- Today’s main news: Preview of OnDeck’s Q3 earnings. Credit Karma acquires Noddle from TransUnion, expands into UK. Lufax to move P2P lending to the blockchain. WeBank hits $21B valuation. Linked Finance loans up 63%. Nubank now worth $4B.
- Today’s main analysis: The unbanked approaches banking like everyone else.
- Today’s thought-provoking articles: HSBC, Barclays bucking the trend. International P2P lending volumes for October 2018. QED has several companies on the CB Insights Fintech 250 list. Remarkable alternative lending founders under 35 in Southeast Asia.
- OnDeck’ Capital’s Q3 earnings preview.
- HSBC, Barclays buck the trend. Interestingly, these traditional banks are launching unsecured personal lending products while Marcus and Discover are pulling back.
- No excuse for ignoring the unbanked. So why have traditional banks done it for so long? Their own data suggests it is folly.
- Credit Karma expands into auto insurance.
- Interview with Kathryn Petralia of Kabbage.
- ForwardLine increases loan originations by 350%.
- Majority of Americans expect to use a robo-advisor.
- NBKC gets expands online mortgage business.
- AGORA to release first loan validation report for seasoned loans.
- Roostify names new chief marketing officer.
- PeerIQ partners with Liberty Lending.
- Credit Karma acquires Noddle from TransUnion. This is a bold move. Instead of simply opening an office in the UK, Credit Karma acquires a UK asset from the competition. Nice!
- Experian to offer trended data of UK consumer finances.
- Insolvency reforms could hinder P2P loan recoveries.
- Goji launches SIPP wrapper for direct lending bonds.
- Lloyds Banking Group to add 2,000 jobs in new digital shake-up.
- Affirm to offer airline flight payment options for Alternative Airlines. It’s interesting they chose Affirm and not Klarna.
- Lufax to move P2P lending to the blockchain. I expect other P2P lenders, and not just in China, to follow.
- WeBank hits $21 billion valuation.
- Hong Kong is growing as virtual banking hub.
- Nubank is worth $4 billion.
- P2P lending volumes for October 2018.
- QED list of companies that made the Fiintech 250.
- Ireland: Linked Finance loans up 63% in 2018. Awesome!
- Southeast Asia: Remarkable alternative lending founders under 35.
- Australia: Afterpay, Revolut redefine trust.
- Malaysia: Government to launch crowdfunding platform for home buyers.
- Australia: How to handle unexpected expenses.
- Malaysia: CIMB, Maybank team up with The Edge on property financing.
- United States
- On Deck Capital’s Q3 Earnings Preview (Benzinga) Rated: AAA
- Strong Wage Growth, HSBC / Barclays Bucking the Trend (Peer IQ) Rated: AAA
- There’s no excuse for ignoring the unbanked, big banks’ own data shows (American Banker) Rated: AAA
- Credit Karma expands into insurance with auto policy service (Reuters) Rated: A
- Kathryn Petralia of Kabbage (Lend Academy) Rated: A
- ForwardLine Accelerates Growth and Achieves a 350% Increase in Loan Originations (PR Newswire) Rated: A
- Majority of Americans Expect to Use a Robo Adviser (Plan Advisor) Rated: A
- Is This Community Bank’s Bold Digital Play The Model Of The Future? (The Financial Brand) Rated: A
- AGORA Announces Release of First-Ever Loan Validation Report for Seasoned Loans (PR Newswire) Rated: A
- Roostify Names Courtney Keating Chakarun as New Chief Marketing Officer (Business Wire) Rated: B
- PeerIQ Announces Agreement with Liberty Lending (Globe Newswire) Rated: B
- United Kingdom
- Credit Karma acquires Noddle from TransUnion and expands to the UK (Tech Crunch) Rated: AAA
- Experian to Offer a New Trended Data ‘Multi-Dimensional View’ of UK Consumer Finances with the Launch of Credit 3D (Business Wire) Rated: A
- Insolvency reforms may hinder P2P loan recoveries (Peer2Peer Finance News) Rated: A
- Goji launches SIPP wrapper for direct lending bonds (Peer2Peer Finance News) Rated: A
