- Today’s main news: Funding Circle tumbles. SoFi partners with Kukun. Petal raises $34M on launch day. China is losing its grip on P2P lending risks. ID Finance Mexico profitable after 8 months.
- Today’s main analysis: Wealthfront: Clients who engage with automated financial advisors save more.
- Today’s thought-provoking articles: The difference between LendingClub’s, Funding Circle’s valuations. Venture capital investment in blockchain startups is up 280% this year. Why Flipkart wants to enter the financial services market.
- Lending Club compares valuation with Funding Circle’s. These are two different companies operating in two different cultures. Of course their valuations will differ and be based on different criteria.
- SoFi partners with Kukun on home remodeling.
- Petal raises $34 million on launch day. This is great right out of the gate. Petal could be a rising star in credit card issuances as they are targeting a hard-to-service market for traditional lenders.
- Clients who engage with automated financial advisors save more. This is based on Wealthfront research. The data is interesting.
- Lending Coin: Real estate lending powered by the blockchain.
- U.S small business lending keeps rolling.
- Making business analytics as easy to use as a smartphone.
- NetSuite angles for speed-to-market advantage.
- The best places for boomer entrepreneurs.
- U.S Bank Simple Loan 2018 review.
- How robotic process automation can transform banking.
- White Oak Healthcare Finance closes SNF portfolio financing for Granite Investment Group.
- Shared Harvest Fund tackles student debt.
- Early-stage fintech firms benefit from TransUnion, FinTech Sandbox Partnership.
- Funding Circle rallies, then tumbles. I think this came as a surprise to everyone.
- Intrust Bank partners with Funding Circle.
- Desai makes top 10 on Tech 100 list.
- Banks shudder at Marcus launch.
- Orca Money opens P2P lending market to investors.
- LendInvest cuts bridging rate.
- LendInvest adds CFO to board of directors.
- VC investment in blockchain startups is up 280% this year. I think we’re still in the early stages of a blockchain boom.
- Tencent-backed N26 launches in UK and plans US expansion next year. A company to watch.
- Why Flipkart could enter financial services.
- Credit card EMI vs. P2P loans.
- Aadhaar verdict sends fintech lenders back to the drawing board.
- United States
- Lending Club weighs in on Funding Circle’s float (Altfi News) Rated: AAA
- SoFi Forms New Partnership With Kukun to Help Homeowners Understand the Remodeling Cost (Crowdfund Insider) Rated: AAA
- Petal Card Announces $ 34 Million Round on Launch Day (Lend Academy) Rated: AAA
- Wealthfront Research Shows Clients Who Regularly Engage With Automated Financial Advice Save More (PR Newswire) Rated: AAA
- Worldwide Business with kathy ireland Discusses Blockchain Empowered Real Estate Lending with Lending Coin (Digital Journal) Rated: A
- U.S. Small Business Lending Keeps Rolling in August, According to PayNet (Business Wire) Rated: A
- Making business analytics as easy to use as a smartphone (American Banker) Rated: A
- NetSuite angles for speed-to-market advantage over fintechs (American Banker) Rated: A
- San Jose, San Francisco and Boston are the Best Places for Boomer Entrepreneurs (PR Newswire) Rated: A
- U.S. Bank Simple Loan 2018 Review (Nerdwallet) Rated: A
- RPA: the new tech transforming banking (Kyron Systems email) Rated: A
- White Oak Healthcare Finance Closes Subsequent SNF Portfolio Financing for Granite Investment Group (Business Wire) Rated: B
- Volunteer Organization Tackling the Crippling Student Debt Facing Americans (Crazy Good Turns email) Rated: B
- Early-Stage Financial Technology Firms to Benefit from TransUnion and FinTech Sandbox Partnership (Business Wire) Rated: B
- United Kingdom
- Funding Circle rallies as it makes official market debut (The Telegraph) Rated: AAA
- Intrust Bank driving small business opportunities with Funding Circle partnership (Witchita Business Journal) Rated: A
- Funding Circle’s Desai makes top 10 of ‘Tech 100’ list (Peer2Peer Finance) Rated: B
- British banks shudder at Goldman Marcus launch (financial Times) Rated: A
- Orca Money opening up the peer-to-peer lending market to investors (Proactive Investors) Rated: A
- LendInvest announce new bridging rate cuts (Property Reporter) Rated: A
- Property Fintech LendInvest Adds CFO to Board of Directors (Crowdfund Insider) Rated: B
- China doesn’t yet have a grip on P2P lending risks (East Asia Forum) Rated: AAA
- European Union
