s P2P lenders panic. How Venmo exposes users’ private lives.
- SoFi, Ladder partner on life insurance. SoFi continues to expand, chasing its desire to be the ultimate financial services company to everyone.
- LendingClub hires former GreenSky, Wells Fargo credit officer to be chief lending officer. This is an excellent hire, and an excellent opportunity for Ronnie Momen.
- PeerIQ MPL loan performance monitor. Leads to a download link, but PeerIQ analyses are always worth it.
- JPMorgan Chase, Wells Fargo mobile banking trends. This indicates that mobile banking is on the rise, but it makes me wonder why we don’t see more growth in the specialty digital banks that have started in the U.S. in the last few years.
- Where home price inequality is highest. Very interesting to see that the concentration of home price inequality is in the Mid-Atlantic and the south. It’s lowest in the western states.
- BlueVine offers credit through QuickBooks.
- OnDeck to release Q2 results in August.
- Why financial companies are giving customers a velvet rope.
- KBRA assigns preliminary ratings to Marlette Funding Trust 2018-3.
- CRE lending shifts while nonbank lenders step up.
- Investment trust listings struggle.
- P2P lenders can reduce banking risks.
- Why digital banks enhance UK as global fintech hub.
- P2P property lending.
- BankNorth prepares for launch.
- Swoon adds Klarna Slice It solution.
- P2P lenders panic.
- Tencent, Alipay lose $1 billion through payment rules.
- HKMA, seven banks partner on blockchain-based trade finance platform.
- Pintec files for U.S. IPO.
- CreditEase’s Fintech Investment Fund is ranked third.
- How Venmo exposes private lives. This is alarming.
- Why financial inclusion should be frictionless.
- United States
- Exclusive: SoFi teams up with Ladder to offer revamped life insurance (Fast Company) Rated: AAA
- LendingClub turns to outsider to oversee credit operations (American Banker) Rated: AAA
- PeerIQ MPL Loan Performance Monitor: May 2018 (PeerIQ) Rated: AAA
- OnDeck Announces Date of Second Quarter 2018 Earnings Conference Call (PR Newswire) Rated: A
- JPMorgan Chase, Wells Fargo earnings calls show mobile banking trend (Business Insider) Rated: AAA
- LendingTree Study: Where Home Price Inequality is Highest (Guru Focus) Rated: AAA
- Why financial companies are giving customers the velvet rope treatment (Market Watch) Rated: A
- KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2018-3 (Business Wire) Rated: A
- ‘You get out what you put in’: Fintechs find success in QuickBooks Online’s ecosystem (TearSheet) Rated: AAA
- As CRE Lending Landscape Shifts, Nonbank Lenders Step Up (Forbes) Rated: A
- United Kingdom
- Investment trust listings struggle in 2018 (Financial Times) Rated: A
- Fintechs such as P2P lenders can reduce risks of banking system (Peer2Peer Finance) Rated: A
- Why the UK’s digital banks enhance its status as a global fintech hub (AltFi Opinion) Rated: A
- PROPERTY P2P LENDING: A NEW CHOICE FOR INVESTORS (Raconteur) Rated: A
- UK challenger BankNorth preps for launch (FinTech Futures) Rated: A
- Swoon adds Klarna Slice It solution (Retail Technology Innovation Hub) Rated: B
- China/Hong Kong
- Panic Roils China’s Peer-to-Peer Lenders (Bloomberg) Rated: AAA
- Tencent and Alipay set to lose $ 1bn in revenue from payment rules (Financial Times) Rated: AAA
- HKMA and seven banks to jointly launch blockchain-based trade finance platform in September (South China Morning Post) Rated: A
- Sina-Backed Fintech Platform Pintec Filed For U.S. IPO (Crunchbase News) Rated: A
- European Union
- Klarna prepares for launch of payment card and for expansion (Financial Times) Rated: AAA
- P2P Lender CreditEase’s Fintech Investment Fund Ranked 3rd Globally (Crowdfund Insider) Rated: AAA
- Venmo: how the payment app exposes our private lives (The Guardian) Rated: AAA
- Billion Reasons to bring Financial Inclusion with a frictionless Ecosystem (Global Coin Report) Rated: A
- 5Paisa.com plans to raise ₹103.5 crore via rights issue to enter P2P lending business (Live Mint) Rated: AAA
- Finzy to Trigger Pan-India Channel Tie-ups for P2P Lending Visibility: Amit More (Business World) Rated: A
- Vemanti Group Announces Investment In eLoan, JSC (Vemanti Group) Rated: AAA
- Cadre, partially owned by Kushners, opens Toronto office (Real Estate News Exchange) Rated: B
Exclusive: SoFi teams up with Ladder to offer revamped life insurance (Fast Company) Rated: AAA
Social Finance (SoFi) today began offering life insurance to customers through a partnership with Ladder, a Palo Alto, California, startup. Customers who sign up for the co-branded service will be eligible for fully underwritten term life coverage worth up to $8 million. Most will get a policy quote instantly, sidestepping the hassle of a doctor’s appointment.
