- Today’s main news: Funding Circle cuts price range for IPO. Nelnet withdraws industrial loan charter (ILC) application. China Rapid Finance names former Hewlett Packard exec as Co-CEO. Faircent drops prime lending rates.
- Today’s main analysis: The most free and clear cities in America.
- Today’s thought-provoking articles: Fincera grows as China’s P2P lending industry falters. BNP Paribas discusses the SME lending cycle. The delicate balance between customer experience and fraud prevention.
- Nelnet withdraws application for ILC. It’s beginning to look like no alternative lender will ever get a loan charter of any kind. But that’s an appearance. I believe it will happen–eventually.
- The most, and least, free and clear cities in America. This is an interesting study, with an interesting list. At the top are Detroit, Miami, and Las Vegas (of all places). At the bottom: Seattle, Virginia Beach (really?), and Washington.
- CreditShop converts 500,000 Mastercard accounts.
- Covr Financial Technologies raises $10 million.
- OppLoans appoints chief compliance officer.
- Funding Circle cuts price on IPO.
- Lending to manufacturers grew in the last year.
- Wagestream raises $4.5 million for pay-as-you-work service.
- Frank Field asks City watchdog to protect Wonga borrowers.
- Tandem Bank adds auto-savings rules.
- China Rapid Finance names former Hewlett Packard exec as Co-CEO. This is some of the most interesting news to come out of China in a while, not necessarily because of the executive chosen, but just because he was selected as co-CEO.
- Fincera thrives as P2P lending suffers.
- Crypto.com announces advisory board. Includes an officer from Affirm.
- Striking a delicate balance between customer experience and fraud prevention.
- Speakers tell ABS pros not to sweat the credit cycle.
- Blockchain.io to consider P2P lending with cryptocurrencies.
- Faircent drops prime lending rates for unsecured loans.
- Verdict on Aadhaar Act may make operations expensive for fintech lenders.
- COAI to examine linkage between Aadhaar verdict and mobile connections.
- Loan rates.
- Europe: BNP Paribas responds to lending cycle news.
- Thailand: Bank of Thailand prepares P2P lending service.
- Australia: Signum Capital backs Konkrete.
- Finland: Fellow Finance Plc’s prospects is approved.
- Europe: Ronald Kleverlaan shares insight into European fintech.
- Germany: MYBESTBRANDS launches universal checkout with Klarna.
- United States
- Nelnet withdraws application for industrial loan charter (American Banker) Rated: AAA
- LendingTree Reveals the Most Free & Clear Cities in America (Lending Tree) Rated: AAA
- CreditShop Announces the Successful Conversion of More Than 500,000 Mastercard Credit Card Accounts (PR Newswire) Rated: A
- Covr Financial Technologies raises $ 10MM Series A from leading technology venture firms (PR Newswire) Rated: A
- Fintech Leader OppLoans Appoints Stacee Hasenbalg to Chief Compliance Officer Role (PR Newswire) Rated: B
- United Kingdom
- Funding Circle cuts price range for London IPO (Financial Times) Rated: AAA
- Lending to manufacturers grew over the last year (Business Insider) Rated: A
- PLATFORM RAISES £4.5M TO END ‘PAYDAY POVERTY’ CYCLE (Business Cloud) Rated: A
- Frank Field asks City watchdog to protect Wonga borrowers from ‘disaster zone’ (AOL) Rated: A
- Tandem Bank adds auto-savings rules (Fintech Futures) Rated: B
- As China’s P2P Industry Stumbles, One Company Is Soaring (The Diplomat) Rated: AAA
- China Rapid Finance Limited (XRF) Names Former Hewlett Packard Executive as Co-CEO (Street Insider) Rated: AAA
- Crypto.com Announces Advisory Board (PR Newswire) Rated: B
- European Union
- Aren’t we at the ‘peak of the cycle’? BNP Paribas responds (Altfi News) Rated: AAA
- Ronald Kleverlaan, Director European Centre for Alternative Finance, Shares Insight Into European Fintech Marketplace (Crowdfund Insider) Rated: A
- The Finnish Financial Supervisory Authority approved Fellow Finance Plc’s prospectus (Globe Newswire) Rated: A
- MYBESTBRANDS Launches Universal Checkout in Collaboration With Payment Provider Klarna (PR Newswire) Rated: B
- Striking the Delicate Balance Between Customer Experience and Fraud Prevention (TransUnion), Rated: AAA
- Speakers tell ABS pros not to sweat the credit cycle (GlobalCapital) Rated: A
- This Exchange Protects User Funds by Keeping 98% in Cold Storage (News BTC) Rated: A
- Real Estate Startup Konkrete Gets Backing From Signum Capital (ThirtyK) Rated: AAA
- Faircent.com drops prime lending rates by 200Bps to 9.99% p.a. for unsecured loans (Economic Times) Rated: AAA
- SC verdict on Aadhaar Act may make operations expensive for fintech players (Your Story) Rated: A
- COAI to examine implications of Supreme Court verdict on Aadhaar linkage with mobile connections (Economic Times) Rated: A
- Loan Rate DOWN: While HDFC, SBI, ICICI, Indusland Bank hike lending rates, this lender bucks the trend (Zee Business) Rated: A
- BoT readies peer-to-peer lending service (Bankok Times) Rated: AAA
Nelnet withdraws application for industrial loan charter (American Banker) Rated: AAA
Nelnet, a student loan servicing company, has withdrawn its application to become a Utah-chartered industrial bank.
