- Today’s main news: RateSetter to break even in 2019. Revolut sees top line revenue jump 5 times. Orca Money surpasses 500K funding target on Seedrs. Revolut to enter Singapore. Prodigy Finance raises $1B.
- Today’s main analysis: Understanding Renaud Laplanche’s next act. Are fintech lending booms a good thing?
- Today’s thought-provoking articles: Whose problem is student debt? Peer2Peer Finance News annual survey. The rise of app-only banks in Europe.
- Whose problem is student debt? Student debt is over $1.5 trillion, but almost half of students borrowing are expected to default. Who’s really going to pay for these loans?
- Q3 securitization update. From PeerIQ. Eight marketplace lending securitizations are expected to price this quarter. We are poised to enter 2019 with record levels of securitization.
- Understanding Renaud Laplanch’s next act. This is an excellent read. Seemingly about Upgrade, it’s really about more than Upgrade.
- Libby Leffler first turned down a job at Facebook; now she is VP of membership at SoFi.
- Kathryn Petralia’s strategy for building Kabbage.
- Cortera receives $10 million in funding.
- Will unregulated fintech lead to the next market crash?
- Interview with Matt Humphrey of LendingHome.
- Joydrive expands into New York.
- Digital Recognition Networks has a new unit that helps clients be strategic.
- RateSetter to break even in first half of 2019.
- Revolut sees 5x jump in top-line revenue.
- Orca Money surpasses 500,000 funding target on Seedrs. Congratulations.
- Peer2Peer Finance News annual survey.
- Prodigy Finance raises 760 million GBP in debt finance.
- Nebeus launches crowdfunding campaign.
- Cleo picks up $10 million.
- Funding Options receives 5 million GBP for international expansion.
- Suss tells of delight at NatWest.
- Thincats raises 300 million GBP.
- How to invest in equity of P2P lending marketplaces.
- InvestX raises $25 million using larger SMEs. blockchain tech.
- Klarna launches pay later service with In The Style.
- App-only banks in Europe rise up.
- Are fintech lending booms a good thing? A must-read report from the Bank of International Settlements.
- Global Debt Registry expands structured credit blockchain offering across asset classes.
- Prodigy Finance secures $1 billion.
- Cred lands $200 million credit facility.
- United States
- Student Debt Burden Whose Problem Is It Anyway (Credit Chronometer) Rated: AAA
- OCC Head Otting defends charter; ABS update (PeerIQ) Rated: AAA
- A former Facebook exec initially turned down the job — but a few weeks later, she had a change of heart based on a metric she still uses today (Business Insider) Rated: AAA
- Understanding Renaud Laplanche’s next Upgraded act (Tech Crunch) Rated: AAA
- This Serial Entrepreneur Shares the Surprising Confidence Strategy That Helped Her Build a Billion-Dollar Business (Stamford Advocate) Rated: A
- Credit scoring firm Cortera lands $ 10m funding (Fintech Futures) Rated: A
- Unregulated Fintech Could be the Source of the Next Market Crash (Inside Sources) Rated: A
- Matt Humphrey of LendingHome (Lend Academy) Rated: A
- Revolutionary Online Car Buying Platform Joydrive Announces Expansion in New York (Finanzen) Rated: B
- Digital Recognition Network’s New FinTech Client Services Unit Helps Clients Be More Strategic (PR Newswire) Rated: B
- United Kingdom
- RateSetter set to break even in first half of 2019 (Peer2Peer Finance) Rated: AAA
- Digital Bank Revolut Reports 5X Jump in Top Line Revenue, Users Now Over 1.3 Million (Crowdfund Insider) Rated: AAA
- P2P Investment Platform Orca Money Surpasses £500,000 Funding Target on Seedrs (Crowdfund Insiders) Rated: AAA
- Peer2Peer Finance News annual survey (Peer2Peer Finance) Rated: AAA
- Prodigy Finance raises £760m in debt finance (Peer2Peer Finance) Rated: AAA
- Crypto P2P platform Nebeus launches crowdfunding campaign (Peer2Peer Finance) Rated: A
- Cleo, the digital assistant that replaces your banking apps, picks up $ 10M Series A led by Balderton (Tech Crunch) Rated: A
