- Today’s main news: Marcus may reign in new loans, but not SoFi, LendingClub. Fellow Finance goes public. Aereal Bank invests in BrickVest. Aussie borrowers dump banks for P2P lenders. Figure launches HELOCs on blockchain.
- Today’s main analysis: PeerIQ’s Q3 2018 marketplace lending securitization tracker.
- Today’s thought-provoking articles: How every day can be payday. Older Americans are most creditworthy. Corporate debt in China.
- Marcus could reign in new loans next year. SoFi and LendingClub came to prominence doing things differently than banks, and Marcus is quite a departure for the traditional finance firm of Goldman Sachs. The latter is talking about pulling back on new lending while SoFi and LendingClub plan to press in.
- Q3 2018 MPL securitization tracker. An analysis of PeerIQ’s data from Lend Academy.
- Are storm clouds gathering? More on securitization.
- How every day can be payday. Americans are strapped living paycheck to paycheck and payday loan companies make it worse, but a new brand of online payday loans is changing how low-income Americans pay their bills and receive their paychecks.
- Older Americans are more creditworthy. There are way too many factors at play here to narrow this down to one or two criteria. Older Americans built their credit scores in the 1970s, 1980s, and 1990s. Many of those years were boom economic cycles. It is difficult to build a credit history when banks have pulled back on personal lending. Millennials and Gen Xers have had different challenges.
- Figure launches HELOCs on blockchain. It will be interesting to see how Figure does in the marketplace. One good thing they have going for them is the experience of their founder, Mike Cagney. One successful venture behind him, he’s on the move again.
- Robinhood makes another move to compete with traditional brokerages.
- Online real estate crowdfunding is expected to grow.
- Can fintech be more inclusive?
- Goji hits 100M GBP in assets.
- Roostify integrates with Ellie Mae’s Encompass Digital Mortgage Solution.
- Treasury official says states’ response to OCC Fintech Charter is disappointing.
- Wagestream wants to tackle poverty premium.
- Savers offered 8% on ISA bond that fights justice.
- Zopa, Funding Circle, Monzo CEOs among London’s most influential.
- Fellow Finance goes public.
- Nasdaq Helsinki welcomes Fellow Finance.
- Bitwala teams up with solarisBank on cryptobank services.
- Aereal Bank invests in BrickVest.
- SALT Coin hits retracement target after gaining 55%.
- Nexo overview.
- Fellow Finance aims for international growth.
- United States
- Goldman’s Marcus May Rein In New Loans Next Year But Rivals Aren’t Worried (Forbes), Rated: AAA
- PeerIQ’s Q3 2018 Marketplace Lending Securitization Tracker (Lend Academy), Rated: AAA
- Economic Growth is Solid, Lending Securitization Strong, but are Storm Clouds Gathering? (Crowdfund Insider), Rated: A
- The end of the two-week pay cycle: How every day can be payday (MarketWatch), Rated: AAA
- LendingTree Study Finds Older Generations Most Creditworthy (PR Newswire), Rated: AAA
- The CEO of Robinhood sets out his vision after announcing another move to compete with major brokerages (Markets Insider), Rated: A
- Mike Cagney’s Figure Launches Blockchain-Powered Online Home Equity Loans (PYMNTS), Rated: AAA
- Online Investing in Real Estate through Crowdfunding Expected to Grow (Urban Land Institute), Rated: A
- Toward a more inclusive fintech industry (American Banker), Rated: A
- Direct lending platform Goji hits £100m in assets (AltFi), Rated: A
- Roostify Announces Bidirectional Integration with Ellie Mae’s Encompass Digital Mortgage Solution (BusinessWire), Rated: B
- States’ response to OCC fintech charter ‘disappointing,’ top Treasury official says (American Banker), Rated: B
- United Kingdom
- Fintech startup Wagestream wants to tackle Britain’s ‘poverty premium’ (TechWorld), Rated: AAA
- Savers Offered 8% By ISA Bond That Fights for Justice (OA Online), Rated: A
- London’s most influential people 2018 (Evening Standard), Rated: B
- Overheard in the Long Room: corporate China (FT Alphaville), Rated: AAA
