- Today’s main news: Barclays buys stake in MarketInvoice. N26, Revolut are coming to America. Zopa raises 44M GBP for new bank. China private equity funds suffer. Linked Finance ink 10M Euro in loans in Q2.
- Today’s main analysis: The states where payday lending charges almost 700 percent interest.
- Today’s thought-provoking articles: PeerIQ’s MPL Securitization Tracker. Debut of the OCC Fintech Charter. LendingTree’s rebrand. How Fintex Capital enabled Banco BNI Europa to invest in Upgrade Loans.
- Can N26, Revolut conquer America? The presence of N26 and Revolut in the U.S. would up the competitive game. They’ve proven themselves in Europe, but the U.S. market for digital banking hasn’t taken off. Can the European challenger banks entice Americans to get on board? It will be interesting to watch.
- PeerIQ’s MPL Securitization Tracker for Q2. Q2 2018 was a record quarter for marketplace lending securitizations. My guess is, Q3 will top that. This will be the year for securitizations.
- Debut of the Office of the Comptroller of the Currency’s (OCC) Fintech Charter. This isn’t exactly breaking news (it happened last week), but everybody’s talking about it.
- Less is more for OCC’s financial inclusion plans.
- Be wary of innovating another financial crisis.
- Will fintech companies enter the OCC door?
- Does a bank charter still make sense for Square?
- The map that shows which states charge 700% interest on payday loans. Payday loans are still popular in many states, and several states are waging war on the practice. If online lenders can present a reasonable alternative, they can help people applying for these loans and make legislation unnecessary.
- LendingTree’s rebrand is not barking up the wrong tree. A rebrand can often pump new juice into a business.
- Elevate Credit expected to register $203.49 million in sales this quarter.
- Proposed payday alternative loans are unattractive to credit unions.
- Why real estate deals are the big success story in equity crowdfunding.
- A moratorium on industrial loan charter applications?
- Lenders One names new CEO.
- Barclays buys minority stake in MarketInvoice.
- Zopa raises 44 million GBP for new bank.
- Wonga investors sink 10 million GBP into payday lender.
- Can new breed of robo-advisors get your money?
- Private equity funds suffer wae of closures.
- P2P CEO hits Forbes high achievers list while under criminal investigation.
- Qudian distances itself from other P2P lenders.
- China lends trillions to SMEs, farmers.
- Linked Finance logs 10 million euros in loans in Q2. Congratulations. Great achievement.
- Banco BNI Europa launches Spanish equity release with Optima Mayores.
- Altisource names new COO of origination solutions.
- International: How Fintex Capital enabled Banco BNI Europa to invest in Upgrade Loans.
- India: Regulations shrink P2P lending industry.
- India: Cashkumar sees huge potential in online lending for short-term credit.
- Japan: Samurai Asset Finance offers loans collateralized by digital assets.
- Singapore: Real estate crowdfunding with cryptocurrencies.
- IMDEX ICO: Decentralized crypto exchange and banking (including lending).
