- Today’s main news: Upgrade gets $62M injection from CreditEase Fintech Investment Fund. Elevate Credit issues earnings results. Wonga on the brink of collapse.
- Today’s main analysis: Calculating spreads for valuation, competition, and opportunity in unsecured lending (A MUST-READ).
- Today’s thought-provoking articles: Lenders who shunned personal loans are now competing for them. The sophisticated algorithms behind P2P lending. 2018 Supermoney Mortgage Industry Study. Top 10 P2P lending startups in India.
- CreditEase Fintech Investment Fund drops $62 million into Upgrade. Renaud Laplanche is making a huge comeback with Upgrade. This is a significant achievement.
- Calculating spreads for valuation, competition, and opportunity in unsecured lending. This is an absolute must-read from PeerIQ. Outstanding analysis.
- Elevate Credit issues earnings results. Elevate is looking good, but the estimates are looking better.
- Lenders how shunned personal loans are now competing for them. Business cycles change. Personal loans were risky, now they’re in high demand. Go where the business is.
- The sophisticated algorithms behind P2P lending. The focus here is LendingClub’s algorithms, primarily.
- 2018 Supermoney Mortgage Industry Report. This is a must-read report for anyone in the mortgage industry.
- Marlette Funding CEO is a straight shooter with a sense of humor.
- TransUnion CreditVision Link Short-Term Risk Score gives alt lenders better predictive power.
- Unity Bank uses Finastra Total Lending solution.
- Wonga is on the brink of collapse. Could the company be in for a buy-out?
- Welendus secures 850,000 GBP through Seedrs.
- Victory Park Capital fund continues strong performance.
- Assetz Capital supports construction of over 500 homes during the summer.
- Indiegogo allows companies to sell security tokens.
- The advantages of blockchain technology in P2P lending.
- China: What to expect from Yirendai’s earnings report.
- India: Top 10 P2P lending companies in India.
- China: P2P crypto lending gains popularity.
- India: NBFCs to see 35%-40% increase in hiring over the next year.
- Kenya: Lendable gets Sh45m grant.
- Asia: Partnerships push Pi Pay to next level.
- India: Shubh Loans raises $4.2 million.
- Indonesia: OJK to issue fintech regulation.
- Asia: TRAXION wants to set up in Mindinao.
- United States
- Consumer Credit Platform Update Secures $ 62 Million Through Series C Funding Round Led By CreditEase Fintech Investment Fund (Crowdfund insider) Rated: AAA
- Calculating Spreads for Valuation, Competition & Opportunity in Unsecured Lending (PeerIQ), Rated: AAA
- Elevate Credit (ELVT) Issues Earnings Results (Fairfield Current) Rated: AAA
- Lenders Shunned Risky Personal Loans. Now They’re Competing for Them. (Wall Street Journal) Rated: AAA
- The sophisticated algorithms behind peer-to-peer money lending (Silicon Angle) Rated: AAA
- 2018 Supermoney Mortgage Industry Study (SuperMoney) Rated: AAA
- At Marlette Funding, CEO Jeffrey Meiler a ‘straight shooter’ with a sense of humor (Delaware Online) Rated: A
- Alternative Lenders to Gain Greater Predictive Power with TransUnion CreditVision Link Short-Term Risk Score (Transunion) Rated: A
- Unity Bank streamlines lending processes with Finastra (Finastra) Rated: B
- United Kingdom
- UK’s biggest payday lender Wonga ‘on the brink of collapse’ (The Guardian) Rated: AAA
- Overfunding: P2P Lender Welendus Secures £850,000 Funding Target Through Latest Seedrs Round (Crowdfund Insider) Rated: A
- Assetz Capital supports construction of 517 homes during summer (Development Finance Today) Rated: B
- Victory Park Capital fund continues strong performance (Peer2Peer Finance) Rated: A
- Here’s what to expect from Yirendai’s earnings report (Markets Insider) Rated: AAA
- Peer-to-Peer Cryptocurrency Lending Gains Popularity in China (Coin Geek) Rated: A
- Crowdfunder Indiegogo allows companies to sell security tokens (Coin Geek) Rated: AAA
- What are the Possible Advantages of Blockchain Technology in P2P Lending? (Financial Report 24) Rated: A
- European Union
- TRAXION’s Blockchain Technology to help in building one Mindanao (Davao Today) Rated: A
- List of top 10 P2P lending startups in India (The Indian Wire) Rated: AAA
- NBFCs to see up to 35-40% rise in hiring in next 1 yr, say experts (Times of India) Rated: A
- Fintech startup Shubh Loans raises $ 4.2m from Saama Capital, others (Deal Street Asia) Rated: A
- Partnerships pushing Pi Pay to next level (Southeast Asia Globe) Rated: A
- OJK issues regulation on financial technology (The Jakarta Post) Rated: A
- Kenyan fintech lender gets Sh45m grant (Business Daily) Rated: AAA
Consumer Credit Platform Update Secures $ 62 Million Through Series C Funding Round Led By CreditEase Fintech Investment Fund (Crowdfund insider) Rated: AAA
CreditEase FinTech Investment Fund (CEFIF), the U.S.-based Fintech Fund of the Chinese fintech CreditEase, recently led $62 million Series C round investment for consumer credit platform, Upgrade.