- European Union
- Fellow Finance goes public (AltFi), Rated: AAA
- Nasdaq Helsinki welcomes Fellow Finance to Nasdaq First North Finland (Nasdaq), Rated: A
- German Blockchain Banking Group Bitwala Teams Up With solarisBank to launch Cryptobank Services (Crowdfund Insider), Rated: A
- Germany’s Aareal Bank invests in UK real estate platform BrickVest (Banking Tech), Rated: AAA
- SALT Coin Hits Retracement Target After 55% Gains (Global Coin Report), Rated: A
- Nexo (NEXO) Overview: We might have gotten the first legit crypto lending platform (Captain Altcoin), Rated: A
- Crowdfunding firm aims for rapid global growth (BusinessDay), Rated: A
- More Aussie borrowers are dumping banks for peer-to-peer lenders, CommSec reveals (mozo), Rated: AAA
- Latin America
- Goldman Sachs has joined George Soros and Steve Cohen in backing an Argentinian mobile banking startup (Business Insider), Rated: AAA
- What’s happening with crypto in Latin America? (Crypto Insider), Rated: A
- Borrowers and Lenders Discover a Reputable Financial Conduit with FundKo (Digital Journal), Rated: AAA
Goldman’s Marcus May Rein In New Loans Next Year But Rivals Aren’t Worried (Forbes), Rated: AAA
Nearly two years after exploding on the online personal lending market scene, Marcus, the unit of Goldman Sachs, is reportedly retreating, reigning in its loan origination target for 2019.
That’s according to Bloomberg, which citing people with knowledge of the plans, reported executives within Marcus are worried about the current state of the market as the Federal Reserve continues to raise interest rates, with more hikes expected next year. While unemployment is near record lows and consumer confidence is surging, it’s not clear how the consumer will fare in a continuing rising rate environment.
It’s also a move that its rival online lenders including LendingClub and Social Finance don’t appear to be copying. “The personal loan category as a whole grew 18% in the first quarter making it the fastest growing category of debt,” said LendingClub Chief Executive Scott Sanborn. “It is solving a real need to refinance credit card debt.”
Take the first quarter of 2018 as one example. According to TransUnion, the credit-scoring company, the number of outstanding personal loans in the first three months of the year rose to 19.2 million. That compares to 16.9 million a year ago. Meanwhile, the total loan balances reached $120 billion, up from $102 billion in the first quarter of 2017. Good news for the fintech lending industry and investors: default rates among personal loan borrowers declined by 3.51% in the first quarter of this year compared to a rate of 3.72% in the same period last year.
PeerIQ’s Q3 2018 Marketplace Lending Securitization Tracker (Lend Academy), Rated: AAA
A total of eight marketplace lending securitizations were issued in the third quarter, totaling $3.5 billion. This is the fifth highest level of quarterly issuance which is noteworthy given that the summer is typically a slower period for issuance. This is an increase of 35% from the prior year period. It’s hard to believe that total marketplace lending issuance to date stands at $41.9 billion across 134 deals.
There has been a shift with spreads tightening and yields falling on new deals, a reversal from prior quarters. PeerIQ noted that all-in yields on consumer deals decreased 2 basis points from 3.72% to 3.7% and student deals decreased 100 basis points from 4.5% to 3.5% over the previous quarter.
Economic Growth is Solid, Lending Securitization Strong, but are Storm Clouds Gathering? (Crowdfund Insider), Rated: A
“Citigroup, Deutsche Bank, and Credit Suisse continue to top the issuance league tables with 57% of MPL ABS transaction volume. Citi and CS are increasing their activity in the Fintech space, with CS also offering risk retention solutions on securitizations.”
The end of the two-week pay cycle: How every day can be payday (MarketWatch), Rated: AAA
Teresa Long, an assistant manager at a Walmart near Dallas, is like many Americans: She sometimes struggles to pay her monthly bills on time, especially when her biweekly paycheck fluctuates.