- German Challenger Bank Kontist Secures Series A Investment (Crowdfund Insider) Rated: A
- VC Investment in Blockchain Startups Is Up 280% So Far This Year (CoinDesk) Rated: AAA
- Tencent-backed mobile bank N26 launches in the UK and plans US expansion by early 2019 (CNBC) Rated: A
- Here is Why Flipkart is Keen to Enter the Financial Services Sector (Entrepreneur) Rated: AAA
- Credit Card EMI vs P2P Loan: Which one should you opt for? (Economic Times) Rated: A
- Aadhaar verdict sends fintech players back to the drawing board (The Week) Rated: A
- VN Central Bank working on framework for P2P lending (Vietnam Net) Rated: AAA
- Latin America
- ID Finance Mexico operations reaches profitability within eight months of launch (Finextra) Rated: AAA
Lending Club weighs in on Funding Circle’s float (Altfi News) Rated: AAA
The stock closed at 364p yesterday, down almost 20 per cent. This was the result of trading during the period between its float last Friday and the stock’s official market debut yesterday.
SoFi Forms New Partnership With Kukun to Help Homeowners Understand the Remodeling Cost (Crowdfund Insider) Rated: AAA
On Tuesday, online lending platform SoFi announced it has formed a new partnership with home improvement platform Kukun to offer advanced new tools to help homeowners gain a greater understanding of how much their home improvement project could cost and how it can affect the resale value of their home.
SoFi reported that the tools will help homeowners estimate costs and returns on investment for over 28 project types that range in price from $10,000 to $300,000, including renovations and expansions. These are notably the first tools SoFi is offering related to its home improvement loans. Financial calculators that are built by Kukun are notably based on highly normalized and granular property condition marketplace data, in addition to normalized construction permit data (fresh and historic), as well as customer intent from the Kukun marketplace
Petal Card Announces $ 34 Million Round on Launch Day (Lend Academy) Rated: AAA
Petal, a startup aims to deliver on what we’ve often called the real promise of fintech: financial inclusion. The company describes itself as “credit with a conscience” and announced a new fundraising round of $34 million on the same day that they officially launched their credit card product to the public. Backing the vision is Jefferies and Silicon Valley Bank.
The funding will aid the roll-out to a waitlist which includes 100,000 people. The card is aimed at the tens of millions of Americans who have no credit score at all or a short credit history.
Wealthfront Research Shows Clients Who Regularly Engage With Automated Financial Advice Save More (PR Newswire) Rated: AAA
Today, Wealthfront released the 2018 Savings Report detailing the impact their automated advice engine, Path, has on their clients’ savings patterns. In the last year, the company has observed that consistent engagement with Path correlates with a 28% increase in a client’s savings rate. For a 32-year-old client with a $130,000 income and $100,000 in savings, this could mean an additional $1.25 million dollars at retirement.
Wealthfront’s goal is to fully automate financial decisions to what some people have called, “self-driving money.” Clients will be able to automatically deposit their paycheck into their Wealthfront account and the company will route their money appropriately based on the lifestyle and goals they’ve set. Bills will be automatically paid, emergency funds and 401(k)s will be topped off and Wealthfront will invest the rest in the most tax efficient way. To date the company offers a suite of automated financial planning, investment management and banking related services. To read the full report visit https://blog.wealthfront.com/2018-wealthfront-savings-report/ or to start saving and investing today download the app on iOS or Android.
Worldwide Business with kathy ireland Discusses Blockchain Empowered Real Estate Lending with Lending Coin (Digital Journal) Rated: A
“We provide peer-to-peer lending around the world,” says Ngo. “By using the blockchain, we don’t have high overhead costs or errors like traditional financing. That’s why we are able to offer such low interest rates.”
Backed by Popular Bank, the platform is fully operational. With Highly experienced private banking professionals and dedicated office suites in each of its principal New York and Miami markets, the Popular private client program is well-positioned to cater to current and prospective clients.
