- Today’s main news: Renaud Laplanche banned from securities industry for 3 years. Varo Money pulls FDIC charter application. Funding Circle completes IPO. Marcus enters the UK. OnDeck Australia expands equipment finance.
- Today’s main analysis: Delinquency/Loss Trends, yield curve.
- Today’s thought-provoking articles: Americans prefer humans over robo-advisors. Global P2P lending market expected to reach $898B by 2024. AltFin’s path to SMB adoption.
- Renaud Laplache banned from securities industry for 3 years. The founder of Lending Club agreed to the deal along with $200,000 fine. This is pretty light-handed. It could have been worse.
- Lending Club responds to settlement.
- Why Varo Money pulled its FDIC charter application. This is an interesting turn of events.
- Americans prefer humans over robos. As millennials grow older and Boomers die off, we’ll see these numbers change. Younger generations are more comfortable with technology. I suspect a future report to indicate a majority will prefer robos. The only question is, When?
- Delinquency/loss trends, yield curve. A very interesting analysis from PeerIQ.
- Bank of America secures digital plans by poaching from Apple, Disney.
- SoftBank invests $400 million in Opendoor.
- California passes Assembly Bill 237 targeting predatory debt.
- Compass raises $400 million.
- 46% of millennials think they need $1,000 to start investing.
- Petal’s credit card hits the market.
- Klarna hires U.S. marketing agency.
- Flipnerd owner published in Forbes.
- Funding Circle completes IPO. Congratulations. This is a landmark event for the industry.
- Funding Circle valuation reflects brand, growth opportunity.
- Marcus enters the UK. This will increase the competition in the UK where challenger banks are much more popular than in the U.S.
- Zopa customers like Aston Martin as most iconic screen car.
- Relendex increases max loans size to 5 million GBP.
- How UK debt looks in figures.
- 70% believe low credit scores or zero hour contracts would prevent borrowing.
- iwoca responds to 775 million GBP RBS competition package briefing.
- China Rapid Finance submits to regulatory report.
- Golden Bull reports 75% revenue increase.
- Household debt hits record high.
- Samoyed Holding files for U.S. IPO.
- P2P lending expected to hit $898 billion by 2024. Emerging technologies like AI and blockchain should be a large part of that.
- AltFin’s path to SMB adoption.
- Skynet World wants to enhance P2P lending on Tezos blockchain.
- Australia: OnDeck Australia expands equipment finance.
- Portugal: Younited Credit enters Portugal.
- Vietnam: Belt Road Capital invests $3 million in Tima.
- India: Modi operandi.
- Philippines: First Circle to launch SME-targeted credit facility.
- Sweden: Telia Sweden hires Klarna exec.
- India: PaisaDukan hires independent director.
- United States
- Lending Club founder settles; banks fear weak third quarter (American Banker), Rated: AAA
- LendingClub Responds to DOJ and SEC Settlements (PR Newswire), Rated: A
- Why this fintech pulled its FDIC charter application (American Banker), Rated: AAA
- Delinquency/Loss Trends; Yield Curve One Hike from Inversion (PeerIQ), Rated: AAA
- Bank of America is luring top talent from Apple and Disney to fuel its $10 billion digital ambition (Business Insider), Rated: A
- SoftBank Invests $ 400M in Home-Selling Startup Opendoor (Coverager), Rated: A
- Governor Brown Signs Bill That Expands Access to Capital for the Underbanked (BusinessWire), Rated: A
- Compass Raises $ 400M in Series F Funding (Finsmes), Rated: A
- Americans Prefer Humans over Robos for Financial Advice (Wealth Management), Rated: AAA
- 46 percent of millennials think it takes $ 1,000 to start investing—here’s how much you actually need (CNBC), Rated: A
- Petal’s no-fee credit card for the credit score-less is now open to the public (TechCrunch), Rated: A