- Lloyds Banking Group to add 2,000 jobs in digital shake-up (The Guardian) Rated: A
- Alternative Airlines: “Spread the cost of a flight over monthly instalments” (Travel Daily) Rated: A
- China/Hong Kong
- Chinese Wealth Manager Lufax Eyeing P2P Lending with Blockchain (Blockchain Reporter) Rated: AAA
- Tencent-Backed WeBank Hits $ 21 Billion Valuation (Caixin Global) Rated: AAA
- Hong Kong’s appeal as a virtual banking hub is about to be put to the test as first online lenders arrive (South China Morning Post) Rated: A
- European Union
- Linked Finance’s loans up 63% in first nine months of 2018 (RTE) Rated: AAA
- Nubank is now worth $ 4 billion after Tencent’s $ 180 million investment (Tech Crunch) Rated: AAA
- International P2P Lending Volumes October 2018 (P2P Banking) Rated: AAA
- The Fintech 250: The Top Fintech Startups Of 2018 (CB Insights) Rated: AAA
- New giants Afterpay and Revolut are redefining trust for the fintech generation (Australian Financial Review) Rated: AAA
- Unexpected expenses hit many of us, so here’s how to handle them (News) Rated: A
- 21 Remarkable Fintech Founders Under 35 in Southeast Asia (Fintech Singapore) Rated: AAA
- Gov’t To Launch Crowdfunding Platform To Help Home Buyers (Property Guru) Rated: A
- Malaysia teams up with The Edge on property financing portal (Tech in Asia) Rated: B
On Deck Capital’s Q3 Earnings Preview (Benzinga) Rated: AAA
On Deck Capital ONDK 26.01% releases its next round of earnings this Tuesday, Nov. 6. Get the latest predictions in Benzinga’s essential guide to the company’s Q3 earnings report.
Earnings and Revenue
Based on On Deck Capital management projections, analysts predict EPS of 12 cents on revenue of $97.33 million.
On Deck Capital EPS in the same period a year ago totaled 1 cent. Sales were $83.66 million. Revenue would be up 16.33 percent on a year-over-year basis.
Strong Wage Growth, HSBC / Barclays Bucking the Trend (Peer IQ) Rated: AAA
QED Investors has raised its largest fund to-date. QED raised $175 Mn in its fifth fund which is focused on early-stage FinTech. QED also released their first quarterly newsletter. (Subscribe here) Matt Burton, the founder and CEO of the Orchard platform, joined as a partner and will lead QED Belay, the newly formalized founding stage investment platform.
SoFi and Marlette are issuing their fourth Consumer Unsecured deals of 2018. SCLP 2018-4 is a $549 Mn securitization. KBRA has rated the tranches A to D AAA, AA+, A+ and BBB respectively. SCLP 2018-4 is the first consumer unsecured deal to receive a AAA rating. MFT 2018-4 is a $266 Mn securitization. KBRA has rated the tranches A to C AA, A, and BBB- respectively.
HSBC and Barclays Leaning In, Marcus and Discover Pulling Back
HSBC and Barclays are launching new unsecured personal loan products. These products will complement the banks’ existing US credit card offerings while competing head-on with Marcus on its home turf. HSBC and Barclays are looking to capture a piece of the $140 Bn personal loan market, that is growing at an annualized rate of eighteen percent.
Discover and Marcus are cautious about the growth in personal loans and the potential for higher losses. GS will temper Marcus’s origination growth and not “chase volume targets”. We note that GS is the only bank whose provision for loan losses increased in Q3 – GS provisions rose by 172% YoY to $174 Mn, while loans grew by 72% – far outpacing loan growth (and what might be expected from loan seasoning).
There’s no excuse for ignoring the unbanked, big banks’ own data shows (American Banker) Rated: AAA
When community advocates ask banks to provide accounts for the estimated 63 million people in the U.S. who are unbanked, bankers typically raised two concerns.
Both arguments appear to be shot down by a new trove of data collected from four of the largest banks: Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo.