The Lincoln, Neb., company had filed an application with the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions in late June to form Nelnet Bank. Nelnet was pursuing an industrial loan charter.
The withdrawal is a “temporary step back” in what Nelnet knew could be a long process, Tim Tewes, the company’s president, said in a press release.
LendingTree Reveals the Most Free & Clear Cities in America (Lending Tree) Rated: AAA
Many U.S. property owners dream of the day they shed the mortgage, owning their homes outright. Reaching this milestone means not only skipping the monthly payment but achieving what is perhaps a lifelong goal of asset accumulation. LendingTree ranks U.S. cities by the proportion of such homeowners who are free and clear.
The Federal Reserve’s measure of how much wealth households have in real estate equity has climbed from a $6-trillion level nine years ago to about $15 trillion in 2018.
CreditShop Announces the Successful Conversion of More Than 500,000 Mastercard Credit Card Accounts (PR Newswire) Rated: A
CreditShop LLC today announced the successful conversion of more than half a million Mastercard credit card accounts and $1.4 billion in receivables. The portfolio, which was acquired in March 2017, was converted to the new Mercury Mastercard® which launched in May. The Mercury Mastercard is marketed by CreditShop, and issued by First Bank & Trust of Brookings, South Dakota.
CreditShop believes that there are few reasonably priced credit cards available to credit-challenged consumers. There are about 75 million Americans in the “middle market” with FICO scores ranging between 575 and 675, and many are charged high fees by sub-prime credit card issuers. The Mercury Mastercard is designed to give hard-working, middle market consumers access to a better credit card, at a reasonable price, so they can manage their financial lives better.
Covr Financial Technologies raises $ 10MM Series A from leading technology venture firms (PR Newswire) Rated: A
Covr Financial Technologies, a digital, multi-carrier life insurance platform for financial institutions, today announced it has raised $10 million in Series A funding. In addition to Covr’s existing individual and family investors that made additional investments during this funding round, Covr’s current venture partners all participated including Nyca Partners, Commerce Ventures, Countour Venture Partners and Connectivity Capital Partners and were joined by new investor Allianz Life Ventures. This most recent round brings Covr’s total fundraising to more than $20MM.
Fintech Leader OppLoans Appoints Stacee Hasenbalg to Chief Compliance Officer Role (PR Newswire) Rated: B
OppLoans has announced the appointment of Stacee Hasenbalg to the role of Chief Compliance Officer. Ms. Hasenbalg has held positions in banking and financial services for more than 20 years, including the role of Associate General Counsel, US Regulatory Liaison at Bank of Montreal, and Chief Compliance Officer at Avant. At OppLoans, Hasenbalg will join the executive team leading the company’s compliance and risk oversight function to ensure maximal transparency and efficiency as the firm delivers financing to underbanked consumers.
Funding Circle cuts price range for London IPO (Financial Times) Rated: AAA
Funding Circle, the peer-to-peer lending platform, has cut the maximum valuation it is seeking in its upcoming stock market flotation, which is viewed as a test for UK investors’ appetite to back alternative lending vehicles.
The loss making company — which connects small businesses seeking credit with private and institutional investors willing to lend to riskier borrowers for potentially higher returns — originally set a price range of 420p to 530p per share for its IPO. This would have valued it at up to £1.8bn.
