- Today’s main news: RateSetter passes 500M GBP in secondary market lending. U.S. economy fuels boom in consumer debt. Seedrs tops 500M GBP in crowdfund securities.
- Today’s main analysis: China P2P lending crackdown could see 70% firms closed.
- Today’s thought-provoking articles: Peter Renton’s Q3 2018 MPL results. 2018 was a standout year for fintech funding. 9 big ideas for 2019. Top 30 fintech influencers in India.
- U.S. economy fuels boom in consumer debt. We see this all the time. The economy improves, consumer debt increases. When the economy turns downward, defaults rise.
- Peter Renton’s Q3 2018 marketplace lending results. Still long on Lending Club and Prosper. Top performing investments seem to be Streetshares and YieldStreet at 15.71% and 11.38%, respectively.
- 2018 volatile equity and credit markets.
- Interview with Kevin Tweddle of ICBA. Community banks are getting into fintech.
- Online loan marketplaces.
- Equifax faces scrutiny.
- White Oak Healthcare Finance provides $161 million for Allegiant Healthcare’s SNF acquisition.
- Blockchain fuels P2P lending.
- RateSetter passes 500 million GBP in secondary market lending. Congratulations. Great milestone.
- Seedrs tops 500 million GBP in crowdfund securities.
- P2P set for 2019 fundraising boom.
- Launch of robo-advice app for the self-employed.
- iwoca adds Barclays, HSBC to open banking connections.
- Arbuthnot Commercial ABL provides 6.5 million facility to Fluorocarbon Group.
- China P2P lending crackdown could lead to 70% firm closure.
- Tighter regulations shrink China’s P2P lending market by 50% in 2018.
- Yidai closes down.
- 2018 was a standout year for fintech funding. 2019 looks to be just as good, but it’s likely that most of the money will go to a few top contenders.
- 9 big ideas for 2019.
- Fintech predictions for 2019.
- Top 30 fintech influencers in India. Many of them are in P2P lending.
- Red tape grounds P2P startups, investors steer clear.
- United States
- U.S. Economy Fuels Boom in Consumer Debt (WSJ), Rated: AAA
- My Quarterly Marketplace Lending Results – Q3 2018 (Lend Academy), Rated: AAA
- How Betterment Stayed on Top in 2018 (and How they Plan to Stay There in 2019) (Financial Advisor IQ), Rated: A
- 2018 – Volatile Equity and Credit Markets (PeerIQ), Rated: A
- Kevin Tweddle of Independent Community Bankers of America (Lend Academy), Rated: A
- Online Loan Marketplaces: Benefits, Challenges, and Enormous Growth (Small Biz Trends), Rated: A
- Equifax Faces Scrutiny As Dems Take Over The House (PYMNTS), Rated: A
- White Oak Healthcare Finance Provides $ 161 Million to Support Allegiant Healthcare’s SNF Acquisition (AP News), Rated: B
- Five reasons Bitcoin could enter a more extreme death spiral (The Conversation), Rated: B
- United Kingdom
- RateSetter passes £500m in lending on secondary market (P2P Finance News), Rated: AAA
- Seedrs Tops £500 Million in Crowdfunded Securities (Crowdfund Insider), Rated: AAA
- P2P set for fundraising boom in 2019 (P2P Finance News), Rated: A
- Robo-advice app for self-employed launches (FT Adviser), Rated: A
- iwoca adds Barclays and HSBC to Open Banking connections (Fintech Finance), Rated: B
- Arbuthnot Commercial ABL provides £6.5m facility to Fluorocarbon Group (Specialist Banking), Rated: B
- China P2P Lending Crackdown May See 70% of Firms Close (Bloomberg), Rated: AAA
- Tighter Reg Shrinks China’s P2P Lending Mkt By 50 Pct In 2018 (PYMNTS), Rated: A
- Yidai shuts shop as China intensifies crackdown on P2P lenders (Banking & Finance), Rated: A
- 2018 was a standout year for fintech funding (Business Insider), Rated: AAA
- 9 big ideas for 2019 (American Banker), Rated: AAA
- Fintech Predictions for 2019 (Crowdfund Insider), Rated: A
- Top 30 Fintech Influencers in India 2019 by Digital Fifth (Fintech News), Rated: AAA
- Red tape grounds P2P startups as investors stay clear of space (India Times), Rated: A
U.S. Economy Fuels Boom in Consumer Debt (WSJ), Rated: AAA
Consumer debt, including credit cards, auto and student loans and personal loans, is on pace to top $4 trillion in 2019.