Calculating Spreads for Valuation, Competition & Opportunity in Unsecured Lending (PeerIQ), Rated: AAA
US stocks look set to enter the longest-ever bull market. The current bull market at 3,453 days since the low in March 2009 is now tied with the 1990-2000 bull market, and is on pace to exceed that target.
Competition – and Opportunity – in Unsecured Lending
Competition for personal loans is heating up. Mailings soliciting personal loan borrowers exceeded credit card mailings in six of the last seven months, even though the credit card industry is almost 6 times larger. Goldman Sach’s Marcus has been one of the new competitors having originated nearly $4 Bn in personal loans since their launch – approximately a $2 Bn annual run-rate – smaller than Lending Club and others, and likely tempering their ambitions due to late-cycle credit conditions. Marcus recently launched in the UK with personal loans and savings accounts.
The price of a loan is the present value of the loan’s future cashflows (after accounting for losses and prepayments), discounted by an appropriate discount rate:
Calculating the Spread at Origination
The SATO is a zero-volatility spread over the benchmark swap curve that equates the present value of the cashflows to the market-observed price. Since the benchmark is considered a risk-free rate, SATO is effectively a credit spread due to the uncertainty of future cash flows.
Elevate Credit (ELVT) Issues Earnings Results (Fairfield Current) Rated: AAA
Elevate Credit (NYSE:ELVT) announced its quarterly earnings data on Monday, July 30th. The company reported $0.07 EPS for the quarter, topping the Zacks’ consensus estimate of $0.05 by $0.02, MarketWatch Earningsreports. Elevate Credit had a return on equity of 12.68% and a net margin of 0.14%. The business had revenue of $184.38 million during the quarter, compared to the consensus estimate of $186.46 million. During the same period in the previous year, the company posted $0.08 earnings per share. The business’s revenue for the quarter was up 22.5% on a year-over-year basis. Elevate Credit updated its FY18 guidance to $0.55-0.90 EPS.
Lenders Shunned Risky Personal Loans. Now They’re Competing for Them. (Wall Street Journal) Rated: AAA
Lenders are stepping up offers of consumer loans with few strings attached, often to individuals with poor credit histories they all but ignored in the years after the financial crisis.
The offers promise a way to help pay down other debts or fund home renovations or vacations, fueling concerns that customers could overextend themselves. “Take control of your finances,” says one mass mailing. “Your dream can come true,” says another.
American Express Co. , Goldman Sachs Group Inc., GS -0.52% LendingClub Corp. LC -1.54%and Social Finance Inc. are among those behind an onslaught of unsolicited mailings offering unsecured loans, known as personal loans, as large as $100,000. In the first half of this year, lenders mailed a record 1.26 billion solicitations for these loans, according to market-research firm Competiscan. The second quarter marked the first period that lenders mailed out more offers for personal loans than credit cards, a much bigger market, according to research firm Mintel Comperemedia.
The sophisticated algorithms behind peer-to-peer money lending (Silicon Angle) Rated: AAA
One of the companies that has capitalized on growing consumer interest in P2P is LendingClub Inc. The company has issued $38 billion in loans since its founding in 2007, and the firm has built a sophisticated technology platform on which to evaluate risk and put investors and borrowers together.
LendingMatch is essentially the firm’s secret sauce. The system relies on algorithms that can weigh a number of key factors, including an investor’s risk tolerance and the borrower’s credit score, to determine a suitable match. Other factors include geography, education and connectedness within social networks.
2018 Supermoney Mortgage Industry Study (SuperMoney) Rated: AAA
It’s no surprise FinTech lenders are disrupting the mortgage industry In 2017, the top lender in the United States was Quicken Loans with $25.1 billion. The second largest loan issuer was Wells Fargo. FinTech lenders process mortgage applications faster (10 days as opposed to 50 days). They also have lower default rates — 25% lower (source). FinTech lenders also tend to be more agile and flexible when it comes to adapting to changing financial circumstances.
What is the size of the U.S. Housing Market?
If you combine mortgage debt and housing equity you get a total value of $25.1 trillion, which is nearly $2.5 trillion more than its previous peak in 2006.
See the full report here.