Funding Circle, which is the first peer-to-peer lender to go public in the UK, has now narrowed that price range from 440p to 460p, giving a maximum valuation of £1.5bn.
Lending to manufacturers grew over the last year (Business Insider) Rated: A
Lending to manufacturers grew by 7.4 per cent over the last 12 months, in contrast to a wider 2.1 per cent contraction overall in UK business borrowing, according to banking trade body UK Finance.
The figures released today also show that UK business deposits for non-financial companies grew by 1.5 per cent in the last 12 months.
PLATFORM RAISES £4.5M TO END ‘PAYDAY POVERTY’ CYCLE (Business Cloud) Rated: A
The fledgling company’s ‘Get-Paid-As-You-Go’ service allows workers to access their monthly wages in real-time.
Backers include QED Investors, Village Global (a global VC backed by leading entrepreneurs, including Bill Gates and Jeff Bezos), as well as the London Mayor’s Co-Investment Fund and the Fair by Design fund, whose social impact charities include Big Society Capital, Nominet Trust and the Joseph Rowntree Foundation.
MP Frank Field has written to the City watchdog to seek assurances that borrowers from collapsed payday loan company Wonga will be protected from “a financial disaster zone”.
Following a meeting with Wonga’s administrators Grant Thornton, the independent politician has written a letter to Financial Conduct Authority (FCA) chief executive Andrew Bailey asking what steps the regulator will take to protect customers from loan sharks.
Mr Field wrote that it was still possible “people of good will” could buy the company’s £400 million worth of outstanding loans and “treat borrowers without exploitation”.
Tandem Bank adds auto-savings rules (Fintech Futures) Rated: B
Tandem Bank is launching the possibility of setting auto-savings rules, designed to help customers automate regular payments to the savings pot.
When a rule is triggered, money will be automatically moved from their current account into their Tandem account. This money will then start to earn interest.
As China’s P2P Industry Stumbles, One Company Is Soaring (The Diplomat) Rated: AAA
China’s peer-to-peer (P2P) lending industry is going through a challenging time, as regulators ensure that companies follow a list of over 100 new rules. The rules have been put into place to eliminate the fraudulent or poor business practices that have plagued the industry since its inception in 2006. Many of these firms have struggled to reduce customer credit risk, lacking sufficient financial and technological expertise. But some companies have continued to perform well despite the chaos, and one of these is Fincera, which lends to businesses.
Fincera Inc. is one of the first companies in China to make loans to trucking businesses online. The company operates a P2P lending platform called “Qingyidai” that continues to thrive despite the turbulence in China’s P2P lending sector. As hundreds of P2P lending firms are shut down and/or bailed out due to China’s current regulatory and economic environment, the few that persist stand out. For Qingyidai, the secret to survival is in its risk control methods, which combine technology with traditional risk control methods.
China Rapid Finance Limited (XRF) Names Former Hewlett Packard Executive as Co-CEO (Street Insider) Rated: AAA
China Rapid Finance Limited (“XRF” or the “Company”) (NYSE: XRF), a leading consumer finance marketplace and technology platform in China, today announced the expansion of its leadership team with the appointment of Russell Krauss, a former Hewlett-Packard executive, as Co-Chief Executive Officer and Vice Chairman. The appointment is intended to help accelerate its strategic corporate transformation as it launches new initiatives and business lines.
Crypto.com Announces Advisory Board (PR Newswire) Rated: B
Huey Lin (Operations)
Huey Lin is COO of Affirm which offers services that empower consumers to advance their financial well-being. Affirm was founded by Max Levchin and is one of Silicon Valley’s fastest growing fintech startups, having raised over US$500m. As COO, Huey is responsible for all aspects of operations, and scaling the company. Prior to Affirm, Huey spent nearly 12 years at PayPal in several key roles, including director of international risk policy & strategy and senior director of Asia-Pacific operations. She played an instrumental role in helping PayPal expand in Europe, meet critical global compliance requirements and was one of the first product managers.
Aren’t we at the ‘peak of the cycle’? BNP Paribas responds (Altfi News) Rated: AAA
In an exclusive interview with AltFi, Stéphane Blanchoz said the firm plans to originate €1 billion a year in SME loans in Europe, with at least €400m in the UK. Blanchoz is heading up the operation as head of SME alternative financing.
BNP is working with a number of origination partners, including CODE Investing and Caple, but also plans to originate loans itself.