U.S. Small Business Lending Keeps Rolling in August, According to PayNet (Business Wire) Rated: A
Small business lending continued its blistering pace in August, according to the latest Strategic Insights Report from PayNet, the leading provider of small business credit data and analysis. The Thomson Reuters / PayNet Small Business Lending Index (SBLI) seasonally adjusted originations increased 7% from 145.1 in July 2018 to 154.7 in August 2018, its second-highest reading ever. Year-over-year, the index is up 16%, marking its 11th consecutive increase over the prior year and the fourth double-digit year-over-year gain in the last five months. The rolling three-month index at 148.3 is relatively flat compared to July 2018 but is up 12% on the year.
The SBLI remained above 140 for the eighth consecutive month. The majority of industries experienced lending growth on an annual basis in August, led by Transportation & Warehousing (+20.4% Y/Y) and Mining (+9.7% Y/Y). Lending in Arts & Entertainment (+4.6% Y/Y) climbed to an all-time high in August, and more than half of industries achieved index readings in the top 25th percentile of all readings since 2005. Construction (+8.0% Y/Y) saw its strongest annual growth since November 2016 (despite weakening residential investment) due to strong investment in commercial and industrial structures. Regionally, lending increased across all ten of the largest states in August, continuing the widespread expansion seen in July. On an annual basis, regional growth was led by Texas (+15.3% Y/Y), Illinois (+12.3% Y/Y), North Carolina (+9.9% Y/Y) and Michigan (+9.4% Y/Y) — each of which saw lending reach record highs in August. Meanwhile, Pennsylvania (+7.9% Y/Y) and New York (+6.2% Y/Y) experienced their fastest year-over-year growth since mid-2015.
Making business analytics as easy to use as a smartphone (American Banker) Rated: A
A constant drumbeat in banking is that businesses require ever more data analytics to remain informed and competitive. Yet Envestnet|Yodlee acknowledged its data offerings were out of tune with customer expectations.
Its Envestnet Envision IQ platform, launched in May, offered up a variety of information concerning a bank’s customers and products, but it had no focus, according to a top executive at the data aggregator.
Branch managers will be able to create their own “playlist” of questions to be answered daily, he said, and the system will record and categorize questions asked into favorited questions and most-asked questions.
NetSuite angles for speed-to-market advantage over fintechs (American Banker) Rated: A
The biggest bank technology providers are revamping their most popular platforms to offer new features and reach more financial service sectors — all in the name of protecting market share from insurgent fintechs and pivoting peers.
Oracle joined the fray last week, announcing it was adding banking as a service to NetSuite, the venerable cloud-based enterprise resource planning platform it acquired for $9.3 billion in 2016.
San Jose, San Francisco and Boston are the Best Places for Boomer Entrepreneurs (PR Newswire) Rated: A
- San Jose – the seat of the Silicon Valley – is by far the best place for boomer entrepreneurs, with a final score of 93.6. In addition to representing high business income, San Jose boasts the largest share of boomer business founders.
- San Francisco comes in second with a score of 86.5, thanks to remarkable earnings potential, relative to the other metros on the list, indicating that boomers are sharing in the general prosperity of self-employed entrepreneurs there.
- Boston earned the third place on the list, with a score of 74.1.
- New Orleans, Miami and Orlando ranked last on the list, with scores of 16.4, 20.5 and 21.1, respectively.
See the full study here.
U.S. Bank Simple Loan 2018 Review (Nerdwallet) Rated: A
Cost: The Simple Loan costs $12 for every $100 borrowed, which translates into an annual percentage rate of 71%. That’s much cheaper than typical payday loans, where the average rate is 391%, and it’s due after three months, not the two-week cycle that is common of payday loans.
Auto-pay discount: U.S. Bank allows both auto-payments and manual payments. Manual payments cost extra, $15 per $100 borrowed, which is equal to 88% APR.
Payments are reported to the credit bureaus, so your score can increase if you make on-time payments.
RPA: the new tech transforming banking (Kyron Systems email) Rated: A
The number of U.S. banks has almost halved since 2007, from 8,400 to about 5,500 in 2017, and the reason is that it costs more. Rising AML and KYC compliance costs combined with regulatory fines are continuously putting banks out of business, especially small banks; U.S. Fed research indicates that adding just two new employees to a small bank’s compliance team would make a third of these banks unprofitable.