- Meet Klarna (Missy Farren & Associates, Ltd. Email), Rated: B
- Real Estate Mogul And Owner of Flipnerd.com, Mike Hambright, Has Been Published In Forbes (MENAFN), Rated: B
- United Kingdom
- Funding Circle Goes Public on the London Stock Exchange (Lend Academy), Rated: AAA
- Funding Circle valuation ‘reflects brand and growth opportunity’ (P2P Finance News), Rated: A
- Goldman Sachs Enters U.K. Savings Market, Continuing Consumer Push (WSJ), Rated: AAA
- Zopa customers vote Bond’s Aston Martin as most iconic screen car (P2P Finance News), Rated: A
- Relendex increases max loan size to £5m (Development Finance Today), Rated: A
- UK in debt: how it looks in figures (London Loves Business), Rated: A
- 70% believe low credit scores or zero hour contracts would prevent borrowing (Financial Reporter), Rated: A
- Fintech iwoca responds to £775m RBS competition package briefing (iwoca Email), Rated: B
- China Rapid Finance Announces Submission of Regulatory Report and Board Change (Markets Insider), Rated: AAA
- Golden Bull Reports 75% Revenue Rise for First Half; Up 6% on Wall Street (Capital Watch), Rated: A
- Chinese Household-Debt Levels Reach Record High (The Epoch Times), Rated: A
- Samoyed Holding Files For $ 80 Million U.S. IPO (Seeking Alpha), Rated: A
- European Union
- Younited Credit expands to Portugal (AltFi), Rated: A
- Telia Sweden overhauls organisational structure, brings in Klarna customer service head on 01 January (Telecompaper), Rated: B
- Global peer-to-peer lending market set to reach $ 898bn by 2024 (P2P Finance News), Rated: AAA
- AltFin’s Inconsistent Path To SMB Adoption (PYMNTS), Rated: AAA
- Skynet Controversy: Similarly Named Tezos dApp Promises Enhanced Peer-to-Peer Lending (BTC Manager), Rated: A
- SME lender expands equipment finance (AustralianBroker), Rated: AAA
- MODI OPERANDI (All About Alpha), Rated: A
- Uttam Prakash Agarwal joins PaisaDukan as independent director (Business Standard), Rated: B
- Belt Road Capital invests $ 3m in Vietnamese P2P lending startup Tima (Deal Street Asia), Rated: AAA
- First Circle, a Philippine-based Fintech, Preps to Launch New SME Targeted Credit Facility with Support of Government (Crowdfund Insider), Rated: A
Lending Club founder settles; banks fear weak third quarter (American Banker), Rated: AAA
Renaud Laplanche, the co-founder and former CEO of online lender LendingClub, agreed to pay $200,000 and be banned from the securities industry for three years to settle Securities and Exchange Commission fraud charges. In addition, LendingClub Asset Management (LCAM), an investment management unit of LendingClub, will pay a $4 million fine while Carrie Dolan, the company’s former chief financial officer, will pay $65,000.
LendingClub Responds to DOJ and SEC Settlements (PR Newswire), Rated: A
“We are pleased to have resolution and closure,” said LendingClub Chairman Hans Morris. “Following an internal review in 2016, LendingClub’s Board of Directors accepted the resignation of Renaud Laplanche as Chairman and CEO of the Company. The Board’s decision was not made lightly but the violation of the Company’s business practices, along with a lack of full disclosure by Mr. Laplanche during the review, was unacceptable. The allegations made by the DOJ and the findings of the SEC further support the Board’s decision to take swift and decisive action. We have full confidence in our new management team and we are a better company today.”
Why this fintech pulled its FDIC charter application (American Banker), Rated: AAA
Varo Money is inching closer to having a bank — the next step will require a major leap.
The fintech, which aims to offer consumer banking services with no fees, applied for a national bank charter over a year ago. While it recently received preliminary and conditional approval from the Office of the Comptroller of the Currency, Varo has been unable to secure the blessing of the Federal Deposit Insurance Corp.