SoFi previously offered life insurance to its 500,000-plus members through Protective. But the customer experience was relatively traditional, and the value of connecting the service to SoFi was unclear. With Ladder, SoFi customers will be able to increase or decrease their coverage over time, as their needs change. SoFi, with its knowledge of customers’ overall finances, will be well-positioned to recommend such adjustments
LendingClub turns to outsider to oversee credit operations (American Banker) Rated: AAA
LendingClub has a new chief lending officer.
The San Francisco online lender said in a press release Monday that it had hired Ronnie Momen to oversee its credit strategy, including credit data use, analytics and innovative products. Momen will report directly to Steve Allocca, LendingClub’s president.
Momen previously was chief credit officer at the fintech company GreenSky. He was also chief credit officer for consumer unsecured products at Wells Fargo, where he was in charge of building risk capabilities for the company’s card and private-label products.
PeerIQ MPL Loan Performance Monitor: May 2018 (PeerIQ) Rated: AAA
- Redesigned MPL Loan Performance Monitor tracks the delinquency rates, cumulative losses, cumulative prepays and transition matrices using public marketplace lending data that comprises unsecured consumer loans originated by Marketplace Lenders.
- Show delinquencies (%), cumulative losses (%) and cumulative prepays (%) on this data set, broken out by annual vintages from 2013 – 2017. We further break the performance out by original loan terms of 36 and 60-months.
- The right-hand axes show the outstanding loan balances broken out by either vintages or loan terms, which allows analysis of performance metrics in conjunction with the pool factor.
- Overall, we notice that delinquencies and cumulative losses on newer vintages are higher while cumulative prepayments are lower than those seen on older vintages at the corresponding loan age.
OnDeck Announces Date of Second Quarter 2018 Earnings Conference Call (PR Newswire) Rated: A
OnDeck announced today that it will report financial results for the second quarter of 2018 on Tuesday, August 7, at approximately 7:00 a.m. ET. The company will host a conference call to discuss the results at 8:00 a.m. ET that same day.
The conference call will be webcast live on the company’s Investor Relations website and it can also be accessed toll free by dialing (866) 393-4306 for calls within the U.S., or by dialing (734) 385-2616 for international calls. The Conference ID # is 7156659.
JPMorgan Chase, Wells Fargo earnings calls show mobile banking trend (Business Insider) Rated: AAA
JPMorgan Chase and Wells Fargo announced their Q2 2018 earnings on Friday, which echo the trend of ongoing but decelerating growth in mobile banking as the market matures.
- JPMorgan Chase counts 31.7 million active mobile customers, up 12% from 28.4 million in Q2 2017. That marks a slowdown in growth, both from the 13% annual growth it posted last quarter and from the 15% it posted in Q2 2017.