- Funding Options Receives £5 Million Investment from Global Bank ING, Will Expand Internationally (Crowdfund Insider) Rated: A
- Suss tells of ‘delight’ at NatWest farm finance deal (Bridging Directory) Rated: A
- Thincats Adds £300 Million to Fund UK SMEs (Crowdfund Insider) Rated: A
- How to Invest Into Equity of P2P Lending Marketplaces (P2P Banking) Rated: A
- InvestX raising £25m for larger SMEs using blockchain technology (SME Magazine) Rated: A
- In The Style and Klarna launch Pay later service (Leap Rate) Rated: B
- The mysterious Mr Wu and the growing threat to China’s private companies (Nikkei Asian Review) Rated: AAA
- App-Only Banks Rise in Europe and Aim at Traditional Lenders (The New York Times) Rated: AAA
- Fintech Lending Booms. Is That a Good Thing? (Barrons) Rated: A
- Global Debt Registry Expands Structured Credit Blockchain Offering Across Asset Classes (Global Debt Registry) Rated: A
- Prodigy Finance secures US$ 1 billion In debt financing over twelve months (Global Banking and Finance) Rated: A
- Cred Secures $ 200M in Credit Facility, Now Live on Uphold (A Medium Corp) Rated: A
- Online system removes barrier for brokers (Australian Broker) Rated: AAA
- When ‘it’ happens, SocietyOne urges us not to reach for the credit card (Australian FinTech) Rated: A
- Indian lending start-up Qbera gets $ 3m funding (Fintech Futures) Rated: AAA
- Singapore Millennials, get ready for a fintech Revolut-ion (The Edge Markets) Rated: AAA
Student Debt Burden Whose Problem Is It Anyway (Credit Chronometer) Rated: AAA
It’s back to school time, and there’s so much noise about a student loan crisis that there’s a need to corral all the noisemakers and to gain an understanding of what’s actually going on. Sister Mary Elephant had the right idea when she scolded her classroom to be quiet some 40 years ago.
It does sound pretty bad. Student debt surpassed $1.5 trillion earlier this year, and it’s estimated that nearly 40 percent of borrowers will default on their student loans by 2023. But talks of a collapse are not marrying up with performance and other data. Prospects for graduates are rosier than they have been in some time, with unemployment at around 3.9 percent – the lowest level since 2000. And, by some reports, student loan delinquencies are the lowest they’ve been in more than 10 years.
OCC Head Otting defends charter; ABS update (PeerIQ) Rated: AAA
The Fed’s latest survey on household wealth showed that total net-worth of American households rose by $2.19 Tn QoQ to nearly $107 Tn, driven by rising equity and home values. Household debt grew by 2.9% YoY to $15.4 Tn with consumer credit growing at 4% YoY. Consumer credit growth continues to propel GDP growth, undeterred by rising interest rates.
Q3 Securitization Update
As Q3 draws to a close and in the lead-up to ABS East, we look at how the MPL ABS markets performed this quarter:
- Eight marketplace lending securitizations are expected to price this quarter totaling $3.5 Bn, the fifth-highest level of quarterly issuance, representing 35% growth YoY. To date, cumulative issuance equals $41.9 Bn across 134 deals.
- All-in spreads tightened, and all-in yields fell on new issuance this quarter. 2018Q2 was the first quarter where we observed higher all-in costs for issuers driven by rising front-end interest rates and ever-increasing ABS supply, breaking the trend of non-stop spread tightening. This quarter, weighted average all-in yields on consumer deals decreased from 4.2% to 3.4% QoQ, and on student deals from 4.5% to 3.5% QoQ.
- Average spreads at issuance are tighter in the consumer and student spaces across credit tranches, except on D tranches of consumer deals. New issue spreads in the consumer MPL space were tighter across the stack, with the spreads on As tighter by 15 bps, Bs tighter by 7 bps, Cs tighter by 1 bps, but those on Ds wider by 15 bps on average QoQ. New issue spreads in the student MPL space were tighter across the stack, with the spreads on As tighter by 72 bps and those on Cs tighter by 200 bps on average QoQ.