Delinquency/Loss Trends; Yield Curve One Hike from Inversion (PeerIQ), Rated: AAA
The range of Fed Funds Rate is now between 2% – 2.25%. A super-majority of committee members indicated that they would like to hike rates by another 25 bps in December. US GDP growth of 4.2% in the 2nd quarter was the fastest since 2014 Q2, and US consumer confidence reached an 18-year high in September.
Delinquencies by Vintage
Bank of America is luring top talent from Apple and Disney to fuel its billion digital ambition (Business Insider), Rated: A
Like its competitors, Bank of America Merrill Lynch is spending a colossal amount of money to stay competitive in the financial tech race: Its $10 billion annual tech budget sits just behind JPMorgan’s $10.8 billion and ahead ofCitigroup’s $8 billion.
A large chunk of that spending goes to the firm’s profit-driving consumer-banking operation, which accounts for $34.5 billion in revenue and $8.2 billion in net income, which is 38% of the firm’s total.
SoftBank Invests $ 400M in Home-Selling Startup Opendoor (Coverager), Rated: A
Online real estate marketplacehas announced a $400M investment from the SoftBank Vision Fund, bringing its total funding to date to over $1b. The company also announced it has secured access to more than $2b in debt financing from top banks.
Governor Brown Signs Bill That Expands Access to Capital for the Underbanked (BusinessWire), Rated: A
INSIKT, a CDFI-certified fintech company disrupting the predatory lending industry, today celebrated a major step forward for working families and small businesses in California with the signing of Assembly Bill 237 (AB237), following unanimous approval by the CA Legislature. Sponsored by Lorena Gonzalez Fletcher (D-San Diego), this new law significantly expands access to lower cost loans for Californians who are part of the 66 million underbanked in America ensnared in endless cycles of predatory debt.
AB237 builds on the success of California’s Pilot Program, established in California in 2010 to provide affordable credit for loans below $2,500. The Pilot Program has many consumer protections, including rate caps, mandated underwriting, credit education and reporting of payback information to credit bureaus so that consumers can build their credit score.
The Pilot Program has been working, with the volume of payday lending declining in California by almost 7% from last year, the third consecutive annual decline. AB237 extends all of the Pilot Program’s consumer protections to larger loans of up to $7,500. It also adds new protections, including a 36% maximum debt-to-income ratio, minimum loan terms of one year, and mandatory rate reductions on second and third loans for borrowers in good standing.
Compass Raises $ 400M in Series F Funding (Finsmes), Rated: A
Compass, a NYC-based real estate technology company, raised $400m in Series F financing round.
The round – which will bring the total capital raised to nearly $1.2 billion – was led by the Softbank Vision Fund and Qatar Investment Authority (QIA), with participation from Wellington, IVP and Fidelity.
Americans Prefer Humans over Robos for Financial Advice (Wealth Management), Rated: AAA
Americans are relatively comfortable with automating financial advice but the majority still want a human to consult, according to Charles Schwab’s latest Consumer Digital Demands report.
The report, which surveyed 1,000 U.S. adults this summer, including 391 current robo advisor users, showed Americans are more open to technology performing some tasks than others. For example, 75 percent of respondents said they’re comfortable with more human assistance than automation when it came to performing surgery. They also are overwhelmingly more comfortable with humans over technology when it comes to driving a car (74 percent), diagnosing a major health issue (73 percent) and flying an airplane (66 percent).
Read the full report here.
46 percent of millennials think it takes $ 1,000 to start investing—here’s how much you actually need (CNBC), Rated: A
A recent survey from financial services app Twine found that 46 percent of millennials believe they need at least $1,000 to start investing. Another 17 percent believe they need at least $10,000 before they’re able to invest.
Overall, 56 percent assume they don’t have enough money to become investors themselves.
It’s simply not true. There are plenty of ways to get into the market with as little as $1, including contributing to an employer-sponsored 401(k) plan, opening a Roth IRA or using a robo-advisor such as Betterment, Wealthsimple or Ellevest, which offer $0 account minimums.