Consumer spending has increased 2.7% on average in the four quarters through September compared with the same period a year earlier, as disposable income rose 2.7% on average, according to Moody’s Investors Service. Meanwhile, personal savings as a percentage of disposable income was 6.3% in the third quarter, above a 20-year average of 5.9%, according to Bureau of Economic Analysis data.
My Quarterly Marketplace Lending Results – Q3 2018 (Lend Academy), Rated: AAA
My trailing 12 month returns for the year ended September 30, 2018 across all my accounts was 4.77% up from 4.46% in my last update. My original six accounts, all with Lending Club and Prosper, also improved over last quarter but are still at a paltry 3.19%.
How Betterment Stayed on Top in 2018 (and How they Plan to Stay There in 2019) (Financial Advisor IQ), Rated: A
Robo advisor Betterment currently manages $15 billion in assets for its more than 400,000 customers, firm CEO Jon Stein tells FA-IQ. But at the start of 2016, Betterment’s AUM was just a little over $6 billion, Stein says. The firm has cemented its place on the 2018 Financial Times’ 300 Top RIAs list.
Q: How has Betterment’s client base evolved?
A: When Betterment was first launched, our customer base was mainly young folks in their twenties who were depositing $100-$500 to invest at a time. That client demographic has shifted dramatically over the years. Today, more than one-third of our business comes from customers who are at least 50 years old.
2018 – Volatile Equity and Credit Markets (PeerIQ), Rated: A
2018 was a volatile year for equity and credit markets, particularly in the fourth quarter. The S&P500 is down ~7.5% for the year, and cyclical stocks are down more. CDX IG spreads have widened ~40 bps and CDX HY spreads have widened ~150bps.
ABS markets enjoyed record issuance. However, spreads widened, and all-in yields were higher leading to rate increases for borrowers and tighter margins for lenders. 2019 is shaping up to be a pivotal year in this late economic cycle. Synchronized global growth could turn into a synchronized slowdown. The risk of policy error is heightened as the Fed navigates record low unemployment and a slowdown in growth. The US yield curve has partially inverted and the all-important 3-month – 10-year yield spread is at ~37 bps.
Kevin Tweddle of Independent Community Bankers of America (Lend Academy), Rated: A
Our next guest on the Lend Academy Podcast is Kevin Tweddle. His official title is the Group EVP for Innovation and Financial Technology at the Independent Community Bankers of America (ICBA), the leading trade organization representing community banks. He is completely focused on fintech and helping community banks use technology to thrive in the future.
Online Loan Marketplaces: Benefits, Challenges, and Enormous Growth (Small Biz Trends), Rated: A
Financial technology (Fintech) and the internet have enabled the creation of online loan marketplaces. Marketplace lending is made possible by technology platforms that use scoring algorithms to determine the borrowers’ ability to repay.
Fintech online loan platforms have started creating partnerships with banks and credit unions to reach small businesses who aren’t as comfortable dealing entirely online. Traditional lenders are eager to jump on the Fintech bandwagon to avoid being made obsolete.
As a small business owner, will you consider online lenders to finance your business? The convenience of banking online is attractive to many who want to bank from anywhere. Online lender Kabbage says 17% of their loans have been accessed through mobile.
Equifax Faces Scrutiny As Dems Take Over The House (PYMNTS), Rated: A
A report in the Wall Street Journal, citing analysts, reported that legislative response to the massive Equifax data breach of 2017 is at the top of the agenda for 2019. The Wall Street Journal noted that existing proposals, some bipartisan, provide a glimpse into how changes can be made to the industry. The paper noted the changes would pertain to how the firms handle consumer information and could include tougher cybersecurity standards and making it easier for consumers to fix mistakes on their credit reports.