A former Facebook exec initially turned down the job — but a few weeks later, she had a change of heart based on a metric she still uses today (Business Insider) Rated: AAA
In 2008, Libby Leffler was offered a job at Facebook.
A few weeks later, Leffler called Facebook back and said she’d had a change of heart: She wanted the job.
Leffler said she did a lot of “self-reflection” in the weeks after declining Facebook’s job offer. The factor that ultimately changed her mind? “It became very clear that there was a lot to learn in this new role at Facebook.”
Understanding Renaud Laplanche’s next Upgraded act (Tech Crunch) Rated: AAA
Renaud Laplanche spent ten years building LendingClub. In the process, he created an industry from scratch. Circumventing conventional banking channels for consumer credit began in 1996 when Chris Larsen started E-LOAN, which ultimately led to Prosper Marketplace. But LendingClub, which Laplanche founded in 2007, was and remains the poster child for the business of marketplace lending. The industry’s short history has been volatile, characterized by both triumphant hype and utter lack of confidence.
While LendingClub has struggled in the public markets since their late 2014 IPO, they have managed to propel their industry into significance, while rapidly expanding their share of the personal loan market to 10%.
After his well-publicized departure in May 2016, Laplanche got started on his next venture in a hurry. Just a few months later he started Credify, ultimately renamed to Upgrade, a company that bears a striking resemblance to LendingClub. In just two years Upgrade has raised $142 million in funding, while originating more than $1 billion in loans since August 2017.
With Upgrade, Laplanche has the opportunity to start fresh with the benefit of hindsight. The initial promise of LendingClub and their competitors was unbundling the banks. Now, to persist and grow, marketplace lenders have realized they need to rebundle, providing an array of bank-like services to better serve their end customers. This post explores what Laplanche is doing differently this time with Upgrade.
This Serial Entrepreneur Shares the Surprising Confidence Strategy That Helped Her Build a Billion-Dollar Business (Stamford Advocate) Rated: A
As co-founder of Kabbage, Kathryn Petralia is in the business of helping other companies and entrepreneurs get loans to get their companies off the ground.
In 2010, the financial services data and technology platform launched with 50 customers on its platform — and a few headaches. There was one in particular that she had to contend with right out of the gate.
Just as Kabbage was about to launch, thanks to some regulatory changes beyond their control, they learned that in order to comply with the new rules, they wouldn’t be able to move forward with a bank partner they had in place.
Credit scoring firm Cortera lands $ 10m funding (Fintech Futures) Rated: A
Business-to-business (B2B) credit scoring company Cortera has landed $10 million in funding, bringing its total capital raised to just over $578 million in combined debt and equity, reports Julie Muhn at Finovate.
Investing in the Florida-based company are Hearst’s Fitch Group Financial Venture Fund, who led the round, as well as existing investors Volition Capital, Battery Ventures, Allen & Company, and Tomorrow Ventures.
Unregulated Fintech Could be the Source of the Next Market Crash (Inside Sources) Rated: A
Ten years after the start of the Great Recession, the U.S. economy is currently booming. But some industry experts fear that, without regulation, financial technology (fintech) companies like Biz2Credit, Fora Financial, Kabbage, LendingClub, Lendup and OnDeck Capital, Inc. could bring about the next market crash. So why aren’t governments acting? Because of an ongoing debate over who should oversee this new industry– states, or the federal government?
At the end of July, the Office of the Comptroller of the Currency (OCC) announced it would accept applications from fintech companies seeking a national bank charter. At the same time, states are wooing fintech companies to charter with them instead, and just last week the Conference of State Bank Supervisors said it intends to suethe OCC over its authority to issue national bank charters to fintech companies.
So far, only one fintech company — Varo Money — has been preliminarily approved to formally apply for an OCC charter.