At Marlette Funding, CEO Jeffrey Meiler a ‘straight shooter’ with a sense of humor (Delaware Online) Rated: A
Jeffrey Meiler founded Marlette Funding in 2013. The CEO calls himself the company’s “first employee.”
Five years later, there’s more than 300 of those. Its quick growth, and Meiler’s drive in heading the Fairfax-based lender known for its brand Best Egg resulted in a Top Workplaces award for leadership at the mid-size company level.
Marlette Funding as a whole placed second overall among mid-size companies as the best place to work.
Alternative Lenders to Gain Greater Predictive Power with TransUnion CreditVision Link Short-Term Risk Score (Transunion) Rated: A
The opportunity for alternative credit and small dollar loans remains high with a market size that approaches $40 billion annually. To help these lenders better segment risk in an increasingly competitive market, TransUnion (NYSE: TRU) introduced today the CreditVision Link Short-Term Risk Score.
This new predictive risk scoring model, tailor-made for alternative lenders, combines traditional and alternative data to offer a holistic picture of consumers. Information about the benefits of this new risk score will be highlighted during TransUnion’s webinar, Alternative Loan Insights with TransUnion Risk Scores, scheduled for 1 p.m. CDT on August 30.
Unity Bank streamlines lending processes with Finastra (Finastra) Rated: B
Unity Bank, whose holding company is based in Augusta Wisconsin, and which has branches in Minnesota, has selected Finastra’s Total Lending solution to streamline its commercial lending and consumer lending processes, including its agricultural lending business.
UK’s biggest payday lender Wonga ‘on the brink of collapse’ (The Guardian) Rated: AAA
Britain’s biggest payday lender, Wonga, is teetering on the brink of collapse following a surge of customer compensation claims in recent weeks that could cause it to call in administrators.
The short-term loan provider has reportedly lined up accountancy firm Grant Thornton to handle a potential administration of the company should its board believe it is unable to avoid falling into insolvency. The report from Sky News said Wonga could appoint Grant Thornton as soon as this week.
Overfunding: P2P Lender Welendus Secures £850,000 Funding Target Through Latest Seedrs Round (Crowdfund Insider) Rated: A
Just a little over a week after launching its latest equity crowdfunding round on Seedrs, Short-term peer-to-peer lending platform Welendus has successfully secured its initial £850,000 funding target. Founded in 2015, Welendus seeks to redefine the short-term lending market by launching a peer-to-peer short-term lending platform to help customers with short-term financial needs.
Assetz Capital supports construction of 517 homes during summer (Development Finance Today) Rated: B
This announcement was in addition to the P2P lender reporting a surging interest from business owners and developers in the last two months, which saw it fund over £60m to SMEs.
In May, Assetz Capital revealed that it had lent over £500m since its inception in 2013, which has now increased to £590m, up 18% in less than three months.
In order to fulfil the influx of enquiries, Assetz Capital has appointed six more regional relationship directors in 2018, bringing the total to 26, and has also hired four senior relationship managers across the UK.
Victory Park Capital fund continues strong performance (Peer2Peer Finance) Rated: A
VICTORY Park Capital Specialty Lending (VSL) is expecting to recommence payment of performance fees to its investment manager in the coming months, after an improvement in net asset value (NAV) returns.
In its latest monthly report, released on Friday, the alternative finance-focused fund reported a total NAV return of 1.15 per cent in July.
In May, VSL posted a record NAV return of 1.03 per cent – the highest figure since its fruition in March 2015 – and has now posted NAV returns above one per cent for three consecutive months.
Here’s what to expect from Yirendai’s earnings report (Markets Insider) Rated: AAA
Yirendai will report Q2 earnings on August 28.
5 analysts are forecasting earnings of $0.779 per share compared to earnings of $0.663 per share in the same quarter of the previous year.
Analysts expect Yirendai to report sales of $256.2 million, an increase of 45.52% over the same period last year.
Peer-to-Peer Cryptocurrency Lending Gains Popularity in China (Coin Geek) Rated: A
At the same time that China is putting pressure on the crypto industry, peer-to-peer (P2P) cryptocurrency lending continues to gain in popularity. According to local media outlet Sohu, more and more crypto lending platforms are popping up, but their livelihood could ultimately be cut short because of tightened regulations in the country.
One source close to the activity is a crypto veteran, Zhang Le. He told the media outlet, “At present, most of the market only recognizes two major currencies, Bitcoin and Ethereum. This business is currently earning interest.” Another individual, Xu Lizhen, pointed out that those lending crypto are generally long-term holders who have no interest in trading on the markets. He added, “This is just the need. When the currency is low, people who are speculating in the currency will definitely not be willing to sell the coins. Once they are short of money, they must find such platforms. The demand has formed this market.”