In response, banks are turning to a new field of virtual assistants: RPA, which stands for ‘robotic process automation’ but there are no actual, physical robots, rather virtual bots that run in the background on employee computers, learning what processes the bots can do instead, and then doing exactly that. Although RPA is being implemented in almost every industry, it dovetails particularly well with banking because there are so many repetitive processes that can be automated, everything from risk exposure calculations to compliance reports.
More information on RPA can be found here.
White Oak Healthcare Finance Closes Subsequent SNF Portfolio Financing for Granite Investment Group (Business Wire) Rated: B
White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as sole lender and administrative agent on the funding of a $28 million senior credit facility for Granite Investment Group (“Granite”). Secured by three skilled nursing facilities in Texas, the funds refinanced existing debt and provided a dividend for investors. White Oak recently announced it financed a separate portfolio of four skilled nursing facilities in Texas for Granite.
“We are happy to have had another opportunity to work with Granite. This transaction materialized as an opportunity to provide a bridge-to-HUD financing for an under-levered portfolio. As an active lender in the space, we can optimize our offerings to meet each company’s unique business needs,” said Isaac Soleimani, Managing Director and Partner at White Oak.
Granite Investment Group is a privately held, real estate investment firm focused on multi-family, senior housing, and post-acute care.
Volunteer Organization Tackling the Crippling Student Debt Facing Americans (Crazy Good Turns email) Rated: B
A new non-profit, Shared Harvest Fund has created an impactful way to pay down student debt. Shared Harvest Fund has created a program that partners non-profit organizations in need of workers, with students looking to not only pay down their debt, but do something with purpose as well. Once the connection is made, students volunteer a set amount of hours per month, and the non-profit organization in turn sends a check directly to the lender of the student’s choice.
The founders of Shared Harvest Fund; Dr. Briana DeCuir, Dr. Joanne Moreau and Dr. NanaEfua B.A.M, will be featured on the October 17th Crazy Good Turns podcast, a non-profit podcast that shines a light on people and organizations making a positive impact in the world, to share the in’s and out’s of their platform and discuss in detail how students looking to pay down debt—or non-profits looking for volunteers—can be a part of the Shared Harvest Fund community.
Podcast Topics Include:
- The founders discuss how and why they created the platform
- The negative physical and mental consequences that carrying debt has on borrowers and the positive effects of volunteering to help others.
- How unaware most students are about the length of time it takes to pay off student loans.
- How corporations can increase their corporate responsibilities goals by supporting the Shared Harvest Fund.
Early-Stage Financial Technology Firms to Benefit from TransUnion and FinTech Sandbox Partnership (Business Wire) Rated: B
FinTech Sandbox today announced it has entered into a partnership with TransUnion to help early-stage financial technology firms launch in the marketplace. As part of the partnership, TransUnion’s Startup Credit Kit will enable startups to test business model concepts and refine their go-to-market strategies.
Funding Circle rallies as it makes official market debut (The Telegraph) Rated: AAA
Shares in Funding Circle rallied as it made its official market debut on the London Stock Exchange today, in a move likely to quell fears over market uncertainty.
The peer-to-peer lender tumbled as much as 8pc in the company’s first official day of trading, falling well below the 440p per share it had floated at last week, before later jumping back up.
Around 20pc had been wiped off their value during conditional trading, which began last Friday and ran through to Tuesday evening. Shares dropped as low as 340p on Wednesday, before later rising to 390p.
Intrust Bank driving small business opportunities with Funding Circle partnership (Witchita Business Journal) Rated: A
The original partnership was announced in January. It expanded in June and Intrust increased its commitment to more than 500 loans.
Brian Heinrichs, CFO at Intrust, says the bank is now at around 400 of those commitments, though he declined to say what amount of lending that represented for the bank.
Heinrichs says Intrust is the only bank partnered in such a way with U.K.-based Funding Circle.
Funding Circle’s Desai makes top 10 of ‘Tech 100’ list (Peer2Peer Finance) Rated: B
FUNDING Circle’s chief executive Samir Desai has been named as one of the top 10 most influential people in the British tech industry.
The peer-to-peer pioneer appears alongside fellow fintech leaders such as Starling Bank chief executive Anne Boden, and Tom Blomfield, chief executive of Monzo.