Matt Humphrey of LendingHome (Lend Academy) Rated: A
When it comes to the fix ‘n’ flip real estate lending space it is still very much a cottage industry with many small players in local areas providing loans to their network. There have been few national players, including banks, that have really focused deeply on this segment.
Our next guest on the Lend Academy Podcast is Matt Humphrey, the CEO and Co-founder of LendingHome. They have become the #1 fix ‘n’ flip lender in the country operating 100% online in just a few short years. Matt explains how they have been able to do this in such a fragmented market.
Revolutionary Online Car Buying Platform Joydrive Announces Expansion in New York (Finanzen) Rated: B
Sunrise Toyota and Sunrise Chevrolet announced today that they are partnering with national marketplace Joydrive to offer New York consumers a new way to buy vehicles 100% online — no dealership visit necessary. At no extra cost, customers can complete their entire transaction online—from trade-in to financing, get their car delivered to their door, and use a 5-day return period to make sure they love it.
Both Sunrise dealerships join a rapidly growing list of the most prestigious dealers around the country, all eager to offer customers a chance to buy their next car from the comfort of their home. Joydrive’s roster of innovative dealers has grown in nine months from 1 dealership in 1 state to 50+ dealerships across the country and now includes the #1 Chevrolet dealership, the #1 Chrysler Dodge Jeep RAM dealership, and the 3rd largest pre-owned dealership in the country.
Digital Recognition Network’s New FinTech Client Services Unit Helps Clients Be More Strategic (PR Newswire) Rated: B
Digital Recognition Network (DRN), an AI and data analytics company that provides vehicle location data and analytics to auto lenders, insurance carriers and other commercial verticals, today announced the creation of its new Client Services Unit – as part of its FinTech Division – to help its clients to be more strategic. The Client Services Unit provides its clients with consulting services, on-site training and monthly reporting, so they can gain greater insight into DRN’s vehicle location data (a.k.a. automated license plate recognition (ALPR) data) and leverage the data to drive results. Using the monthly reporting capabilities, the Client Services Unit conducted a review of its clients’ usage and performance from January 2018 to August 31, 2018 and found that DRN’s auto lending clients receive a 193 percent average return on their investment from the suite of products in DRNsights.
DRN’s FinTech Division helps auto lenders, ranging from local credit unions to top 100 auto finance companies, mitigate risk via DRNsights, its suite of products that combines DRN’s exclusive vehicle location data with analytics to provide new locations for targeting assets.
RateSetter set to break even in first half of 2019 (Peer2Peer Finance) Rated: AAA
RATESETTER expects to break even in the first half of 2019, excluding spending on investor advertising.
The peer-to-peer lender is currently in the red, but told investors at a Q&A session that the gap is closing in line with its forecasts.
“Reaching profitability is important but this is balanced with the importance of longer-term investment (i.e. we may choose to invest more in the short-term which will repay over the longer-term),” RateSetter said in a blog post on its website, summarising points covered during the Q&A session.
RateSetter was profitable in the financial years ended 2014 and 2015, but fell into losses since then, as it has invested in scaling up the business.
Digital Bank Revolut Reports 5X Jump in Top Line Revenue, Users Now Over 1.3 Million (Crowdfund Insider) Rated: AAA
UK based digital challenger bank Revolut is reporting 2017 numbers and according to the Fintech revenue has increased 5X from £2.4 million to £12.8 million as monthly transaction volume jumps from $200 million to $1.5 billion. Revolut also reported a loss for the year of £14.8 million. The number of customers banking with Revolut increased from 450,000 to 1.3 million.
Revolut states that rapid growth is important but the key focus for the company is expanding the banking service into international markets while adding new features for their users – such as commission free trading. Currently, Revolut says it is expanding into 10 international markets and it has applied for a European banking license. Revolut is expected to launch in the US market at some point in 2018 but the platform has yet to explain its roll out timeline.