- United States
- Will Europe’s fintech banks conquer North America? (AltFi), Rated: AAA
- PeerIQ’s MPL Securitization Tracker for 2Q2018 (PeerIQ), Rated: AAA
- Debut of the OCC’s FinTech Charter + Supervisory Standards (PeerIQ), Rated: AAA
- Less is more for OCC’s fintech financial inclusion plans (American Banker), Rated: A
- Fintech charter: Be wary of innovating into another crisis (The Hill), Rated: A
- With OCC’s door officially open, will fintechs enter? (American Banker), Rated: A
- Does a Bank Charter for Square Still Make Sense? CEO Jack Dorsey Thinks So (Bank Innovation), Rated: A
- This map shows the states where payday loans charge nearly 700 percent interest (CNBC), Rated: AAA
- This Rebrand Is Not Barking Up The Wrong Tree (Forbes), Rated: AAA
- $ 203.49 Million in Sales Expected for Elevate Credit Inc (ELVT) This Quarter (Fairfield Current), Rated: A
- NCUA’s Proposed Payday Alternative Loans Unattractive to CUs: Trades (CU Times), Rated: A
- Why Real Estate Deals, Not Startups are the Big Success Story of Equity Crowdfunding (Crowdfund Insider), Rated: A
- ICBA calls for a new FDIC moratorium on industrial loan charter applications (American Banker), Rated: A
- Lenders One Names Michael Kuentz as Chief Executive Officer (Altisource), Rated: A
- United Kingdom
- Barclays takes stake in SME lender MarketInvoice (Banking Tech), Rated: AAA
- P2P lender Zopa raises £44m to fund new bank (Financial Times), Rated: AAA
- Wonga investors inject £10M so cash-strapped payday lender can fund claims (TechCrunch), Rated: A
- Can this new breed of robo-advisers help you take control of your money? (The Telegraph), Rated: A
- China private equity funds suffer wave of closures (Financial Times), Rated: AAA
- Chinese P2P chief Yao Kunjie makes the Forbes high achievers list while under investigation (SCMP), Rated: A
- Qudian Tries to Distance Itself from Other P2P Lenders (Capital Watch), Rated: A
- China lends trillions to SMEs, farmers as part of inclusive finance push (Global Times), Rated: A
- European Union
- €10m loans mark record quarter for Linked Finance (Independent), Rated: AAA
- BANCO BNI EUROPA LAUNCHES EQUITY RELEASE IN SPAIN WITH ÓPTIMA MAYORES (Fintech.Finance), Rated: A
- Altisource Names Justin Vedder as Chief Operating Officer of Origination Solutions (Altisource), Rated: B
- How Fintex Capital Enabled the $ 30M Banco BNI Europa Investment in Upgrade Loans (Lend Academy), Rated: AAA
- Regulations Shrink India’s Peer-To-Peer Lending Industry (Bloomberg Quint), Rated: AAA
- Cashkumar foresees huge potential in online lending for short-term credit (The Hindu Business Line), Rated: A
- Japan’s Samurai Asset Finance Offers Loans Collateralized by Digital Assets (Bitcoin Exchange Guide), Rated: A
- Crypto for real estate (Business Times), Rated: A
- IMDEX ICO (IMDX Token): Decentralized Exchange & Crypto Banking Platform? (Bitcoin Exchange Guide), Rated: B
Will Europe’s fintech banks conquer North America? (AltFi), Rated: AAA
Revolut and N26 will be launching in the US soon, but what sort of market will they be entering? How are local banks adapting their offerings to suit younger users? And what will be the impact of the newly-announced bank charters for fintechs?
PeerIQ’s MPL Securitization Tracker for 2Q2018 (PeerIQ), Rated: AAA
- Twelve marketplace lending securitizations priced this quarter totaling $5.0 Bn, the highest level of quarterly issuance, representing 36% growth YoY. To date, cumulative issuance equals $38.4 Bn across 126 deals.
- We observed spreads widening and yields rising on new issuance. Weighted average all-in yields on consumer deals increased from 2.9% to 4.2% QoQ, and on student deals from 3.0% to 4.5% QoQ.
- All deals issued this quarter except SoFi’s student loan passthrough securitizations were rated.
- Tranches continue to get upgraded. So far, ratings’ agencies have upgraded 51 consumer MPL tranches and 67 student MPL tranches that are outstanding.
- Citigroup, Deutsche Bank, and Credit Suisse continue to top the issuance league tables with 54% of MPL ABS transaction volume.
- Freedom Financial issued its inaugural deal and OnDeck returned to the market. SoFi issued over $2 Bn in student loan passthrough securitizations.
Debut of the OCC’s FinTech Charter + Supervisory Standards (PeerIQ), Rated: AAA
The US economy added 157k jobs in July and the unemployment rate dropped to 3.9%. Wage growth came in strong at 2.7%, potentially fueling inflation down the road and keeping the Fed on its stated rate hike path.
OCC Asserts its Authority and is Open to Accepting SPNB Charters
Immediately following the report, Joseph Otting, Comptroller of the Currency, announced that the OCC would start accepting applications from “fintech companies that are engaged in the business of banking but do not take deposits.”
An SPNB can engage in a limited range of banking or fiduciary activities like credit card operations, taking deposits, paying checks, lending money, community development, or cash management activities. The policy is a significant development as companies with the Fintech charter would be able to perform banking activities like lending and payment processing nationally.