The operation will focus on ‘medium enterprises’, with loans ranging from £500k to £5m. According to a presentation delivered at its offices last week, the asset manager sees this as an underserved segment of the market, populated by around 34,000 companies. Companies within this segment are turning over between £1m and £50m a year.
Ronald Kleverlaan, Director European Centre for Alternative Finance, Shares Insight Into European Fintech Marketplace (Crowdfund Insider) Rated: A
Ronald Kleverlaan: The alternative finance market in Europe is currently preparing for the next growth phase with EU wide regulations, launch of new initiatives backed by large institutional funders and public support for cross-border investments.
Previously alternative finance was used in startups or specific higher risk industries and in several countries 10-20% of that market is already funded through alternative finance providers.
One of the main drawbacks is the maximum of €1 million to be raised by companies through a platform. In most member states this maximum has already been raised to €5 million or €8 million making it applicable also for larger scale-ups and growing companies to raise funding though these platforms.
The Finnish Financial Supervisory Authority approved Fellow Finance Plc’s prospectus (Globe Newswire) Rated: A
The Finnish Financial Supervisory Authority has today, on 26 September 2018, approved Fellow Finance Plc’s (“Fellow Finance” or the “Company”) Finnish language Prospectus (“Prospectus”) regarding the Company’s planned listing on the First North Finland marketplace of Nasdaq Helsinki Ltd and the initial public offering related thereto (the “IPO”).
The Prospectus will be available in electronic form on or about 26 September 2018, on Fellow Finance’s website at www.fellowfinance.com/company/ipo, at the website of Evli Bank Plc at www.evli.com/fellowfinance and at the website of Nordnet Bank AB Finnish Branch at www.nordnet.fi/fellowfinance. The printed versions of the Prospectus will be available on or about 27 September at the registered office of the Company at Ratakatu 1 b A 10, FI-00120 Helsinki, at Evli Bank Plc’s office located at Aleksanterinkatu 19 A, 4th floor, FI-00100 Helsinki and at the Nasdaq Helsinki Ltd (Fabianinkatu 14, 00100 Helsinki).
MYBESTBRANDS Launches Universal Checkout in Collaboration With Payment Provider Klarna (PR Newswire) Rated: B
Klarna, one of Europe’s leading payment providers, and MYBESTBRANDS, Germany’s largest online shopping mall for premium and luxury fashion, have joined forces to launch the Universal Checkout (UCO), the first cooperation of its kind in Germany. Innovative bot technology developed by MYBESTBRANDS combined with the Klarna Checkout will create a superior shopping experience for customers, driving increased order values, conversion and ultimately building loyalty for MYBESTBRANDS’ merchants.
Customers will now be able to add items from different merchants to a single cart on MYBESTBRANDS and then pay with a click via Klarna.
Striking the Delicate Balance Between Customer Experience and Fraud Prevention (TransUnion), Rated: AAA
Striking the delicate balance between customer experience and fraud prevention is not an easy feat. This was a common theme among newly released Forrester Consulting global studies exploring fraud in the financial services, insurance and single and multi-family rental industries.
Increases in fraud are corroborated by the research conducted by Forrester.
- Nearly all financial services firms (94%) in the study recognized that they have experienced some sort of fraud, whether it’s identity theft/new account fraud, synthetic identity fraud, or account takeover fraud in the past two years.
- Almost two-thirds of insurance companies (62%) have seen an increase in soft fraud and 57% have seen an increase in identity fraud in the past year.
- Virtually all property management companies (97%) have experienced fraud in the properties they manage in the past two years.
The studies come at a time when TransUnion’s own proprietary fraud data found that outstanding balances of suspected synthetic fraud for auto loans, bankcards, retail cards and personal loans have now surpassed $1 billion as of Q2 2018. Insurers and large and small property managers also face new fraud schemes as the prevalence of online applications continues to rise.
See the full study on fraud here.
Speakers tell ABS pros not to sweat the credit cycle (GlobalCapital) Rated: A
Panelists speaking on state of the consumer ABS market on day two of ABS East told a packed audience that while the credit cycle is definitely in its late stages, material distress in consumer credit was unlikely to be seen for some time.
The comments reflect a broader sentiment that has been expressed at the conference, that the bull market is showing no signs of slowing down and is throwing the likelihood of a recession of any size into question (see related article).
This Exchange Protects User Funds by Keeping 98% in Cold Storage (News BTC) Rated: A
A new European exchange wants to protect their customer funds from governments and hackers by regulatory compliance and a special focus on security.