Nik Storonsky, Revolut founder & CEO, says they have launched all of their money making products, such as their Premium accounts, throughout the year – and he is pleased with platform progress:
P2P Investment Platform Orca Money Surpasses £500,000 Funding Target on Seedrs (Crowdfund Insiders) Rated: AAA
Founded in 2015, Orca Money stated it serves two functions, which are its investment solution that enables investors to diversify capital across multiple, major UK peer to peer lending platforms, all from one place. The company noted its research service provides fact-based, no-nonsense analysis on the UK P2P market.
Orca explained that it makes money in two ways:
- The P2P platforms pay us referral fees on each lender account that we refer.
- The user pays us a % of the invested funds on an annual basis.
Orca also revealed that for two years it has provided market leading research on the P2P market, which has built an organic user base of P2P investors (avg. 6,000+ monthly web sessions and 2,000+, compliant subscribers). The platform noted it currently integrates with 5 UK P2P platforms with 11 more in the sales pipeline.
Peer2Peer Finance News annual survey (Peer2Peer Finance) Rated: AAA
THE 2018 Peer2Peer Finance News annual survey comes at an interesting time for the sector, with the long-awaited release of the Financial Conduct Authority’s (FCA) post-implementation review and an economic environment dictated by Brexit and interest rate speculation.
The majority of industry professionals surveyed do not expect borrower rates to decrease. 41.67 per cent of respondents predicted rates to go up in 12 months and another 41.67 per cent said there would be no change, while just 16.67 per cent said rates would increase.
On the other side of the P2P spectrum, investors may already be getting decent returns from P2P, but just 25.53 per cent of industry respondents expect rates to increase over the next 12 months. Another 25.5 per cent expect investors’ rates of return to go down and 48.94 per cent said there would be no change. This approach to rates may be reflective of increased default expectations and more economic uncertainty amid platforms. Almost two thirds, 62.5 per cent, said they expected defaults to increase over the next 12 months, and a similar 66.67 per cent said they expect the wider credit markets to tighten.
Read the full report here.
Prodigy Finance raises £760m in debt finance (Peer2Peer Finance) Rated: AAA
UK-BASED peer-to-peer lender Prodigy Finance has secured $1bn (£761m) in available debt finance as it aims to expand its student funding programme.
The financing primarily consists of $900m from institutions including Deutsche Bank, Goldman Sachs, M&G Investments and Sumitomo Mitsui Banking Corporation.
Other investors include schools, family offices and high-net-worth individuals participating in Prodigy Finance’s international bond programme, which was distributed by Credit Suisse.
Prodigy Finance, which shares backers with ‘big three’ P2P lenders Zopa and Funding Circle, provides education loans to international students attending top universities around the world. Funding options can be limited for these students, particularly for those coming from emerging markets.
It plans to use its latest fundraise to expand its offering to more students worldwide, particularly in the field of engineering and at US universities and colleges.
Crypto P2P platform Nebeus launches crowdfunding campaign (Peer2Peer Finance) Rated: A
NEBEUS, the cryptocurrency peer-to-peer lending platform, has launched a £1.1m crowdfunding campaign on Crowdcube.
Funds from the campaign, which has already raised over £400,000, will be used to obtain an e-money licence from the Financial Conduct Authority and launch Nebeus’ services to a wider audience.
The London-based fintech, which lets users trade, store, remit, lend and borrow funds by leveraging blockchain technology, aims to bring borderless banking to the two billion people across the globe who it claims struggle to access banking services.
Nebeus has facilitated £1.9m of P2P Bitcoin loans since its platform went live at the end of 2017.
Cleo, the digital assistant that replaces your banking apps, picks up $ 10M Series A led by Balderton (Tech Crunch) Rated: A
When Cleo, the London-based “digital assistant” that wants to replace your banking apps, quietly entered the U.S., the company couldn’t have expected to be an instant hit. Many better-funded British startups have failed to “break America.” However, just four months later, the fintech upstart counts 350,000 users across the pond — claiming more than 600,000 active users in the U.K., U.S. and Canada in total — and says it is adding 30,000 new signups each week. All of which hasn’t gone unnoticed by investors.