Who are the Likely Winners and Losers?
The long-term winner of the charter is the US consumer who will benefit from greater competition, innovation, and access to credit. Payments companies that seek to compete with Visa/Mastercard also stand to benefit. Lenders that qualify for the charter may also have a competitive advantage. Payments arms of firms like Google, Apple, Amazon and PayPal would fit the profile, as well as large non-bank lenders that can demonstrate sustainable profitability de-risked their business models. Fintechs that have liquidity, funding, or going-concern risks will struggle to obtain charters.
Less is more for OCC’s fintech financial inclusion plans (American Banker), Rated: A
The Office of the Comptroller of the Currency is threading a tricky needle.
It has affirmed that it plans to evaluate fintech charter applicants based on their fair lending efforts, but it’s pulled back on specifics for how that process might work. That has made some consumer groups nervous.
The OCC published an updated version of its licensing manual supplement for fintechs on July 31, in connection with an announcement that it’s begun accepting applications for fintech charters.
Fintech charter: Be wary of innovating into another crisis (The Hill), Rated: A
But before we allow fintech firms to bound over the regulatory mound, it’s important to take a hard look at why we regulate the financial services sector so thoroughly to begin with.
Many also claim that fintech will bank the unbanked and lead to financial inclusion. The only thing standing in the way of all of this change and disruption, many claim, is overbearing government regulation.
With OCC’s door officially open, will fintechs enter? (American Banker), Rated: A
Fintech companies now have the federal option they have long sought after the Office of the Comptroller of the Currency green-lighted firms to apply for a special-purpose bank charter. But winning OCC approval on charter bids will not be a walk in the park.
One day after the OCC announcement, some fintech firms signaled clear interest in the charter. But the agency’s decision also prompted a slew of additional questions, including whether firms would be able to meet the regulator’s tough criteria, and whether state regulators would continue to fight
Does a Bank Charter for Square Still Make Sense? CEO Jack Dorsey Thinks So (Bank Innovation), Rated: A
POS payments provider Square is still interested in pursuing a bank charter, but how? It may be more challenging given that the company will be paying more attention to its customer-facing prepaid products like Square Cash and its Cash Card, according to CEO Jack Dorsey in the company’s earnings call yesterday.
Some short-term loans cost over 20 times more in interest than the average credit card. And yet one in 10 Americans have used them.
In the U.S. today, these loans are a $9 billion business. In the past two years, 11 percent of U.S. adults say they’ve taken out a payday loan, according to a recent survey of approximately 3,700 Americans that CNBC Make Itperformed in conjunction with Morning Consult.
This Rebrand Is Not Barking Up The Wrong Tree (Forbes), Rated: AAA
For LendingTree, a leading online loan marketplace, it had been nearly ten years since they last made any changes to their logo. However, they recently underwent a brand refresh that offered some best practices for other brands potentially considering the same move.
The focus is now on letting consumers know that LendingTree is there to support them and provide assistance with what they term life’s ‘meaningful moments.’ This might entail a personal loan to consolidate high-interest credit card debt. Or, it could be a student loan to cover the cost of higher education. Besides providing for these moments, LendingTree also ensures that it provides the choice, education, and support that is often missing from what banks and financial institutions offer.
$ 203.49 Million in Sales Expected for Elevate Credit Inc (ELVT) This Quarter (Fairfield Current), Rated: A
Equities analysts expect Elevate Credit Inc (NYSE:ELVT) to announce sales of $203.49 million for the current fiscal quarter, according to Zacks. Two analysts have made estimates for Elevate Credit’s earnings, with the lowest sales estimate coming in at $201.00 million and the highest estimate coming in at $205.97 million. Elevate Credit reported sales of $172.85 million in the same quarter last year, which indicates a positive year-over-year growth rate of 17.7%. The business is scheduled to announce its next earnings report on Monday, October 29th.
NCUA’s Proposed Payday Alternative Loans Unattractive to CUs: Trades (CU Times), Rated: A
A new payday alternative program proposed by the NCUA is unlikely to convince many more credit unions to offer short-term loans because the loan terms are too prescriptive, credit union trade groups said.