Petal’s no-fee credit card for the credit score-less is now open to the public (TechCrunch), Rated: A
Petal, the startup credit card company that’s offering a no-fee credit line to people without a credit history, is now publicly available.
Annual percentage rates begin at 14% and are up to 25%, which is the standard for the industry, says Gross. And Petal offers credit limits that are, in many cases, ten times higher than its competitors. Another difference between Petal and its older competitors is the company’s elimination of all fees.
The typical applicants for the Petal card are in their 20s, and are making somewhere between $30,000 and $70,000 per year.
In the market for the past year, Petal has issued cards to over 1,000 early adopters and is on pace to hit 10,000 borrowers signed up with the company by the end of the year.
Meet Klarna (Missy Farren & Associates, Ltd. Email), Rated: B
We’re excited to let you know we are now working with Klarna, a Swedish-based financial service that provides e-commerce payment solutions for merchants and shoppers.
Real Estate Mogul And Owner of Flipnerd.com, Mike Hambright, Has Been Published In Forbes (MENAFN), Rated: B
Flipnerd.com continues to grow and make its mark in the real estate world due to the versatility and expertise of its owner, Mike Hambright. In recognition of his expertise, business acumen and dedication to succeeding in his carved niche, the founder of this real estate company has been published on one of the greatest platforms in the world, Forbes.
Funding Circle Goes Public on the London Stock Exchange (Lend Academy), Rated: AAA
It was a landmark day for fintech in London as Funding Circle became the first UK marketplace lender to complete an IPO. The company raised £300 million at a valuation of around £1.5 billion. They began trading on the London Stock Exchange (LSE: FCH) this morning with an initial price of 440 pence (at the lower end of the forecasted price range of 420p to 530p). While rising early in the day to 460p it closed the exactly flat at 440p.
Funding Circle valuation ‘reflects brand and growth opportunity’ (P2P Finance News), Rated: A
The peer-to-peer business lender, which listed on the London Stock Exchangeon Friday, was originally targeting a market value of £1.8bn. But after narrowing its IPO price range, it subsequently priced at 440p, implying a market capitalisation of £1.5bn.
Some market commentators argue the company is overvalued as it is still loss-making, although revenues surged from £51m in 2016 to £94.5m last year.
Goldman Sachs Enters U.K. Savings Market, Continuing Consumer Push (WSJ), Rated: AAA
Goldman Sachs Group Inc. entered Britain’s £700 billion ($922 billion) cash savings account market Thursday with the U.K. launch of its consumer bank Marcus, adding a fresh source of funding for the U.S. investment bank.
Online-only Marcus offers savings accounts paying interest of 1.5%, the highest rate for instant-access savings products, according to price-comparison websites.
Zopa customers vote Bond’s Aston Martin as most iconic screen car (P2P Finance News), Rated: A
THE ASTON Martin DB10 driven by Daniel Craig in the James Bond films has been voted the most iconic car in film and television.
The car won 35 per cent of votes in a poll conducted by peer-to-peer platform Zopa.
Inspector Morse’s maroon MK II Jaguar followed in second place with 14 per cent, while Dominic Toretto’s Dodge Charger from The Fast and The Furious came third.
Relendex increases max loan size to £5m (Development Finance Today), Rated: A
Loans will also be available on commercial and industrial assets, where circumstances allow, as Relendex plans to reach a lending target of £100m in 2019.
UK in debt: how it looks in figures (London Loves Business), Rated: A
The research briefings provided by the UK Parliament itself show that student debt stands at £105 billion by the end of March 2018.
The Guardian reports that only 5% of the graduates remain unemployed six months after graduating. In addition to that, 74% of professionals who enter the workforce are full-time first degree graduates. In terms of the pay that they get, males more than females tend to benefit from getting a degree. The men’s average pay rise to £24000.
The Guardian reports that by the end of July 2017, unsecured credit had risen to a level not seen since September 2010. Specifically, unsecured debt has reached £201.5 billion.