Already backed by some of the biggest VC names in the London tech scene — including Entrepreneur First, Moonfruit co-founders Wendy Tan White and Joe White, Skype founder Niklas Zennström, Wonga founder Errol Damelin, TransferWise founder Taavet Hinrikus and LocalGlobe — Cleo is adding Balderton Capital to the list.
Funding Options Receives £5 Million Investment from Global Bank ING, Will Expand Internationally (Crowdfund Insider) Rated: A
Funding Options, a UK Fintech that provides a “supermarket” of financing options for SMEs, has received a £5 million investment from ING Ventures – the VC arm of the global bank. The additional capital is expected to be used for Funding Options to expand its services internationally. In June 2018, Funding Options announced its expansion into the Dutch SME finance market, in partnership with ING.
Funding Options claims to be the UK’s largest online marketplace for SME finance, linking lenders with businesses across the UK to provide over £100 million of funding to thousands of firms each year. Currently, Funding Options says there are 50+ active finance providers on platform such as challenger bank loans, P2P lending, asset finance and leasing, and invoice finance, among others.
Funding Options is also a major contributor to HM Treasury’s Bank Referral Scheme, in which SMEs that are turned down for bank lending are referred on to designated platforms for alternative finance options.
Suss tells of ‘delight’ at NatWest farm finance deal (Bridging Directory) Rated: A
UK Agricultural Finance chief Robert Suss says he is thrilled to see the business become the first sector specialist lender included on the NatWest Capital Connections panel.
The move means that the specialist agricultural business finance company joins a select group of leading alternative finance firms on the panel.
Thincats Adds £300 Million to Fund UK SMEs (Crowdfund Insider) Rated: A
Online lender ThinCats has announced a new £300 million program with global asset manager Insight Investment to fund UK SMEs. The announcement was shared on a ThinCats blogpost that indicated they now have the potential to loan up to £600 million. ThinCats is a UK based peer to peer lender that provides access to credit for SMEs from £100,000 to £10 million
Damon Walford, Chief Development Officer at ThinCats, said they have responded to market demand to provide lending at a cost of capital that reflects “lower risk associated with established strong businesses and thereby offer a real alternative to bank funding.”
Shaheer Guirguis, Head of Secured Finance at Insight Investment, explained that their strategy is to seek compelling assets to provide clients with complexity premium above comparable corporate credit securities. Their partnership with ThinCats represents such an opportunity – specifically in SME lending.
How to Invest Into Equity of P2P Lending Marketplaces (P2P Banking) Rated: A
One of the main developments in UK p2p lending this autumn is the IPO (initial public offering) of Funding Circle. It will be open for investors that commit at least £1,000 through an intermediary (see list of participating intermediaries). Investing at the IPO means investors will invest at a very late stage of the growth phase of a startup. This article and this article suggest that it might not be a good idea to invest in an IPO.
But is there really a chance to invest into equity of a p2p lending marketplace at an early stage, if you are not an employee, business angel or VC? Up to a few years ago the answer would have been NO. But crowdfunding for equity came into use a recently and a surprising number of p2p lending companies have used this route to raise funding.
In this article I will look at the p2p lending services that have used British equity crowdfunding platform Seedrsto raise money. Some of these p2p lending company funding rounds have taken place years ago, but the interesting point is that Seedrs has a secondary market and new investors can buy shares from existing investors that invested earlier through Seedrs. The secondary market opens every first Tuesday of a month (next on Oct. 2nd) and stays open for a week. Some of the shares on offer are in high demand and often sell out within an hour. If you’d like to buy on the secondary market you should open your Seedrs account now, as you’ll need time to verify it and deposit funds prior to the market opening.
InvestX raising £25m for larger SMEs using blockchain technology (SME Magazine) Rated: A
Finance platform InvestX is raising £25 million in equity through individual investors to fund mid-range SMEs.
Unlike Funding Circle, which arranges debt for SMEs, InvestX links equity investors with established SMEs.
InvestX plans to back 59 SMEs in year one and 400 small businesses in year two.
The average investment will be £250,000 but could be anything between £100,000 and £1 million.