- Wells Fargo counts 28.9 million total active digital users, 22 million of whom use mobile banking. That demonstrates slow annual growth of just 4% year-over-year (YoY) from its 27.9 million total active digital customers in Q2 2017, as well as a slight uptick from 28.8 million users in Q1 2018, which could indicate recovery of active users in the wake of the bank’s fake account scandal.
This slowdown is likely because of saturation in the digital banking market. Eighty-three percent of consumers use mobile banking, making it nearly ubiquitous, according to Business Insider Intelligence’s Mobile Banking Competitive Edge Report (enterprise only). That saturation, not a decline in interest, is causing firms to add digital customers at a slower rate; they’re seeing customers new to banks rather than those new to mobile offerings.
LendingTree Study: Where Home Price Inequality is Highest (Guru Focus) Rated: AAA
- Detroit, Birmingham, Ala. and Indianapolis have the highest home price inequality in the nation, with a level of inequality twice that of the most equal markets.
- Salt Lake City, Portland, Ore. and Denver have the least home price inequality. The 95th percentile of home values is 3x the value of the 5th percentile in these markets, compared with over 10x the value in the most unequal markets.
- High home prices don’t necessarily mean high inequality. The San Jose and San Francisco metros, with the highest values for the 95th percentile of homes ($2.7 million and $2.3 million respectively) ranked No. 41 and No. 33 out of 50 for inequality.
- The metros with the most inequality tended to have very low prices for the 5th percentile of home values.Of the 10 most unequal markets, none had a 5th percentile home value of $100,000 or more, and averaged $48,500. The most equal markets had a $242,100 average value for the 5th percentile of homes.
- The World Bank lists the income GINI for the U.S. at 0.415 in 2016. Only our top ranked city, Detroit at 0.446, was above this level. So income inequality is greater than home value inequality, a phenomenon also reflected in the fact that wealthier households don’t need to spend as high a portion of their earnings on housing.
Why financial companies are giving customers the velvet rope treatment (Market Watch) Rated: A
More than 1 million people waited to get access to a cryptocurrency trading platform on Robinhood. (The company did not respond to MarketWatch’s request for comment.) And over 100,000 people have signed up in the last year for the waiting list for Petal, a no-fee credit card that has not yet launched, the company said. SoFi Money, a bank account through the lender SoFi, would not disclose an official number on its waiting list, but said it was “multiple tens of thousands.”
KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2018-3 (Business Wire) Rated: A
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Marlette Funding Trust 2018-3 (MFT 2018-3). This is a $402.31 million consumer loan ABS transaction.
This transaction represents the eighth securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.
Preliminary Ratings Assigned: Marlette Funding Trust 2018-3
|Class||Preliminary Rating||Initial Class Principal|
‘You get out what you put in’: Fintechs find success in QuickBooks Online’s ecosystem (TearSheet) Rated: AAA
Intuit essentially runs two different partner platforms: one open and one closed. Intuit’s closed platform generally consists of one to three, hand-picked partners in a few categories. For a handful of lucky lenders, Intuit offers the QuickBooks Financing Platform.
Limited in number, these integration partners were offered early access to the growing QuickBooks community of business owners. In 2016, Intuit tapped BlueVine, a business lender known for its factoring product, to offer credit to QuickBooks customers.
As CRE Lending Landscape Shifts, Nonbank Lenders Step Up (Forbes) Rated: A
Even though CRE loans celebrated a record-breaking year in 2017, according to a Mortgage Bankers Association (MBA) report, the CRE market also started to see slowing property value growth and decelerating property sales. Interest rates, historically low since the financial crisis, have been climbing since 2016. Rising rates increase borrowing costs, sapping returns for property owners and constraining owners’ borrowing capacity.
Direct Lenders Respond
The private debt space has seen tremendous growth as small- and mid-size borrowers abandoned by large banks seek alternative financing solutions. In 2017, private debt assets under management rose to $638 billion — 6% higher than a year earlier — according to a Preqin survey (purchase required) of the space. In addition, aggregate capital raised by the 136 private debt funds closed in 2017 ballooned to a record $107 billion, increasing 10% from 2016.