Seventy-four percent of the 3 million previously unbanked people who opened accounts at the four banks in the past year are digitally active. In fact, they are heavy users of online and mobile banking. They are statistically no more likely to call or walk into a branch than existing bank customers.
Credit Karma expands into insurance with auto policy service (Reuters) Rated: A
Financial technology startup Credit Karma said on Tuesday it is expanding into insurance through a new service that makes it easier for users to find cheaper auto insurance policies.
The tool generates suggestions by analyzing government information on drivers and vehicles together with data from credit bureaus and public insurance rate filings, bypassing the need for users to manually input information into long forms, the company said.
Kathryn Petralia of Kabbage (Lend Academy) Rated: A
In this podcast you will learn:
- How Kabbage has changed since they launched 10 years ago.
- The biggest challenge they have found as they have grown.
- Their approach to data analytics and the different data sources they use.
- Why it is important to have a complete picture when a business seems to be struggling.
- Why they have not pursued direct lending outside of the U.S.
- Why their banking clients have been outside the U.S.
- How Kathryn views the competitive business lending environment today.
- Why banks are not going head to head against Kabbage yet.
- What Kabbage is doing to foster more gender balance throughout the organization.
ForwardLine Accelerates Growth and Achieves a 350% Increase in Loan Originations (PR Newswire) Rated: A
ForwardLine, a nationwide direct lender providing affordable loans to small businesses, has announced strong results for third quarter 2018, achieving a 350% increase in loan originations over third quarter 2017. The company attributes its growth trajectory to strategic investments in technology, enhanced analytics, and an improved overall customer experience.
Majority of Americans Expect to Use a Robo Adviser (Plan Advisor) Rated: A
Fifty-eight percent of Americans expect to use a robo adviser by 2025, Charles Schwab learned in a survey, summarized in its report, “The Rise of the Robo: Americans’ Perspectives and Predictions on the Use of Digital Advice.” In addition, 45% say robo advice will be the technology that will have the biggest impact on financial services.
In addition, by the year 2025, 57% expect to use robotics, 55% artificial intelligence, 54% virtual reality, 53% big data, 43% augmented reality, 36% blockchain and 36% cryptocurrency.
However, when it comes to financial advice, people still want the human touch, with 71% of people wanting a robo adviser that also gives them access to human advice. Among Millennials, this jumps to 79%. This is true for 73% of Gen Xers and 64% of Baby Boomers.
Forty-six percent of Baby Boomers using a robo adviser say it is perfect for their life stage, and 45% of this demographic group expect to use a robo adviser by 2025.
Is This Community Bank’s Bold Digital Play The Model Of The Future? (The Financial Brand) Rated: A
Online mortgage lending has been a very large part of NBKC Bank’s business model, and remains so.
Now, people in all 50 states can apply online for a mortgage from NBKC. Its originations run between $2.5 and 3 billion annually, and the bank is one of eight mortgage lenders on Costco’s nationwide platform.
AGORA Announces Release of First-Ever Loan Validation Report for Seasoned Loans (PR Newswire) Rated: A
AGORA Data, Inc., a secondary loan marketplace based in Arlington, Texas, announced today, the release of the first-ever Loan Validation Report for seasoned loans. AGORA’s proprietary technology enables car dealers and finance companies to avoid compliance issues with the Truth in Lending Act (Regulation Z), by assessing in real-time any issues with the terms of a loan, either at the portfolio or individual loan level. This includes assessment of the loan APR, Finance Charges, Principal Balance, Total of Payments, Unearned Interest and Gross Balance. Violation of Regulation Z can lead to significant penalties and other legal issues.
Roostify Names Courtney Keating Chakarun as New Chief Marketing Officer (Business Wire) Rated: B
Roostify, a leading digital lending platform provider, announced today that Courtney Keating Chakarun has joined the company as Chief Marketing Officer. Chakarun comes to Roostify from CoreLogic, where she served as Senior Vice President, Marketing & Innovation.
