- Today’s main news: Equifax to pay up to $700M in data breach settlement. MoneyLion raises $160M. Monzo, Starling win top rankings among banking apps. Harmoney makes maiden profit.
- Today’s main analysis: Peter Renton’s quarterly MPL results – Q1 2019 (A MUST-READ).
- Today’s thought-provoking articles: Metro areas with the biggest jump in private million-dollar businesses. In-house marketing at Klarna. The Chinese millionaire who canceled lunch with Warren Buffett. Hedge funds help fuel consumer lending in southeast Asia.
- Equifax to pay $700 million in data breach settlement. Data breaches are serious in today’s online business environment. As online business models expand, this will become a more serious issue.
- MoneyLion secures $160 million funding. Congratulations.
- Q1 marketplace lending results. Peter Renton of Lend Academy has been open about his marketplace lending investments for years. As usual, this is a must-read.
- Metro areas with the biggest jump in private million-dollar businesses. LendingTree undergoes the most interesting studies.
- OnDeck makes key hire in sales and strategy.
- Lendio pairs SMB loan management with accounting.
- How artificial intelligence can make fair lending better.
- Aura closes $28.7 million.
- Credible announces more student loan options.
- How fintech speeds up mortgage close times.
- Cross River blurs the line between fintech and banking.
- Questions increase for fringe ABS players.
- Should fintechs be regulated like banks?
- Financial services business ideas.
- NASAA on initial loan procurements.
- Online business ideas.
- Mynd Property Management acquires HomeUnion.
- Think Finance settles with Pennsylvania.
- Monzo, Starling take top rankings among banking apps. Congratulations! That’s No. 1 and No. 2, respectively.
- Lord Myners puts more pressure on FCA over Lendy failings.
- More lessons from Lendy.
- Innovate Finance adds three regions to network.
- Growth Street pledges 75 million GBP overdraft funding for East Anglia.
- Does your business need short-term financing?
- Superdry partners with Klarna.
- OakNorth lends 11.4 million GBP to Ocea.
- LendInvest hires for business development team.
- Meet the Chinese millionaire who cancelled lunch with Warren Buffett. Justin Sun is a cryptocurrency entrepreneur who paid $4.6 million to have lunch with Buffett. This is a very interesting read.
- Why huge VC rounds are common in fintech.
- YouHODLer exposed unencrypted user credit cards and transactions.
- Genesis Capital sees expansion in crypto lending.
- What does ‘DeFi’ mean?
- Decentralized finance in a centralized world.
- Is it time to rethink securities finance?
- Finacity facilitates $115 million in receivables securitization for UK entities.
- In-house marketing at Klarna. Interesting interview.
- AdviceRobo launches open banking API for lenders.
- Australia: Harmoney makes maiden profit. Congratulations. Off to a good start.
- Southeast Asia: Hedge funds fuel consumer lending boom.
- Australia: Are bank hybrids too expensive? A good read.
- India: Cube Wealth expands into UK, Hong Kong.
- Indonesia: OJK condemns Incash for indecent post of debtor online.