Why Real Estate Deals, Not Startups are the Big Success Story of Equity Crowdfunding (Crowdfund Insider), Rated: A
In the year after Title III went into effect, startups received only $38 million in equity crowdfunding, according to Bloomberg—an amount that amounted to “a rounding error” in the larger system.
Before the JOBS Act, there were three formidable barriers to widespread individual investment in commercial real estate.
- Limited access to deal flow
- High minimums
Online crowdfunding has eliminated all three barriers
To begin with, the process is far more transparent and accessible, with minimum investments dropping to as low as $10,000.
ICBA calls for a new FDIC moratorium on industrial loan charter applications (American Banker), Rated: A
Renewing longstanding opposition to industrial loan charters, the Independent Community Bankers of America urged the Federal Deposit Insurance Corp. to impose a two-year moratorium on such applications.
The trade group also pressed the FDIC to reject an application from the student loan servicer Nelnet for an industrial loan charter.
Lenders One Names Michael Kuentz as Chief Executive Officer (Altisource), Rated: A
Lenders One Cooperative, a national alliance of independent mortgage bankers, announced that Michael Kuentz has been promoted to the role of Chief Executive Officer of Lenders One by its Board of Directors. Mr. Kuentz previously held the title of President. In his new role, he will assume responsibility for Lenders One’s day-to-day operations and strategic execution as well as continue to lead and manage the cooperative’s sales effort.
Barclays takes stake in SME lender MarketInvoice (Banking Tech), Rated: AAA
Details were not disclosed, because we live in the age of secrecy, but the bank says the deal is a key part of its plans to invest in new business models for growth, and MarketInvoice’s ambition to broaden its reach across the UK.
P2P lender Zopa raises £44m to fund new bank (Financial Times), Rated: AAA
Zopa has raised £44m in a new funding round to aid its expansion into traditional banking as its traditional peer to peer business comes under pressure from regulators.
Wonga investors inject £10M so cash-strapped payday lender can fund claims (TechCrunch), Rated: A
Yesterday Sky News reported that those same two, Accel Partners and Balderton Capital, are among a group of Wonga investors that have agreed to inject a further £10M (~$13M) into the business to help fund compensation claims related to its past censured practices.
Can this new breed of robo-advisers help you take control of your money? (The Telegraph), Rated: A
Savers have historically been forced to choose between picking and managing their own investments, paying for financial advice, or, recently, handing their money over to a “robo adviser” to do it for them.
China private equity funds suffer wave of closures (Financial Times), Rated: AAA
Chinese alternative asset managers have become the latest casualty of the country’s crackdown on debt and financial risk, with a record number of private equity and hedge funds dissolving in recent months as new regulations limit their fundraising.
In the first six months of this year, the Asset Management Association of China (Amac) — a government-controlled industry body — “lost contact” with 163 private fund institutions, more than 70 per cent of the total for which contact was lost for 2017.
Chinese P2P chief Yao Kunjie makes the Forbes high achievers list while under investigation (SCMP), Rated: A
Yao Kunjie, 28, is the CEO of peer-to-peer lending platform Beimi Wallet and was named on the financial sector list on Thursday.
Forbes magazine puts out regional lists of high achievers born after January 1, 1988, in 20 sectors every year.
The announcement came just a week after Shanghai police said Yao had been detained on July 13 on suspicion of “illegally absorbing public funds”, without elaborating, in a statement last Saturday.
Qudian Tries to Distance Itself from Other P2P Lenders (Capital Watch), Rated: A
Qudian Inc. (NYSE: QD) defended its business model Friday, saying that it is not undergoing the same “[volatility] and uncertainty” suffered by China’s broader peer-to-peer industry.
The announcement sent the company’s stock up nearly 5 percent mid-afternoon to $7.59 per American depositary share.
China lends trillions to SMEs, farmers as part of inclusive finance push (Global Times), Rated: A
For example, banks’ balance of loans to farmers stood at 30.95 trillion yuan ($4.53 trillion) as of the end of 2017, up 48.2 percent from 2013. The balance of lending to small and micro-sized businesses stood at 34.74 trillion yuan in 2017, up 73.1 percent from 2013, according to Feng.