PeerIQ Announces Agreement with Liberty Lending (Globe Newswire) Rated: B
PeerIQ, the leading provider of risk analytics for consumer credit, today announced that Liberty Lending, a leading online platform that provides innovative borrowing solutions to deserving consumers, has entered into an agreement to license two PeerIQ products: Consumer Credit Suite and Analytics Platform.
Credit Karma acquires Noddle from TransUnion and expands to the UK (Tech Crunch) Rated: AAA
Credit Karma, the US startup with 85 million users that offers credit reports and a platform to browse and buy other financial services, has made an acquisition to help it kick-start its first overseas expansion beyond the US and Canada: it has acquired Noddle, a UK-based credit reporting service with 4 million users, from TransUnion.
Financial terms of the deal are not being disclosed, but Valerie Wagoner, Credit Karma’s VP of International (who had previously been at Twitter), said that it will be a full acquisition of tech and employees — 35 in all — and TransUnion is not taking any stake in Credit Karma as part of this deal, although the two will continue to work together with TransUnion providing data to Credit Karma, as it had done before.
As a point of reference — and a sign of the consolidation and competition in the market — earlier this year Experian acquired another credit scoring service in the UK, ClearScore, for the equivalent of $385 million. That service has 6 million users compared to Noddle’s 4 million. Competition authorities are still investigating that deal, and Credit Karma’s will also have to get the pass from regulators before closing.
Experian to Offer a New Trended Data ‘Multi-Dimensional View’ of UK Consumer Finances with the Launch of Credit 3D (Business Wire) Rated: A
Experian is launching a new range of services to help lenders evolve their approach to making consumer credit decisions, so businesses can make more informed decisions and deliver fairer, more affordable outcomes for their customers. It’s now possible to take a multi-dimensional view of a borrower’s financial health with Experian Credit 3D.
Knowing a consumer’s credit information at a single point in time only offers a snapshot of their financial behaviour. However, by using innovative trended and alternative data sources via Experian Credit 3D, businesses can access an unparalleled set of insights, enabling faster decisions based on a more rounded picture of affordability.
Insolvency reforms may hinder P2P loan recoveries (Peer2Peer Finance News) Rated: A
REFORMS to the way HMRC is treated as a creditor will make it harder for some peer-to-peer lending platforms to recover bad debts, an insolvency practitioner has warned.
Chancellor Philip Hammond announced in his 2018 Budget last week that HMRC would be given preferred creditor status in business insolvencies to ensure tax is collected.
Simon Bonney, a partner at Quantuma, told Peer2Peer Finance News this would impact any P2P platforms accepting floating charges, such as stock, receivables or cash at the bank, as security on loans.
Goji launches SIPP wrapper for direct lending bonds (Peer2Peer Finance News) Rated: A
GOJI has made its direct lending bonds available in a self-invested personal pension (SIPP) wrapper.
Investors can now access the specialist investment manager’s direct lending bond through both an Innovative Finance ISA (IFISA) and a SIPP.
Its diversified lending bond targets returns of more than five per cent by investing in loans sourced by alternative finance providers in the property, small business and education sector.
Lloyds Banking Group to add 2,000 jobs in digital shake-up (The Guardian) Rated: A
Lloyds Banking Group is planning a major restructuring of its workforce, adding 2,000 jobs as it refocuses its operations on digital technology.
Britain’s biggest high street lender will cut 6,000 jobs but create another 8,000 as part of a £3bn reorganisation over the course of the next two years.
The job losses will be spread across the group transformation division, corporate banking, retail and community banking, Sky News reported. New roles will be oriented towards digital technology.
Alternative Airlines: “Spread the cost of a flight over monthly instalments” (Travel Daily) Rated: A
UK based flight search site Alternative Airlines, has put the cat amongst the pigeons with an announcement of a new deal with Affirm to roll out what the American company describes as its “fair and honest alternatives” to traditional payment options.
The new partnership will see customers pay for their flights in instalments, instead of one single tranche. Giving them the opportunity to plan ahead and even open up a travellers horizons by giving them a chance to experience more wide-ranging trips, with the US customers able to divide fees over three, six and 12 months instalments.