Intriguingly, InvestX links up SMEs with investors using blockchain technology. Investors can convert cryptocurrency into investment tokens.
In The Style and Klarna launch Pay later service (Leap Rate) Rated: B
Payments provider Klarna has just announced a partnership with Manchester-based fashion brand, In The Style. In The Style customers will now benefit from Klarna’s Pay later service, which allows shoppers to order their favourite clothes online, then have the flexibility to pay for them up to 30 days later — with no interest or fees.
The mysterious Mr Wu and the growing threat to China’s private companies (Nikkei Asian Review) Rated: AAA
China’s social media have been abuzz with worried commentaries since Wu Xiaoping, a self-claimed “veteran in China’s financial sector,” posted a blog on Sept. 11 boldly claiming that China’s private sector has “basically fulfilled its task of assisting the state-owned economy in achieving its rapid development.”
As a result, Wu went on to say, “China’s private sector should not blindly expand. A new form of more concentrated, unified, and scaled-up economy of mixed ownership … may gain a greater share.”
The main reason given by Wu for merging China’s private sector into the state-owned sector is that this is the only way to respond to America-led Western containment against China and fight back against U.S. President Donald Trump in the trade war.
App-Only Banks Rise in Europe and Aim at Traditional Lenders (The New York Times) Rated: AAA
The systems failure in April, affecting nearly two million TSB customers, was a breaking point for Mr. Stevenson. He moved his money to Monzo, a British start-up that is among a growing number in Europe offering checking accounts and A.T.M. cards, but lack physical branches — everything is done through an app.
So-called fintech companies have sought to take on the world’s biggest banks for years, but only recently have companies like Monzo begun to build a critical mass. Millions of customers across Europe, most in their 20s or 30s, have signed up over the past two years. And thanks to favorable regulations in the region and an influx of venture capital, that shift is accelerating.
In contrast, while some policymakers in the United States are trying to make it easier to open new banks, progress has been slow. States do not want to cede oversight, and without a license, American financial start-ups must set up partnerships with traditional banks to hold deposits.
Support from regulators in Europe has given momentum to companies entering the market there. In addition to making slicker apps, the companies have slashed fees for spending overseas and wiring money. Last year, Monzo became one of the first challenger banks to receive a license allowing it to hold customers’ deposits on its own, a milestone no start-up in the United States has achieved.
Fintech Lending Booms. Is That a Good Thing? (Barrons) Rated: A
But the biggest findings in the report are what the BIS, the bank for central banks, doesn’t know: How fintech has affected borrowers, lenders, financial stability, and the economy.
Because “the resilience of new fintech credit processes and firms has not yet been tested over a full economic and credit cycle,” the report points out, “hence, it is not clear how fintech credit will perform when conditions deteriorate.”
The rise of fintech lending is clear: The volume of loans globally vaulted to $284 billion in 2016 from $11 billion in 2013.
Read the full report here.
Global Debt Registry Expands Structured Credit Blockchain Offering Across Asset Classes (Global Debt Registry) Rated: A
Global Debt Registry (“GDR”) today announces an extension of the current blockchain platform offering into additional ABS asset classes. This announcement follows the company’s June 2018 launch, which focused on supporting the efficiency of lending to the $15 billion marketplace loan sector. To date the company had concentrated on marketplace loans to demonstrate value and a working model and is now scaling to support banks needs across other asset classes.
GDR is now targeting growth into over $250 billion of loans in the asset-backed securities market, led by asset classes such as Auto, Credit Card, Student and Equipment amongst others.
Prodigy Finance secures US$ 1 billion In debt financing over twelve months (Global Banking and Finance) Rated: A
Founder and CEO of Prodigy Finance, Cameron Stevens, said “the world is increasingly global and connected, yet the banking industry has not kept pace. Traditional lenders are bound by local legal constraints, local data, as well as local repayments and collections, which ties an applicant’s credit profile to their location. For example, if you’re born and live in the U.S. you will have greater choice and access to financial services and credit. However, if you’re born in Ghana and want to study abroad, you’re more likely to be unbanked. We’ve worked hard over the years to change this. Our global credit model has allowed us to help international students with limited or no funding options to gain access to life-changing opportunities and become the next generation of leaders around the world.”