White Oak Healthcare Finance Provides $ 161 Million to Support Allegiant Healthcare’s SNF Acquisition (AP News), Rated: B
White Oak Healthcare Finance, LLC (“White Oak”), today announced it acted as sole lender and administrative agent on the funding of a $161 million senior credit facility for Allegiant Healthcare (“Allegiant”) and Hillstone Healthcare, Inc. (“Hillstone”). The funds were used to acquire and provide working capital for a portfolio of 17 skilled nursing facilities in Ohio.
Five reasons Bitcoin could enter a more extreme death spiral (The Conversation), Rated: B
The one upside to all this is that, although cryptocurrencies may have entered a death spiral, the blockchain economy is here to stay. As well as allowing safe peer-to-peer lending and transactions, it is being used to build more efficient supply chains and in the evolution of the internet of things – to name just a few of its applications.
RateSetter passes £500m in lending on secondary market (P2P Finance News), Rated: AAA
RATESETTER has passed £500m in lending on its secondary market, marking a major liquidity milestone for the platform.
At the end of December 2018, the peer-to-peer platform revealed that a cumulative total of £500m in liquidity had been provided to investors via its secondary market. According to the platform, in the majority of cases investors were able to access these funds within one working day.
Seedrs Tops £500 Million in Crowdfunded Securities (Crowdfund Insider), Rated: AAA
In a blog post, UK crowdfunding platform Seedrs shared that it has now topped £500 million in investment crowdfunding. The money has been raised for 720 deals that have been successfully funded since the platform launched.
P2P set for fundraising boom in 2019 (P2P Finance News), Rated: A
P2P lenders raised more than £10m through crowdfunding platforms last year to boost their technology and operations, while almost £2bn was ploughed into the wider fintech sector.
“39 fintech companies have used crowdfunding platforms to raise capital. This is a record level of crowdfunding investment into fintech companies and we expect to see more of this in 2019.”
Robo-advice app for self-employed launches (FT Adviser), Rated: A
A new robo-advice service designed especially for the self-employed and freelancers is expected to launch in the first quarter of 2019.
The start-up, which received £1.5m after a funding round in late 2017, is currently in the Financial Conduct Authority (FCA) Sandbox, and hoping to receive authorisation in the next couple of months.
iwoca adds Barclays and HSBC to Open Banking connections (Fintech Finance), Rated: B
iwoca,the UK’s fastest growing small business lender, today announces it has connected to Barclays and HSBC banks under Open Banking. This expands the number of Open Banking connections offered by iwoca to three, including Lloyds Bank, and will enable more than 60 percent of the lender’s customers to take advantage of the Open Banking service.
Arbuthnot Commercial ABL provides £6.5m facility to Fluorocarbon Group (Specialist Banking), Rated: B
Arbuthnot Commercial Asset Based Lending (ABL) has agreed to provide a £6.5m refinancing facility to fluoropolymer processor the Fluorocarbon Group.
China P2P Lending Crackdown May See 70% of Firms Close (Bloomberg), Rated: AAA
The number of Chinese peer-to-peer lenders may drop by 70 percent this year, a research firm that tracks the industry says, as the nation intensifies a crackdown on riskier forms of financing.
As few as 300 companies will remain by the end of the year, according to an estimate from Shanghai-based Yingcan Group. The number of operators dropped by more than 50 percent to 1,021 during 2018, it said, adding that there’s been no new entrants into the market since August.
Tighter Reg Shrinks China’s P2P Lending Mkt By 50 Pct In 2018 (PYMNTS), Rated: A
According to Yingcan Group, by the end of 2019, there will only be 300 P2P lenders remaining. During 2018, the market research firm said the number of P2P lenders declined by 50 percent to 1,021. What’s more, no new companies have entered the market since August.