Chinese Wealth Manager Lufax Eyeing P2P Lending with Blockchain (Blockchain Reporter) Rated: AAA
Lufax is transferring its entire peer-to-peer (P2P) lending portfolio worth “tens of billions US dollars” onto the blockchain platform, according to a post on South China Morning Post.
Tencent-Backed WeBank Hits $ 21 Billion Valuation (Caixin Global) Rated: AAA
Tencent-backed online lender WeBank Co. Ltd. has reached a sky-high valuation of 147 billion yuan ($21 billion) after less than four years in operation, becoming one of the world’s largest “unicorn” companies.
The new valuation is based on a legal document attached to an auction notice on Taobao.com, which described the upcoming auction of a minor stake in WeBank.
WeBank’s latest valuation makes it the fifth most valuable privately-held company in the world, based on the CB Insights list.
Hong Kong’s appeal as a virtual banking hub is about to be put to the test as first online lenders arrive (South China Morning Post) Rated: A
Of the 29 virtual bank licence applications before the HKMA, submissions have been made by WeLab, HKT, Standard Chartered Bank, as well as an alliance between Australia’s Airwallex, Bank of East Asia (BEA), and mainland firm Sequoia Capital China.
There are 21.43 bank branches and 50.09 ATMs for every 100,000 residents in Hong Kong, higher than the global city average of 12.6 and 47.55 respectively in 2016, according to World Bank data.
Linked Finance’s loans up 63% in first nine months of 2018 (RTE) Rated: AAA
Peer-to-peer lending platform Linked Finance has facilitated loans of over €28m in the first nine months of this year, an increase of 63% on the same time last year.
The lender said it was on track for record growth this year.
It also noted that loans in the quieter third quarter covering the summer holiday months were up more than 62% to €9.3m, while average loan size also rose significantly – up 33% to €62,000.
Nubank is now worth $ 4 billion after Tencent’s $ 180 million investment (Tech Crunch) Rated: AAA
Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.
With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.
International P2P Lending Volumes October 2018 (P2P Banking) Rated: AAA
Dofinance crossed 50M EUR total volume lent since launch.
The Fintech 250: The Top Fintech Startups Of 2018 (CB Insights) Rated: AAA
12 QED portfolio companies named to CB Insights’ Fintech 250 list of the most promising financial services start-ups: Shout outs to AvidXchange, blooom, CircleUp, Credit Karma, Creditas, Flywire, Klarna, LendUp, Nubank, Roofstock, Signifyd, and SoFi! (Credit: QED inaugural newsletter)
The company provides individuals with credit scores and reports and makes recommendations based on data accordingly
Klarna offers safe and easy-to-use payment solutions to e-stores with the ambition to make e-commerce safer, simpler, and more fun.
LendUp’s mission is to provide anyone with a path to better financial health. Through its proprietary software, it designs safe, transparent products that expand access, lower costs, and provide credit building opportunities for the population of Americans who currently have limited options within the traditional banking system because of low credit scores and income volatility.
Roofstock runs an online marketplace where retail and institutional investors can buy and sell homes in the United States occuped by renters.
The entire Fintech 250 list and report is available here.
New giants Afterpay and Revolut are redefining trust for the fintech generation (Australian Financial Review) Rated: AAA
More than 500 fintech aficionados hit the swanky Peninsula event space in Melbourne’s Docklands last week for the third annual Intersekt festival.
The three-day shindig, organised by FinTech Australia, debated topics such as how start-ups can capitalise on the loss of trust in incumbent institutions (exacerbated by the banking royal commission); and the extraordinary rise of “neobanks” around the world.
Anthony Eisen, co-founder of local payments star Afterpay, and Chad West, the marketing head of globally focused neobank Revolut, explained how they have lured customers by reinventing traditional fee models.
Unexpected expenses hit many of us, so here’s how to handle them (News) Rated: A
LARGE unexpected expenses are hitting the household budgets of two-thirds of Australians, and many are resorting to dangerously expensive credit cards to get themselves out of a financial jam.