The financing primarily consists of US$900 million in institutional debt facilities from American, European and Asian lenders including Deutsche Bank, Goldman Sachs, M&G Investments and Sumitomo Mitsui Banking Corporation. Other investors include schools, family offices and high-net-worth individuals participating in Prodigy Finance’s international bond programme distributed by Credit Suisse.
Today’s financing allows the company to increase its offering, particularly in the field of engineering and at U.S. universities and colleges, including those ranked by the U.S. News & World Report3. The Prodigy Finance platform now supports 245 specific engineering schools and 2,222 courses[iv], including electrical and computer engineering, data analytics, information systems, and industrial, chemical and nuclear engineering, among others; with the option of 10, 15 or 20-year loans terms and without the need for collateral, co-signer or guarantor. The financing also demonstrates that a strong debt financing environment still exists for U.K. firms like Prodigy Finance.
Cred Secures $ 200M in Credit Facility, Now Live on Uphold (A Medium Corp) Rated: A
Despite the crypto bear market, at Cred, we’re witnessing something spectacular- the explosive growth in interest in crypto-backed lending. The level of lending capital Cred now has to support the crypto ecosystem is unprecedented. Judging by Chris Skinner’s blog highlighting a recent report from DLA Piper, Cred is not alone in what we’re seeing:
- 31% of financial services firms now believe central banks will hold cryptocurrencies on their balance sheet within the next five years.
- 18% expect central banks to establish their own cryptocurrency.
That leads me to one of the biggest announcements we’ve made to date:
Cred has now secured over $200,000,000 in crypto-backed lending facilities.
Online system removes barrier for brokers (Australian Broker) Rated: AAA
A lender has said its use of online application system NextGen.Net has removed a barrier for brokers and encouraged them to lodge applications.
Better Choice upgraded to the ‘ApplyOnline’ electronic lodgement system in July. It said the outcome of the change has been an increase in brokers being able to access the lender.
Better Choice general manager sales and distribution, Natalie Sheehan, said she understood why brokers in the past had not been so interactive with the lender.
When ‘it’ happens, SocietyOne urges us not to reach for the credit card (Australian FinTech) Rated: A
When ‘it’ happens, SocietyOne urges us not to reach for the credit card.
Australia’s pioneering and leading marketplace lender, SocietyOne, has launched an integrated marketing campaign to capitalize on the fast-approaching holiday season, where demand for consumer credit typically jumps with increased expenditure on festivities and gifts.
The campaign, entitled “When ‘it’ happens”, highlights how even positive situations can put financial strain on even the most savvy Australians.
Indian lending start-up Qbera gets $ 3m funding (Fintech Futures) Rated: AAA
Bengaluru-based lending start-up Qbera has raised $3 million funding from Indian conglomerate Essel Group.
Essel Group has a wide variety of firms under its belt in media, tech, packaging and education. In this round, E-City Ventures, a cinema exhibition and retail real estate business, made the investment.
Last year E-City invested in Finnovation Tech Solutions’s KrazyBee, an online installment store for students. That investment and this latest one clearly demonstrates E-City’s interest in the financial sector.
Qbera will use the money to expand its business operations to other cities in India. The firm offers loan amounts from INR 50,000 ($692) to INR 2,500,000 ($34,500) and acts as an intermediary with banks such as Kotak Mahindra and RBL.
Singapore Millennials, get ready for a fintech Revolut-ion (The Edge Markets) Rated: AAA
Revolut, a commission-free trading service for stocks and other securities targeted at investors aged between 25 and 35, is coming to Singapore soon.
According to the Financial Times, Revolut is one of two of the fastest-growing fintech companies in Europe aiming their products at millennials. The other is Plum.
In the past two years, Revolut and Plum have signed up close to 3 million users with cheap and easy-to-use investments that appeal to a younger crowd.