Yidai shuts shop as China intensifies crackdown on P2P lenders (Banking & Finance), Rated: A
Yidai, an online peer-to-peer (P2P) lending intermediary, is the latest to exit the business as China reins in its US$176 billion experiment with this riskier form of financing.
The company set up a committee to start refunding its lenders after “months” of losses, Yidai said in statements over the extended holiday weekend. It has about 32,000 lenders with an outstanding principal balance of four billion yuan (S$795.4 million), and expects to repay them in three-to-five years.
2018 was a standout year for fintech funding (Business Insider), Rated: AAA
In the first half of 2018 alone, fintechs secured $57.9 billion, nearing the previous annual record of $62.5 billion set in 2015.
Fintechs including UK neobank Revolut, US insurtech Root, US fintech for gig economy workersEarnin, Hong Kong-based alt lender Oriente, and US crypto exchange operator Coinbase all raised funding rounds of over $100 million this year.
9 big ideas for 2019 (American Banker), Rated: AAA
JPMorgan Chase collected more than $1.8 billion in revenue from overdraft fees in 2017, according to an analysis of regulatory data by the Center for Responsible Lending. Bank of America and Wells Fargo both raked in more than $1.6 billion. Big banks typically charge around $35 per overdraft. Many other institutions also rely on such fees.
Give customers some control of their financial data
For decades, banks, credit card networks and credit bureaus have been sharing and selling consumers’ financial data without their knowledge or consent while data aggregators have screen-scraped that information without the full cooperation of financial services providers.
But there are signs that is beginning to change.
Fintech Predictions for 2019 (Crowdfund Insider), Rated: A
10. New Asset Class – New Asset Backed Lending for Crypto
The likes of Nexo, SALT, CoinLoans & Unchained Capital have emerged in the recent months unlocking the value of your cryptocurrency. There is a list of crypto lending sites here.
8. Banks will rule again
We have seen big banks leveraging Fintech platforms from OnDeck and Avant in 2018. More of it will come in 2019 as banks begins to decentralize banking again.
7. Everyone will be rich (unlocking home equity value)
I attend a talk by Mike Cagney of Figure at 2018’s Lendit China conference. He’s creating something completely different to unlock the potential of the entire “supply chain” process from home equity lines of credit to bundling and tracking this asset class utilizing smart contracts and blockchain. He wants to eliminate the hurdles and ambiguity for the secondary market.
As home equity value rises and interest rates increase, home equity products will need a ton of tech. It has become a forgotten art since the great depression. I am predicting that a lot more of Fintech companies will come to light in 2019 working with the banks to unlock consumers’ home equity value
Top 30 Fintech Influencers in India 2019 by Digital Fifth (Fintech News), Rated: AAA
Amrish Rau : CEO at PayU India
Amrish Rau is the CEO of PayU India, the country’s leading digital payment solution provider valued at around USD 2.5 billion. Previously, he had founded Citrus Pay, which was acquired by Naspers (PayU) in one of the largest startup acquisitions in India. PayU’s digital lending platform Lazypay has done extremely well with nearly 4.5 lakh customers already using it. He has also invested in multiple startups like Signzy, Elemential, Nuo and Open.
Harshil Mathur : CEO & Co-Founder at Razorpay
Harshil runs one of India’s most innovative Fintechs, Razorpay, which is morphing from a B2B Payment Gateway into a Financial Conglomerate. They have entered the lending business with Razorpay Capital, which has already reached an annual loan disbursal rate of USD 30 million.
Manish Khera : CEO at Happy
Manish is the founder of Happy Loans – one of the fastest growing MSME lending platform in the country.
Naveen Kukreja : Co-Founder & CEO at Paisabazaar.com; CMO at Policybazaar
Naveen is the co-founder and CEO of Paisabazaar.com. Under Naveen’s leadership, Paisabazaar.com has become one of the largest marketplace platforms for lending and banking products. Paisabazaar.com currently disburses annualized loans worth USD 1 billion to more than 1000 towns and cities across India.