The Tech 100 list is compiled by Business Insider and aims to celebrate “the 100 coolest and most ground-breaking people in the UK tech industry over the past 12 months”.
British banks shudder at Goldman Marcus launch (financial Times) Rated: A
Marcus by Goldman Sachs recently launched in the UK and the biggest high street banks are only beginning to grapple with what the new competitor means for the market. Marcus has seen significant success in the U.S. market and is hoping to bring that to the UK, they currently have a savings rate offer 3 times the traditional powers and have plans to launch more products soon.
The news is not all bad for high street powers as data has shown customers thus far have stayed loyal to their bank and regulations around use of deposits make it a bit trickier for Marcus to repeat their U.S. model.
Keith Horowitz, analyst at Citigroup, tells the FT where the biggest opportunity could exist, “The big key for Goldman ultimately is customer data, that’s the holy grail for banking, creating an open financial marketplace platform that can also utilise their huge balance sheet.”
Orca Money opening up the peer-to-peer lending market to investors (Proactive Investors) Rated: A
LendInvest announce new bridging rate cuts (Property Reporter) Rated: A
Online property finance platform, LendInvest, has announced that it has cut rates across its Bridging product range and introduced a new Bridge to Term transition service.
The lender has cut rates on its Residential and Commercial Bridging, Development Exit and Auction Finance products. Monthly interest rates now start from 0.55% for Residential Bridging, Auction and Development Exit and 0.79% for Commercial Bridging.
A new Bridge to Term service has also been introduced that offers borrowers looking to purchase residential property at auction, undertake refurbishment or carry out minor development the opportunity to then switch to one of LendInvest’s Buy-to-Let mortgages.
Property Fintech LendInvest Adds CFO to Board of Directors (Crowdfund Insider) Rated: B
LendInvest, an online lending platform for property finance, has announced the addition of Chief Financial Officer, Angelie Panteli, to the board of directors.
China doesn’t yet have a grip on P2P lending risks (East Asia Forum) Rated: AAA
China’s online peer-to-peer (P2P) lending platforms have been falling like dominos. This has sparked investor panic, exposing deeper risks long hidden in China’s shadow finance sector. It is yet to be seen if Chinese regulators will be able to manage the risks and effectively regulate P2P in the same way they have done in other areas of shadow banking.
Shadow banking from institutions supervised by empowered central regulators is shrinking. One of the best ways to measure shadow credit funded by banks is through their lending to non-bank financial institutions. It rose 80 per cent year-on-year in February 2016, but over the last year has shrunk by 4 per cent.
The number of surviving P2P platforms has been on a gradual decline since November 2015, but regulators were caught off guard when failures suddenly accelerated in mid-June 2018. Investors began to panic and tried to pull their money out, sparking yet more failures. Many protested for government help when they found that their savings had been stolen or sunk into bad loans.
Outstanding loans then plummeted by 300 billion RMB (US$44 billion), from 1.3 trillion RMB (US$190 billion) to just under 1 trillion RMB (US$146 billion). They fell again in August, but the outflows and failures moderated. The storm may have passed, leaving most platforms intact for now.
German Challenger Bank Kontist Secures Series A Investment (Crowdfund Insider) Rated: A
Kontist, a Berlin-based challenger bank, announced on Tuesday it secured a Series A investment to expand the financial services available to freelancers, small businesses, and entrepreneurs. The round was led by Haufe Group, one of Germany’s providers of digital workplace solutions and services with participation from existing investor Danish company builder, Founders.
VC Investment in Blockchain Startups Is Up 280% So Far This Year (CoinDesk) Rated: AAA
As the crypto industry sees a decline in initial coin offerings (ICOs) amid regulatory concerns and major losses across token markets, traditional VC investment is once more on the rise.
In its latest report, blockchain research group Diar reports that blockchain and cryptocurrency-focused startups have raised nearly $3.9 billion through VC investments in the first three quarters of the year – that up 280 percent when compared to the whole of 2017, it says.
Based on data from Pitchbook, the report indicates that number of deals also nearly doubled this year.
Alongside the increase in VC deals, the average size of crypto and blockchain investments has increased by over $1 million in 2018. Ten of the largest blockchain and crypto investments in 2018 saw the recipient companies raise more than $1.3 billion in total venture capital. While one of the firms has a native token (DFINITY), the rest represent equity investment, says Diar.