Occasionally, when she was not able to budget correctly for the month, she would default on a bill, miss a payment or send in a check late. Sometimes Long would take out a payday loan, but the fees were crippling. “You’re taking a $300 loan, and, by the time you pay it off, it’s probably $1,000 or $1,500,” said the 40-year-old mother of four. “It’s extra money you could have been saving.”
So when she saw information on an internal Walmart website about a new service from an Oakland, Calif.-based company called Even, Long was intrigued. It promised to pay her up to half her wages in advance, on demand, for an average $6 monthly subscription fee.
LendingTree Study Finds Older Generations Most Creditworthy (PR Newswire), Rated: AAA
LendingTree today released its study on Americans’ credit scores by generation that found that the older someone is, the better their credit tends to be. On average, members of the silent generation (the oldest cohort) have credit scores 100 points higher than those of millennials.
- Millennials and Gen Xers have, on average, “fair” credit scores.
- Baby boomers have “good” scores.
- Members of the silent generation have “very good” scores.
Why older people have higher credit scores
One possible reason for higher scores among older people is cultural. In general, they may use credit less and may be more disciplined savers and spenders, said Kali McFadden, senior research analyst at LendingTree.
Another reason is that older Americans are more settled financially, with lower monthly costs. In general, the older someone is, the lower their mortgage payments and student loan debts are (or they don’t have such payments at all). Older Americans may also not need new furniture or have child care costs. That means they are less likely to have urgent financial costs that can result in delinquencies, which can hurt credit scores.
Millennials and Gen Xers may have to pay more for loans
Banks, credit card issuers and other lenders make lending decisions based on a borrower’s creditworthiness. They offer much better rates to borrowers with higher scores.
Boomers aren’t much better off
While the higher credit score of baby boomers (average credit score: 696) is a sign of better financial stability than the younger generations, there’s still room for improvement. The average boomer score trails that of the elder generation by 38 points.
The CEO of Robinhood sets out his vision after announcing another move to compete with major brokerages (Markets Insider), Rated: A
Robinhood, the zero-fee stock trading app that helped kickstart a race to the bottom in brokerage fees, has a new weapon in its arsenal as it fights to become the Amazon of personal finance: an in-house clearing system.
The $5.6 billion startup announced Wednesday that it has completed a two-year effort to build and launch its own in-house clearing provider that will allow it to save money and improve trading for its 6 million customers, cofounder and CEO Vlad Tenev told Business Insider.
Mike Cagney’s Figure Launches Blockchain-Powered Online Home Equity Loans (PYMNTS), Rated: AAA
Figure rolled out the first of those products yesterday: a digitally processed home equity loan that it claims can cut approval time to five minutes. According to Cagney, those Figure loans can range between $15,000 and $100,000, with funds made available to users in five days — down from the 45 days that such products usually take.
Learn more about Figure’s business model here.
Online Investing in Real Estate through Crowdfunding Expected to Grow (Urban Land Institute), Rated: A
Crowdfunding has captured the imagination—and money—of investors throughout the United States. While it is used for everything from charitable campaigns to launching startup businesses or paying legal fees, commercial real estate may be the largest online investment opportunity for crowdfunding to date, according to a panel at the 2018 ULI Fall Meeting in Boston.
“This $14 trillion market is the nation’s third-largest investment asset class behind stocks and bonds. Crowdfunding allows real estate firms to reach beyond friends and family to investors anywhere,” he said.
Toward a more inclusive fintech industry (American Banker), Rated: A
I worked for seven years in a company run exclusively by men — no women on the leadership team at all. The executive suite was physically walled off, a literal boys’ club, and no matter how valuable my performance, I wasn’t going to be a “cultural fit” for the all-male back room. Even now, 84% of venture-backed companies lack even a single female founder.
Direct lending platform Goji hits £100m in assets (AltFi), Rated: A
Goji has reached over £100 million in assets under management on its platform, the firm has said.