Crowdfunder Indiegogo allows companies to sell security tokens (Coin Geek) Rated: AAA
Crowdfunding giant Indiegogo has expanded its cryptocurrency operations to make room for security tokens. This comes less than a year after the company started offering tokens on its platform last December.
According to Crowdfund Insider, Indiegogo’s first security token offering (STO) is already available on the platform. The STO is from a luxurious ski resort, St. Regis Aspen Resort in Aspen, Colorado. According to reports, Indiegogo will only allow accredited investors to purchase the resort’s Aspen Coins, which will be offered by a real estate investment trust (REIT) called Aspen Digital.
What are the Possible Advantages of Blockchain Technology in P2P Lending? (Financial Report 24) Rated: A
With smart contracts, ownership can be attested and linked to the terms of a specific contract. Smart contracts are kept on the blockchain and performed automatically as a part of the transaction. For instance, the XDC blockchain is constructed upon Quorum. The power smart contract functionality which exists in the Ethereum protocol is accessible easily via Quorum. XinFin created a smart contract manager which enables for interoperability between the public blockchains and XDC blockchain. The platform included punitive smart contracts which link to the QuorumChain consensus smart contracts to guarantee those who stake at XDCs to operate network infrastructure remain truthful.
TRAXION’s Blockchain Technology to help in building one Mindanao (Davao Today) Rated: A
A transaction management company that specializes in blockchain technology believes that Mindanao will be a good place to implement this kind of technology by connecting large business companies to micro entrepreneurs to create one economic force.
Statistics shows that one of the reasons why a typical farmer refuses to open a bank account is because they only wear slippers. “It sounds absurd but is the truth. Most of the indigenous people in this region doesn’t have their own identities so they have the tendency to change their names if they want to. They are prone to abuses because of this,” she said.
List of top 10 P2P lending startups in India (The Indian Wire) Rated: AAA
According to a report by Boston Consulting Group (BCG), the fintech space has witnessed an explosive growth in the recent years and digital lending industry is expected to touch $1 trillion over the next five years.
Here is a comprehensive list of top 10 P2P lending startups in India:
Faircent – It last raised $4 million in a series B funding from Muthoot Fincorp and Incofin Investment Management in December 2017.
Lendingkart – The startup had last secured ₹300 crores in debt funding Aditya Birla Sun Life AMC and others in August 2018.
Finzy – It provides a digital platform to facilitate quick, easy and secure loans at personalized rates based on borrowers capabilities.
NBFCs to see up to 35-40% rise in hiring in next 1 yr, say experts (Times of India) Rated: A
Hiring activity in the non-banking financial companies (NBFC) sector is likely to expand by up to 35-40 per cent in the next 12 months driven by rising innovation and growth, according to industry experts.
The ability of NBFCs to tap ‘unbanked’ customer base at a time when the banks are facing headwinds in coming out of the NPA mess is driving the growth in the sector, they explained.
Experts see increased hiring in tier-II cities for roles in sales, collection underwriting and risk.
Fintech startup Shubh Loans raises $ 4.2m from Saama Capital, others (Deal Street Asia) Rated: A
Datasigns Technologies Pvt. Ltd, which runs fintech lending platform Shubh Loans, has raised $4.2 million in an investment led by venture capital firm Saama Capital, said Monish Anand, founder of Shubh Loans. Shubh Loans’ existing investors—SRI Capital, Beenext and Pravega Ventures—also participated in the round. The fintech startup had raised $1.6 million from these investors in September 2017.
Partnerships pushing Pi Pay to next level (Southeast Asia Globe) Rated: A
The main partnership, with its growing customer base, has seen the Pi Pay app downloaded 270,000 times in the last year with close to US$100 million in transactions processed through the app.
Partnerships with merchants mean Pi Pay can be used in over 2,100 locations across Cambodia, with new partners being added every day.
Partnerships with overseas fintech giants like Alipay and WeChat have opened up new possibilities for Pi Pay merchants to service the growing number of Chinese visitors to the Kingdom.
OJK issues regulation on financial technology (The Jakarta Post) Rated: A
The Financial Services Authority (OJK) has issued a regulation on financial technology (fintech), which is more comprehensive than a prevailing regulation that only regulates peer-to-peer lending.
The regulation, issued on Aug. 15, consists of 45 articles that cover innovation in digital technology for the financial sector, kontan.co.id reported on Friday.
The regulation covers a number of issues such as transaction settlement that relates to investment, while for fund-raising, the regulation covers equity crowdfunding, virtual exchange, smart contract and alternative due diligence.
Kenyan fintech lender gets Sh45m grant (Business Daily) Rated: AAA
Kenya-based financier Lendable has secured a Sh45 million convertible grant from Dutch Development Bank (FMO) that will go into funding alternative lenders set up across the region.
Lendable, a fintech platform for unconventional lenders, operates in microfinance and other pay-as-you go services including energy.