70% believe low credit scores or zero hour contracts would prevent borrowing (Financial Reporter), Rated: A
Just 31.6% of the 2,400 respondents recognised that none of the reasons listed automatically prevent someone from getting a mortgage.
A massive 47.5% believed a low credit score could stop someone getting a mortgage, 33.4% thought a zero hour contract would be a barrier and 15.6% said a payday loan would stop an application from being accepted.
Fintech iwoca responds to £775m RBS competition package briefing (iwoca Email), Rated: B
The CEO of one of Europe’s fastest growing business lenders has a cautiously optimistic outlook for the £775 million RBS Alternative Remedies Package following a briefing by Banking Competition Remedies this morning.
“Funds from Pools C and D of the package’s Capability and Innovation Fund, would enable iwoca to bring innovative new technology to the market, making it easier for small businesses to secure finance on their terms, whenever and wherever they need it. What’s more, we would be that much closer to achieving our target of funding 100,000 small and micro businesses in the next five years.”
China Rapid Finance Announces Submission of Regulatory Report and Board Change (Markets Insider), Rated: AAA
China Rapid Finance Limited (the “Company” or “XRF”) (NYSE: XRF), operator of one of China’s largest consumer lending marketplaces, today announced that it submitted its P2P Compliance Self-Inspection Report (the “Report”) to its local P2P regulatory office. The Report is the first of three steps mandated in the inspection process, a key element in demonstrating compliance with industry reforms being promulgated by the National P2P Rectification Office.
Golden Bull Reports 75% Revenue Rise for First Half; Up 6% on Wall Street (Capital Watch), Rated: A
The stock of Golden Bull Ltd. (Nasdaq: DNJR) rose more than 6 percent by Monday afternoon after the Chinese P2P lending company posted a 75 percent increase in revenue for the first half of 2018.
Revenue jumped to $4.9 million compared with $2.8 million during the first six months of 2017, the Shanghai-based company said, thanks to an increase in borrowers. According to its statement, Golden Bull has facilitated 3,000 loans with total volume of $77.8 million during the first half compared with 2,200 loans in the amount of $53.7 million processed a year ago.
Chinese Household-Debt Levels Reach Record High (The Epoch Times), Rated: A
While its overall household wealth has increased, China’s household debt-to-GDP ratio reached a record high of 49.1 percent in 2017, according to a new report on global wealth by German insurance giant Allianz. Since the beginning of 2008 to the end of last year, Chinese household debt jumped an average of 27 percent annually, according to separate but corroborating data from the Bank of International Settlements.
Samoyed Holding Files For $ 80 Million U.S. IPO (Seeking Alpha), Rated: A
The firm provides technology-driven credit services to credit-proven millennials in China.
SMY is growing revenues and weighted-average APR but is also seeing sharply increased charge-off rates for its credit card balance transfer marketplace.
Younited Credit expands to Portugal (AltFi), Rated: A
The Paris-based consumer lending platform Younited Credit has increased its potential customer base by launching in Portugal, its sixth European market. Already distributing loans in Germany and Austria, it has 35 per cent of its loans in Italy and Spain.
Telia Sweden overhauls organisational structure, brings in Klarna customer service head on 01 January (Telecompaper), Rated: B
Johan Andersson will lead the strategy division, Fredrik Sidmar will be in charge of professional services, Piero Trivellato will be responsible for digital and analytics, and Sandra Alenius will lead customer service delivery. Alenius will join Telia from Swedish payments specialist Klarna.
Global peer-to-peer lending market set to reach $ 898bn by 2024 (P2P Finance News), Rated: AAA
THE GLOBAL peer-to-peer lending market will grow to $898bn (£688bn) by 2024, according to new research.
The report predicted that this will allow the P2P market to achieve a compound annual growth rate of 48.2 per cent over the next eight years.