€10m loans mark record quarter for Linked Finance (Independent), Rated: AAA
Linked Finance, an Irish peer-to-peer (P2P) lending platform, recorded its strongest quarter to date in the three months to the end of June, facilitating over €10.1m to Irish SMEs.
This followed on from a strong start to 2018, with total lending for the year now more than €18.7m, up 65pc on the same period in the previous year.
The increase in lending is down to both the volume and size of loans. The number of loans that went live on the platform rose by 39pc in the period to 335, with average loan size up 19pc to almost €56,000.
BANCO BNI EUROPA LAUNCHES EQUITY RELEASE IN SPAIN WITH ÓPTIMA MAYORES (Fintech.Finance), Rated: A
Banco BNI Europa launches equity release in Spain in partnership with Óptima Mayores, the Spain’s leading financial advisor specialized in this segment.
Altisource Names Justin Vedder as Chief Operating Officer of Origination Solutions (Altisource), Rated: B
Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ: ASPS), a leading provider of services and technologies to the mortgage and real estate industries, today announced the appointment of Justin Vedder as Chief Operating Officer, Origination Solutions.
How Fintex Capital Enabled the $ 30M Banco BNI Europa Investment in Upgrade Loans (Lend Academy), Rated: AAA
In reality BNI Europa did not actually purchase Upgrade loans, they invested in a privately placed bond that was backed by Upgrade loans. This bond was issued by Fintex Capital.
Regulations Shrink India’s Peer-To-Peer Lending Industry (Bloomberg Quint), Rated: AAA
When the Reserve Bank of India first brought out a discussion paper on peer-to-peer lending in April 2016, it said that there were 30 such start-ups in the country. It then proceeded to fashion a set of rules for the nascent but fast growing sector and came out with regulations in October 2017. Key among them was a requirement that peer-to-peer lenders register with the RBI.
Nine months since, only five of these lenders are registered in the ‘NBFC-P2P’ category, according to RBI data available until June 30, 2018.
- Fairassets Technologies India Pvt. Ltd.
- Fincquare Fintech Pvt. Ltd.
- Bridge Fintech Solutions Pvt. Ltd.
- Bigwin Infotech Pvt. Ltd.
- OHMY Technologies Pvt. Ltd.
Cashkumar foresees huge potential in online lending for short-term credit (The Hindu Business Line), Rated: A
Peer-to-peer (P2P) lending company Cashkumar, which offers short-term credit to borrowers, foresees huge potential to lend in the online space.
At present, the company services around 200 loans a month . It is targeting to service about 80 loans a day in the next six months, besides expanding operations to 20 cities by next year.
Japan’s Samurai Asset Finance Offers Loans Collateralized by Digital Assets (Bitcoin Exchange Guide), Rated: A
A Japanese firm listed on the Tokyo Stock Exchange recently unveiled loans that can be collateralized by three digital assets, namely Bitcoin, Bitcoin Cash and Ethereum. As of now, the maximum amount borrowable is capped at 300 million yen (approximately $2.7 million).
Currently, the loan limits range from a minimum of 20 million yen ($180,000) to a maximum of 300 million yen ($2.7 million). The default repayment period is twelve months, although there are provision for extensions. The interest rates for these loans start from 7% to 155 annually, inclusive of commissions and extensions charges. If a lender fails to repay the loan in time, they will liable to a delinquency charge of 20% per year.
Crypto for real estate (Business Times), Rated: A
WE believe, in time, all real estate assets will reside on the blockchain – this is the grand vision of real estate entrepreneurs Julian Kwan and Alice Chen. The married couple – who co-founded Singapore-based real estate crowdfunding platform InvestaCrowd – has created a new product: RealFuel,
IMDEX ICO (IMDX Token): Decentralized Exchange & Crypto Banking Platform? (Bitcoin Exchange Guide), Rated: B
It’s difficult to ascertain much information about the people behind IMDEX. The company appears to have some connection to a Korean company called Techton Soft that was established in 2016. The Techton Soft website indicates that the company specializes in investment trading solutions, peer-to-peer lending, artificial intelligence, and cryptocurrency exchange. The Techton site states that the company has 10 employees, making it a rather small operation, and lists a man named SangHyun Kim as the CEO.