Blockchain.io is a newly announced exchange that intends on enforcing strict rules to comply with both international and local laws, even for future regulations. The company wants to stay regulatory-compliant, audit their records and only approve carefully selected coins in order to make sure that they stay on the right side of the law.
For instance, a variety of simple and complex order types will be featured. Moreover, there are plans to integrate a peer-to-peer (p2p) lending system to let user borrow from a fund managed and maintained by Blockchain.io. The interest rates of such transactions will be based on supply and demand.
Real Estate Startup Konkrete Gets Backing From Signum Capital (ThirtyK) Rated: AAA
Konkrete, which provides a platform for tokenizing real estate assets, is in the midst of raising $3 million. The Melbourne, Australia-based company has $2 million in precommitments with Signum as the lead investor, according to Australia’s Financial Review.
The announcement comes amid a flurry of blockchain-related real estate projects worldwide.
Faircent.com drops prime lending rates by 200Bps to 9.99% p.a. for unsecured loans (Economic Times) Rated: AAA
Leading NBFC-P2P Faircent.com on Wednesday announced a reduction in the interest rate on unsecured loans to 9.99% per annum for prime borrowers listed on its platform. According to a statement, the move is a first for India’s lending market, with such an interest rate being the lowest for unsecured loan offered by any private/PSU bank or alternative lending platform in the country, so far.
Faircent says this is the direct result of RBI regulating the peer-to-peer lending sector in India and recognizing it as an NBFC-P2P, thereby unlocking the alternative credit supply into the economy.
SC verdict on Aadhaar Act may make operations expensive for fintech players (Your Story) Rated: A
The Supreme Court of India on Wednesday, while upholding the constitutional validity of Aadhaar, struck down Section 57 of the Aadhaar Act, which allowed the sharing of citizen data with private entities.
Bhavin Patel, co-founder and CEO of P2P lending platform LenDenClub, says,
“The authenticity of data through Aadhaar is really high considering physical documents (like PAN card) can be copied. The costs of verification for delivering ultra-small ticket size loans (of say Rs 5,000) will definitely be a concern. We estimate that there will be a 30-percent increase in costs on physical verification, which will add up to another Rs 100 or Rs 150. Also, deployment may take a day or more now (in an ideal scenario) since physical verification takes 24 hours at least.”
COAI to examine implications of Supreme Court verdict on Aadhaar linkage with mobile connections (Economic Times) Rated: A
Cellular Operators’ Association of India (COAI) Wednesday said it will examine and assess implications of the Supreme Court judgement, which states that it will not be mandatory for customers to link Aadhaar for mobile connections and bank accounts.
The apex court Wednesday struck down the Section 57 of the Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016 that permitted private entities like telecom companies or other corporates to avail of the biometric Aadhaar data.
Loan Rate DOWN: While HDFC, SBI, ICICI, Indusland Bank hike lending rates, this lender bucks the trend (Zee Business) Rated: A
Loan takers are having to pay interest through their noses and there has been no relief in sight for a long time. However, bucking the trend is this new-age online lender. Faircent.com has actually reduced interest rates on unsecured loans by a whopping 200 bps to 9.99% per annum for prime borrowers listed on its platform. This is lowest “lowest” interest rate for unsecured loans offered by any private/PSU bank or alternative lending platform in the country, Faircent claimed in a statement. It further said the reduction in lending rate is the “direct result of RBI regulating the peer-to-peer lending sector in India and recognizing it as an NBFC-P2P, thereby unlocking the alternative credit supply into the economy.”
Significantly, unsecured loans are issued without any collateral and are supported only by the borrower’s creditworthiness.
The Reserve Bank of India (RBI) had hiked repo rate in August 2018 from 6.25% to 6.50% to curb inflation. This affected both the existing as well as future borrowers taking loans from banks. Following RBI decision, several public sector and private banks have increased their Marginal Cost-based Lending Rates (MCLR), making the with borrowers pay higher interest rates and EMIs on their loans. Faircent.com has done the opposite.
BoT readies peer-to-peer lending service (Bankok Times) Rated: AAA
The Bank of Thailand plans to set regulations for peer-to-peer (P2P) lending service by the year-end, widening opportunities for small-business operators to access financial sources.
The central bank expects to set out regulations to cover all related parties, including P2P lending platforms, borrowers and lenders, said assistant governor Ruechukorn Siriyothin.