Lenders Armed With Technology
The strongest direct lenders employ an arsenal of technology-based tools and services to enhance the lending and underwriting process. These tools can trim application times to minutes and loan-decision times to a few days. They can accelerate the due diligence and closing processes for bridge and permanent loans. Better technology can also provide borrowers with a certainty of execution that will help attract more competitive bids for properties.
Investment trust listings struggle in 2018 (Financial Times) Rated: A
Investment trusts raised £230m in June, 65 per cent less than the £654m raised in May and 81 per cent less than the amount raised in June 2017.
Twelve investment companies have come to market in the year to date, raising £1.1bn — 40 per cent less than the £1.7bn raised at the same point in 2017, when nine new trusts listed, but raised far more.
Fintechs such as P2P lenders can reduce risks of banking system (Peer2Peer Finance) Rated: A
PEER-TO-PEER lending has been cited by the Treasury as an example of fintech’s ability to reduce risk in the financial sector by reducing concentration.
The government released a response on Tuesday to the 2017 fiscal risks report, which outlines the actions it is taking to address the 57 risks outlined by the UK’s fiscal watchdog, the Office for Budget Responsibility.
The response noted “the comparatively large and highly concentrated UK banking system” as a financial risk to the UK.
Why the UK’s digital banks enhance its status as a global fintech hub (AltFi Opinion) Rated: A
Progressive regulation, government support, access to talent, to funding and to sophisticated capital markets infrastructure – these are the strengths most commonly cited in explaining London’s emergence as a global fintech hub. But there’s another, less-vaunted reason that is becoming increasingly important.
In part as a result of the factors listed above, London boasts perhaps the world’s most active digital banking sector. Between Monzo, Revolut, Starling, Tandem, Atom, Loot, Curve and Tide – to name but a few – it’s already a very competitive market, featuring at least a few billion dollar businesses and spanning several million customers.
PROPERTY P2P LENDING: A NEW CHOICE FOR INVESTORS (Raconteur) Rated: A
Take peer-to-peer (P2P) lending, for example. By connecting those with money to invest with those looking to borrow, it allows you to target what could amount to a healthy, inflation-beating return, with less of the ups and downs of the stock market. And transaction costs are often minimal, too, with many platforms totally free to use.
Property-backed P2P lending in particular has proven popular because the loans are secured on bricks and mortar. It means, should the borrower be unable to repay the loan, the property can be sold to help pay the debt, ultimately reducing the risk to the investor.
UK challenger BankNorth preps for launch (FinTech Futures) Rated: A
The new bank, based in Leeds in the north of England, is the creation of five founders – all with plenty of experience with the old order and one challenger bank in particular.
Nancy Butler (commercial director) has worked at Atom, Santander and RBS. Craig Iley (chairman) did a stint at Atom; while Jonathan Thompson (CEO) has experience at Santander.
Jon Hogan (director) worked at Atom. In addition, Richard Baker (MD savings) was employed at Atom and Metro.
On its website the bank says it is “aiming to transform the way SME lending is delivered”.
In terms of specifics, it asks for a minimum investment of £25,000 and interested parties can download an investment memorandum. It is also looking for expressions of interest and people can reserve their allocation in its investment round.
Swoon adds Klarna Slice It solution (Retail Technology Innovation Hub) Rated: B
UK-based online furniture retailer, Swoon, is rolling out Klarna’s consumer financing solution, Slice it.
This enables shoppers to buy items and make payments of £500 or more over six months and those of £1,000+ over 12 months.
Panic Roils China’s Peer-to-Peer Lenders (Bloomberg) Rated: AAA
China’s savers are rushing to pull money from peer-to-peer lending platforms, accelerating a contraction of the $195 billion industry and testing the government’s ability to maintain calm as it cracks down on risky shadow-banking activities.