This latest milestone coincides with Goji becoming a partner of adviser-support network SimplyBiz.
Roostify Announces Bidirectional Integration with Ellie Mae’s Encompass Digital Mortgage Solution (BusinessWire), Rated: B
Roostify, a digital lending solution, announced that its platform now offers a bidirectional integration with Ellie Mae’s Encompass digital mortgage lending platform. The seamless integration allows lenders to easily pass information between the two systems, driving quality and efficiency in the loan origination process.
States’ response to OCC fintech charter ‘disappointing,’ top Treasury official says (American Banker), Rated: B
A senior Treasury Department official said he was disheartened by state regulators’ negative response to its fintech report, which supported the Office of the Comptroller of the Currency’s plans to create a national fintech charter.
Fintech startup Wagestream wants to tackle Britain’s ‘poverty premium’ (TechWorld), Rated: AAA
The UK’s Financial Ombudsman Service claims to have received 10,979 complaints about payday loans between April and June 2018, according to figures from its annual review for 2017/18.
The figures came just weeks after what was the UK’s biggest payday lender, Wonga, went into administration.
But London-based Fintech startup, Wagestream, has emerged to put an end to the misery of ‘poverty premium’ as it makes a stand to ‘destroy payday loans’.
Savers Offered 8% By ISA Bond That Fights for Justice (OA Online), Rated: A
INVESTORS seeking a higher rate of return – and who want to use their money to help victims of things like professional negligence – will be interested in a new bond by Just, held through an Innovative Finance ISA called Just ISA.
Launched in summer 2018, the Just ISA offers tax-free returns of 8% by investing in a bond that is ultimately used to fund legal cases on behalf of people who are seeking redress from things such as professional negligence by individuals and corporations.
London’s most influential people 2018 (Evening Standard), Rated: B
Tom Blomfield – Chief executive of Monzo
The Oxford graduate has made carrying the ubiquitous orange payment card a mark of cool as its cult status continues to grow.
Samir Desai – Chief executive and co-founder of Funding Circle
The former management consultant has been at the helm for eight years of the leading peer-to-peer lender to small businesses.
Jaidev Janardana – Chief executive of Zopa
The former Capital One man is boss of the world’s first peer-to-peer lending company which is launching a bank.
Overheard in the Long Room: corporate China (FT Alphaville), Rated: AAA
Two diverging trends here. China, on a national level, is requiring more and more cash to service its debts. Not good news for those concerned about the Republic’s burgeoning debt burden, estimated to be anywhere between 300 to 350 per cent of GDP, depending on who you ask and what mood they’re in.
This hasn’t deterred bond buyers however, as the IMF recorded a circa $40bn flow into yuan-denominated bonds over the second quarter of this year, according to Brad Setser at the CFR:
Fellow Finance goes public (AltFi), Rated: AAA
The platform is expected to raise approximately €10m. With a valuation of €55m at the close of the IPO on Tuesday, the platform anticipates rapid growth. The IPO saw 1.3 million new shares in the company on offer for an 18.3 per cent stake in the company. The offer was 2.2 times oversubscribed.
In addition to the new shares on offer, just under 1.3 million in existing shares in the company will go on sale too.
Nasdaq Helsinki welcomes Fellow Finance to Nasdaq First North Finland (Nasdaq), Rated: A
Nasdaq (Nasdaq: NDAQ) announce that trading in Fellow Finance Plc shares (short name: FELLOW) commence today on Nasdaq First North Finland. The company belongs to the Financials sector. Fellow Finance is the 61st company to be admitted to trading on Nasdaq’s Nordic markets* in 2018, and it represents the 9th listing on Nasdaq Helsinki in 2018.
German Blockchain Banking Group Bitwala Teams Up With solarisBank to launch Cryptobank Services (Crowdfund Insider), Rated: A
On Tuesday, German blockchain banking group Bitwala announced it has teamed up with solarisBank to launch its new cryptobanking services. According to Bitwala, nearly 35,000 customers have already pre-registered to be among the first to get access to new service, which helps customers to manage cryptocurrencies with unprecedented convenience and benefit from the high level of security and deposit protection commanded by German banking laws.