Cars are the biggest cause of unpleasant financial surprises, according to new research by marketplace lender SocietyOne, followed by travel costs and medical bills.
The lender’s When ‘It’ Happens report reveals that 40 per cent of people would cover unexpected costs by borrowing money from family and friends, almost 20 per cent would add the expense to their mortgage, 31 per cent would sell stuff, and 28 per cent would take on extra credit card debt.
21 Remarkable Fintech Founders Under 35 in Southeast Asia (Fintech Singapore) Rated: AAA
Iwan Kurniawan, 28, Indonesia; Reynold Wijaya, 29, Indonesia Co-Founder, Modalku
Together with Kelvin Teo, Iwan Kurniawan and Reynold Wijaya founded Indonesia-based Modalku, called Funding Societies in its sister operations in Singapore and Malaysia, a peer-to-peer (P2P) digital lending platform that connects cash-strapped SMEs with lenders. The startup is backed by Sequoia, Softbank Ventures Korea, and Alpha JWC Ventures, and recently passed the US$110 million mark through more 3,000 loans to businesses in the region.
Rachel De Villa, 25, Philippines Founder and CTO, Cropital
Rachel De Villa is the co-founder and CTO of Cropital, a crowdfunding platform that helps finance local Filipino farmers. Established in 2015, Cropital aims to improve the income and productivity of farmers through crowdfunding, providing scalable and sustainable financing. Through Cropital’s online platform, investors choose a farm or farms to invest in. Cropital manages the fund for the farmer making sure it goes to the right resources, assuring as well that investors will get a return on investment.
Abraham Viktor, 25, Indonesia Co-Founder and CEO, Taralite
Abraham Viktor is the co-founder and CEO of Taralite, a P2P lending platform. Taralite’s loans are issued by financial institutions other than banks, also known as multi-financers, which allows it to reduce the interest rate up to 2% and extend the loan period of up to three years. The platform accepts houses, cars or motorcycles as collateral. Founded in January 2015 as Wedlite, Taralite graduated from startup incubator program Global Entrepreneurship Programme Indonesia (GEPI) in November 2015. Previously, Viktor was an investment banking analyst, first with Boston Consulting Group and later at Nomura investment banking.
Mohamed Abbas, 27, Singapore Co-Founder, Rely
Mohamed Abbas is a tech entrepreneur and the co-founder of Rely, a startup that enables online shoppers to shop and pay for their purchases by splitting their cost into manageable monthly payments, interest-free. Abbas is also the co-founder of Onelyst, an online marketplace that helps users from lower-income brackets compare loan rates across different licensed moneylenders. The website allows users to find loans for different purposes, such as medical or rental expenses, and produces a list of personalized options in minutes.
Gov’t To Launch Crowdfunding Platform To Help Home Buyers (Property Guru) Rated: A
The federal government announced during the tabling of Budget 2019 on Friday (2 November) that it will introduce a “property crowdfunding” platform by Q1 2019 to help Malaysians buying their first homes, reported Bernama.
On Sunday (4 November), Prime Minister Tun Dr Mahathir Mohamad said the scheme is the first of its kind in the world, and will enable people to buy a home as long as they can a pay the 20 percent down payment, which can be financed via savings, debts or withdrawals from their Employee Provident Fund (EPF) account. The remaining 80 percent will be funded by investors via peer-to-peer lending supervised by the Securities Commission.
Dubbed as FundMyHome.com, the property crowdfunding platform is expected to help the Pakatan Harapan administration fulfil its election promise of one million low-cost housing within 10 years.
Malaysia teams up with The Edge on property financing portal (Tech in Asia) Rated: B
CIMB and Maybank are the participating institutions that will contribute towards the externally funded 80-percent portion of the house price, with more expected to sign up in the future.
The site – developed by finance and real estate media platform The Edge – will list about 1,000 homes costing less than US$120,000 during the first phase of its rollout. All properties listed will be completed or near completion, and buyers looking for rental income will be allowed to “buy to rent” through the portal.