In some cases, savers are turning up at the offices of P2P operators to demand repayment, spooked by reports of defaults, sudden closures and frozen funds. At least 57 platforms have failed in the past two weeks, adding to 80 cases in June, the biggest monthly tally in two years, according to Shanghai-based Yingcan Group.
Tencent and Alipay set to lose $ 1bn in revenue from payment rules (Financial Times) Rated: AAA
New rules set by China’s central bank have the potential to wipe out more than $1bn in revenue for Alipay and Tencent; third party payment groups now need to hold all customer funds in reserve.
Previously payments groups were able to invest customer funds at banks to earn interest; the PBoC has been slowly implementing changes requiring 20 percent of funds to be held, then 50 percent and now 100 percent; the move is meant to protect fraud and protect customers according to the PBoC.
The changes do not affect mutual funds like Yu’E Bao.
HKMA and seven banks to jointly launch blockchain-based trade finance platform in September (South China Morning Post) Rated: A
The Hong Kong Monetary Authority and seven local lenders will launch a trade finance platform using blockchain technology in September, reflecting efforts by the city to bolster fintech development and close the gap with regional rival Singapore.
Lenders taking part in the project include HSBC and Standard Chartered Bank, Bank of East Asia, Australia and New Zealand Banking Group Limited, Hang Seng Bank, and DBS Bank, according to a statement.
Sina-Backed Fintech Platform Pintec Filed For U.S. IPO (Crunchbase News) Rated: A
Pinduoduo made waves this week after aiming for a $1.63 billion IPO in the United States. The Chinese company is only three years old. Following the Pinduoduo news, two-year-old Sina-backed fintech startup Pintec also filed for a United States-based IPO, hoping to raise $70 million.
The Beijing-based startup is a technology platform that provides financial services that connect businesses to their end users. Its software covers installment loans, personal loans, SME loans, wealth management, and insurance brokerage services. One of its most popular offerings is online lending, which facilitated RMB 3.9 billion loans for over 1.1 million unique borrowers by the end of 2017, per its filing.
Klarna prepares for launch of payment card and for expansion (Financial Times) Rated: AAA
Not many companies end up inspiring their own verb like Google. But there are small signs, at least in the UK, that it is happening to Klarna, the Swedish financial technology start-up.
“Klarna it,” a young woman urges her friend on Twitter who is hesitating about a purchase with online retailer Asos. Asos offers Klarna’s “pay later” function, which gives shoppers 30 days to settle their purchases and allows them to return items without ever having paid for them.
P2P Lender CreditEase’s Fintech Investment Fund Ranked 3rd Globally (Crowdfund Insider) Rated: AAA
CreditEase, a China based peer to peer lending platform, has been recognized for its Fintech venture fund by a CB Insights report. According to the report, the CreditEase Fintech Investment Fund is number three in the world when it comes to ranking the most active Fintech VCs in the world.
While CreditEase started life as an online lender, the company has morphed into a Fintech conglomerate providing robo-advisory services, crowdfunding, Insurtech and more. Additionally, CreditEase, and their Wealth Management Fund of Funds, is a limited partner in many Fintech VCs.
The Fund invests in five subcategories within Fintech: Lending, Payments, Personal Finance / Wealth Management, Enterprise Solutions, and Insurtech.
Venmo: how the payment app exposes our private lives (The Guardian) Rated: AAA
Anyone can track a Venmo user’s purchase history and glean a detailed profile – including their drug deals, eating habits and arguments – because the payment app lacks default privacy protections.
This was the finding of a Berlin-based researcher, Hang Do Thi Duc, who analysed the more than 200 million public Venmo transactions made in 2017. Her aim was to highlight the privacy risk from using a seemingly innocuous peer-to-peer app.
By accessing the data through a public application programming interface, Do Thi Duc was able to see the names of every user who hadn’t changed their settings to private, along with the dates of every transaction and the message sent with the payment. This allowed her to explore the lives of unsuspecting Venmo users and learn “an alarming amount about them”.