Germany’s Aareal Bank invests in UK real estate platform BrickVest (Banking Tech), Rated: AAA
Germany’s Aareal Bank says it plans to acquire a stake in BrickVest, the London-based online platform for commercial real estate investments.
SALT Coin Hits Retracement Target After 55% Gains (Global Coin Report), Rated: A
The announcement by SALT coin to accept Litecoin (LTC)as collateral in their blockchain lending platform led to an explosion in the price of their ERC-20 token. In a 24 hour shake-up that rocked the altcoin market just before the weekend, this crypto-lending favorite rose over US $0.82 on Friday morning. SALT (SALT) shot up 55% overnight while the rest of the market stagnated in a prolonged malaise.
The platform now offers USD loans at a 5.99% interest rate(for loans less than US$75,000) and has removed the cap on maximum loan amounts.
Nexo (NEXO) Overview: We might have gotten the first legit crypto lending platform (Captain Altcoin), Rated: A
After a prolonged period of sideways movement throughout the month of September, staying just below $0.050, the currency started growing around 21st. The slow rise lasted until 30th, when the daily trade volume sharply dropped off from $984,935 to $230,742. The same way it dropped, the volume soared back up on October 1st. NEXO price followed suit and grew to$0.0933 on a daily trade volume of $1,765,517. After a short correction of both parameters, the price and volume spiked up once again on the 5th, this time reaching $0.1143 and $1,936,530 respectively.
Crowdfunding firm aims for rapid global growth (BusinessDay), Rated: A
Finnish crowdfunding platform Fellow Finance is targeting fast international growth after a successful initial public offering (IPO) in Helsinki, its CEO says.
Founded back in 2013, the company was valued at €55m by the IPO, which closed on Tuesday and was more than two times oversubscribed.
More Aussie borrowers are dumping banks for peer-to-peer lenders, CommSec reveals (mozo), Rated: AAA
According a recent CommSec Economic Insights Report, the number of Aussies borrowing from non-bank financial institutions rose by 10.3% over the year to August.
“Banks are facing greater competition from non-banks. At the same time bank deposits are only lifting at a 2.5% annual rate, putting greater reliance on external funding. It is clearly a competitive and challenging environment for financial institutions,” said CommSec chief economist, Craig James.
Goldman Sachs has joined George Soros and Steve Cohen in backing an Argentinian mobile banking startup (Business Insider), Rated: AAA
Ualá, the one-year-old mobile banking startup, raised $34 million in its series B round led by Goldman Sachs Investment Partners, along with existing investors including a private fund managed by Soros Fund Management, Jefferies, the venture arm of Steve Cohen’s Point72, and entrepreneur Kevin Ryan, according to an announcement seen by Business Insider.
Over 50% of people in Argentina had never had a card before and are only operating in cash, so the company aims to provide these people financial inclusion by giving them access to financial system, he added.
What’s happening with crypto in Latin America? (Crypto Insider), Rated: A
Latin America is undergoing somewhat of a transformation in the world of global finance. With the state of the banking industry in many countries in the region, people are turning to one another to solve their problems. From neighborhood initiatives to cross-border peer-to-peer lending platforms and online-only independent banking solutions, Latin America is exploring new ways to approach their personal finances.
Borrowers and Lenders Discover a Reputable Financial Conduit with FundKo (Digital Journal), Rated: AAA
As the world becomes ever more interconnected, as does the financial system. Borrowers and lenders are no longer confined by the parameters of a localized system. In fact, many lenders are branching out to the internet, through online companies such as FundKo.
FundKo is a peer to peer lending company in the Philippines.
No customer may invest 100% of their money on a single loan: in fact, the largest sum of money they may invest is 10% of a loan. This guideline ensures that lenders never suffer a catastrophic loss.