AltFin’s Inconsistent Path To SMB Adoption (PYMNTS), Rated: AAA
In the U.K., $248.9 million was lent to SMBs via alternative lending platforms in Q2, according to the U.K. Peer-to-Peer Finance Association (P2PFA). The P2PFA highlighted that the statistic means net lending to SMBs, via member alternative lending players, surpassed that of high-street banks, which lent about $169.4 million to SMBs during the year’s second quarter. New lending to small firms, among member marketplace lending portals, increased by nearly $130.3 million, the association noted.
In the U.K., 30 percent of small firms need external financing simply to survive, according to new Liberis data.
In the U.S., 63 percent of SMBs sought a loan for working capital needs last year, including payroll, inventory and supplies, according to new data from S&B Global Market Intelligence.
In Mexico, 44 percent of small businesses that have been in operation for five years haven’t seen their incomes rise, according to Moody‘s Senior Credit Officer Felipe Carvallo in an interview with Euromoney. According to Moody’s data, small businesses accounted for just 9.1 percent of all loans in Mexico as of last March — equivalent to only 2 percent of total GDP, reports said.
Skynet Controversy: Similarly Named Tezos dApp Promises Enhanced Peer-to-Peer Lending (BTC Manager), Rated: A
Skynet Open Network seems to promise all things to all people – fastest blockchain implementation, AI on Blockchain, Healthcare on Blockchain and more. Some of the 17,000 people on the SkynetOpen telegram channel were understandably furious about the similarities in the name when Skynet World announced their project on September 26, 2018.
Skynet World aims to disrupt the bank lending space by offering peer to peer lending through their app. According to Skynet World:
“Banks are the major source of debt finance for both households and businesses, accounting for about three-quarters and two-thirds respectively of all debt finance provided to those sectors… Banks charge most of the interest up front, a practice known as amortization. Through amortization, 70% of the total interest is paid by the halfway point of the mortgage period.”
SME lender expands equipment finance (AustralianBroker), Rated: AAA
An online lender has expanded its offering of equipment finance, saying it is providing a solution for the “underserved” market of small business owners.
OnDeck Capital Australia said it had received feedback from small businesses and brokers about the length of the loans.
MODI OPERANDI (All About Alpha), Rated: A
What’s your liquidity M.O.? If you are less than certain, it is time to look east toward the country of India and the land of Modi. After all, when 1.3 billion people cough there is a decent chance the rest of the world just might get sick, or maybe just sick of being gated, PIK-ed, or having their holdings marked down 10% or more in a single trading session.
In September an unlisted India company that relied on debt funding for various infrastructure projects defaulted and the spillover into the listed equity markets was contagious and quick. The poster child this time around was Dewan Housing Finance Corp. Their commercial paper, which was issued to fund their longer term capital needs, ticked up 50 basis points when a mutual fund went to liquidate some of that holding, and the stock ended up dropping by more than half in a single trading session. Despite management claims of good health and solid liquidity, many investors could not process or hear it as they ran from the fire. Some other names in this sector suffered similar fates, and the damages (or buying opportunities) are still being sorted out. In India, the publicly traded mutual funds are estimated to own 60% of the commercial paper issued by these non-bank finance companies.
Uttam Prakash Agarwal joins PaisaDukan as independent director (Business Standard), Rated: B
Belt Road Capital invests $ 3m in Vietnamese P2P lending startup Tima (Deal Street Asia), Rated: AAA
Mekong-focused venture capital firm Belt Road Capital Management (BRCM) has injected $3 million in a Series B funding round of Tima, a Vietnamese P2P lending platform incepted in 2015.
The latest investment values the company at $20 million. Tima raised a series A round in 2016 from Dunearn Singapore Fund and G Capital.
First Circle, a Philippine-based Fintech, Preps to Launch New SME Targeted Credit Facility with Support of Government (Crowdfund Insider), Rated: A
First Circle, a Philippine Fintech, is expected to announce a new credit facility for SMEs nationwide. This new facility has gained the support of the Philippine Department of Trade and Industry (DTI) and the Bangko Sentral ng Pilipinas (BSP).
First Circle is an online lender that provides supply chain financing to SMEs.