Billion Reasons to bring Financial Inclusion with a frictionless Ecosystem (Global Coin Report) Rated: A
Globally, 1.7 billion adults remain unbanked, which means more than one-third of the world’s population does not have formal financial services. It is believed that bringing unbanked adults and businesses into the formal financial platform could generate about $380 billion in new revenues for banks.
LALA world is hoping to create a financial ecosystem for all, where services including low-cost remittances, cashless payments, peer-to-peer lending, fiat lending, etc.prevail under one umbrella. It is opening the door to regulated financial services stating that it has great potential to protect up to $42 billion from what it calls “the grey market.”
LALA world has the vision to reach people with limited resources through blockchain, without needing to understand the underlying technology.
5Paisa.com plans to raise ₹103.5 crore via rights issue to enter P2P lending business (Live Mint) Rated: AAA
Discount broker 5Paisa.com is planning to raise about ₹103.5 crore through a rights issue to enter the peer-to-peer (P2P) lending business, said chief executive Prakarsh Gagdani in an interaction with Mint.
5Paisa.com is a discount broker, which was listed in November 2017. The company is backed by the IIFL group, which is engaged in distribution of financial services and broking. It plans to use the funds for investing in improvisation of technology platform, scaling up its business operations and invest in alternative businesses.
Finzy to Trigger Pan-India Channel Tie-ups for P2P Lending Visibility: Amit More (Business World) Rated: A
Bangalore-based finzy is the premier peer-to-peer (P2P lending solution in India. It connects borrowers with investors and makes the entire process simple and easy. finzy makes the entire borrowing process simple and user friendly. You can get your loan funded in as little as 48 hours.
Amit More, founder and CEO, finzy, tells us more. Excerpts:
Who are your borrowers, typically? Also, how do you determine profiles of lenders?
Around 80 percent of our borrowers are salaried and 20 percent are self-employed. Contrary to the perception that the P2P industry is the lender of last resort and only cater to borrowers not served by banks and NBFCs, we, at finzy, offer loans, starting at a best-in-class rate of 10.99 percent per annum.
Vemanti Group Announces Investment In eLoan, JSC (Vemanti Group) Rated: AAA
Vemanti Group, Inc. (OTC PINK:VMNT), a technology-driven holding company, today announced that it has entered into a definitive agreement to take 20% equity interest in eLoan, JSC (“eLoan”), a Fintech company based in Vietnam whose focus is to build a decentralized ecosystem of financial services starting with its business-centric online Peer-to-Peer (P2P) lending marketplace.
Based in Ho Chi Minh City, Vietnam, eLoan (http://eloan.vn) is a P2P lending marketplace that match investors with borrowers, allowing anyone to lend money directly to small and medium-sized enterprises (SMEs). Established in December 2017, the company is operational and post-revenue.
eLoan is the brainchild of CEO Trung Vo, a respected C-level banking veteran, and CTO Tom Tran, a seasoned Internet commerce executive and serial entrepreneur. eLoan is the first P2P lending company in Vietnam focusing purely on serving SME clients with short-term loans. Businesses can borrow up to $250K for up to 6 months. The company determines the loan rate based on risk category and loan term. Unlike traditional banks, the approval process is much quicker with decision made in as little as 24 hours. Whole or fractional loans are participated by individual and institutional investors. Investors make money from the interest charged on participated loans which currently stands at 12%-20% annually while eLoan earns revenues by charging borrowers an origination fee on each funded loan. There is no fee charged to the investors.
Cadre, partially owned by Kushners, opens Toronto office (Real Estate News Exchange) Rated: B
Cadre, an online startup which makes commercial real estate investments, recently expanded into Canada through the opening of a Toronto office focused exclusively on software product development.
The Canadian office of the fintech firm is strictly for research, engineering, and product development and “we are not raising money or signing deals in the area,” says Raj Singh, director of product and head of Canadian operations at Cadre. Singh joined Cadre in December to run the Toronto office.