Tencent-backed mobile bank N26 launches in the UK and plans US expansion by early 2019 (CNBC) Rated: A
The Berlin-based firm, which is backed by Chinese tech giant Tencent, German insurer Allianz and PayPal co-founder Peter Thiel, said on Thursday that its services are now available in Britain, on a limited basis.
Initially, a select number of “early adopters” will be given access to the app in the U.K. More than 50,000 people who have signed up to a waiting list for the U.K. launch will be on-boarded on a phased basis, and a broader launch is planned for next month.
Here is Why Flipkart is Keen to Enter the Financial Services Sector (Entrepreneur) Rated: AAA
Looks the Indian startup’s ecosystem is smitten by the opportunities fintech industry is benefiting of. No wonder, we have unicorn startup companies such as the Flipkart looking into tap the market.
Market buzz says that Flipkart is in the middle applying for an NBFC license to extend the line of credit to its sellers and customers. With time, it would expand its financial services offerings beyond its e-commerce platform.
The credit problem in India is beyond surreal. For example, the small and medium enterprises sector (SMEs), which contributes between 30-40 per cent in the country’s GDP, suffers majorly because of its unattended financing need and the gap is as big as around USD 650 billion.
Giving an example of the consumer lending space, Gaurav Chopra, Founder & CEO, IndiaLends says this segment is expected to be a USD 1.2 trillion opportunity for the organised lenders, implying a 22 per cent compound annual growth rate over the next three years.
Credit Card EMI vs P2P Loan: Which one should you opt for? (Economic Times) Rated: A
Credit cards can be extremely handy when it comes to making an impulsive high-ticket purchase. All you have to do is to flash the card and walk away with your purchase. Many credit card companies would immediately offer you an option to pay back the money in equated monthly instalments or EMIs.
Compared to credit cards, personal loans can be cheaper. “Credit cards can charge somewhere around 0.1% every day. Making the annual charges go up to 36% in some cases,” says Tanwir Alam, Founder & CEO, Fincart.
P2P loans, unlike the usual bank loans, offer short-term tenures starting 3-36 months and can be looked as an alternative to credit cards, depending on the requirement of the borrower. The interest rates are anywhere between 12 and 28%.
Aadhaar verdict sends fintech players back to the drawing board (The Week) Rated: A
The recent Supreme Court verdict on Aadhaar may bring in tough times for the fintech companies who used to conduct eKYC (electronic Know Your Customer) via Aadhaar. Not mandating Aadhaar for the verification process has sent some fintech players back to the drawing board to work out strategies for physical verification, which is usually a time-consuming and expensive process. Experts and industry representatives with whom THE WEEK spoke to feel that verification of customers will eventually move to a traditional mode of verifying individuals through physical ID proof.
Bhavin Patel, CEO and co-founder of LenDenClub, a P2P digital lending platform, says that a physical KYC check takes around 24 hours or more now in an ideal scenario and this change in processing will result in longer disbursal time and higher cost for the consumer.
VN Central Bank working on framework for P2P lending (Vietnam Net) Rated: AAA
Anh spoke at a recent workshop on international experiences in P2P lending held in Ha Noi with the participation of more than 100 representatives, including financial management authorities from China, Singapore, Thailand and Indonesia.
With the rapid proliferation of mobile devices, artificial intelligence and big data, P2P lending—the practice of lending money to individuals or businesses through online services that match lenders with borrowers—has developed rapidly around the world in recent years.
Although P2P can create enormous socio-economic benefits, it also contains potential risks for the relevant parties, he said, adding that it is necessary to strictly monitor this field to mitigate the risks and improve awareness of the relevant parties.
Through this model, lenders can earn higher returns than they can get from banks while borrowers, especially individuals and micro businesses, can get money at lower rates. But the lending is also fertile ground for high-tech crimes. China had to eliminate some 160 online lending companies as they were in fact high-tech criminals working to cheat investors.
ID Finance Mexico operations reaches profitability within eight months of launch (Finextra) Rated: AAA
The Mexico operations of ID Finance, the emerging markets fintech company, has reached profitability in just eight months since launching in the region.
The announcement represents a key milestone for the business as it continues its rapid expansion across Latin America. It currently operates in Mexico and Brazil.