- United States
- Equifax will pay up to $ 700 million to settle data breach lawsuits (CBS News), Rated: AAA
- MoneyLion Announces $ 160M in Funding (Finanzen), Rated: AAA
- OnDeck Taps Bank Veteran to Lead ODX Sales and Strategy (OnDeck), Rated: A
- My Quarterly Marketplace Lending Results – Q1 2019 (Lend Academy), Rated: AAA
- Metros With the Biggest Jump in Private Million-Dollar Businesses (LendingTree), Rated: AAA
- Lendio Marries SMB Loan Management With Accounting (PYMNTS), Rated: A
- How AI can advance the cause of fair lending (American Banker), Rated: A
- Aura Closes $ 28.7 Million Expansion Loan from Angel Island Capital (Business Wire), Rated: A
- More options to save on student loans at Credible (Credible), Rated: A
- This is how fintech solutions are speeding up mortgage closing times (Housingwire), Rated: A
- Financial services newcomer Cross River blurs line between fintech, banking (ROI), Rated: A
- Fitch Ratings: Questions Increase Around Fringe Players in U.S. ABS (ABL Advisor), Rated: A
- Should fintechs be regulated like banks? (BAI.org), Rated: A
- Examples of Financial Services Business Ideas (Entrepreneur), Rated: A
- NASAA Warning on Initial Loan Procurements: “Crowdfunding Meets Blockchain” (Crowdfund Insider), Rated: A
- Examples of Online Business Ideas (Entrepreneur), Rated: A
- Mynd Property Management Acquires HomeUnion, a Real Estate Investing Portal (Yahoo! Finance), Rated: B
- Pa. Attorney General Announces Payday Loan Relief Settlement (CBS Local), Rated: B
- United Kingdom
- Monzo and Starling took first and second place in a ranking of banking apps (Business Insider), Rated: AAA
- Lord Myners heaps further pressure on FCA over Lendy failings (P2P Finance News), Rated: A
- Lessons from Lendy (Brismo), Rated: A
- Innovate Finance expands national network with three regions added (ComputerWeekly), Rated: A
- Growth Street pledges £75m overdraft funding for East Anglia (P2P Finance News), Rated: A
- Is Short-Term Financing Right For Your Business? (Nav), Rated: A
- Superdry collaborating with Klarna (Fibre2Fashion), Rated: B
- OakNorth completes £11.4m loan to Ocea for major new residential development in Redhill, Surrey (Fintech Finance), Rated: B
- LendInvest boosts business development team with new hires (P2P Finance News), Rated: B
- European Union
- In-house marketing at Klarna: Interview with Elin Svahn (BannerFlow), Rated: AAA
- AdviceRobo has launched an open banking capability for lenders (Business Insider), Rated: A
- Who Cancels Lunch With Warren Buffett? A Chinese Tycoon Did, but Why? (The New York Times), Rated: AAA
- Embedded finance, or why fintech mega VC rounds have become so common (TechCrunch), Rated: A
- Cryptocurrency loan site YouHodler exposed unencrypted user credit cards and transactions (TechCrunch), Rated: A
- Crypto Lending Market ‘Continues to Experience Sustained Growth’ (CryptoGlobe), Rated: A
- What Is DeFi? (Bitcoin Market Journal), Rated: A
- Decentralised Finance in a centralised world (Business Times), Rated: A
- Time for a rethink? (Securities Lending Times), Rated: A
- Finacity Facilitates the Addition of UK Entities to USD $ 115 Million Receivables Securitization (Virtual Strategy Magazine), Rated: A
- Harmoney makes maiden profit (MSN), Rated: AAA
- Why bank hybrids are far too expensive (Cuffelinks), Rated: AAA
- India’s FinTech Cube Wealth expands asset management biz in UK, Hong Kong (IBS Intelligence), Rated: AAA
- Southeast Asia
- Hedge Funds Help Fuel Southeast Asia Consumer Lending Boom (Bloomberg), Rated: AAA
- OJK Condemns Fintech Lender over Indecent Post of Debtor (Tempo), Rated: A
Equifax will pay up to $ 700 million to settle data breach lawsuits (CBS News), Rated: AAA
Equifax will pay up to $700 million to settle with the Federal Trade Commission and others over the massive 2017 data breach that exposed the private data of nearly 150 million people. Consumers are eligible to claim as much as $20,000 in cash payments, the FTC said.
MoneyLion Announces $ 160M in Funding (Finanzen), Rated: AAA
MoneyLion today announced $160 million in funding — $60 million in previously unannounced financing and a $100 million Series C funding round.
The round was co-led by Edison Partners and Greenspring Associates and included strategic investment from Capital One, a diversified bank that offers a broad array of financial products and services to over 45 million consumers. The round also included investment from MetaBank and FinTech Collective. Upon completion of the Series C round, the company will have raised over $200 million in equity financing.
OnDeck Taps Bank Veteran to Lead ODX Sales and Strategy (OnDeck), Rated: A
OnDeck today announced the appointment of Lonnie Hayes as the Head of Sales and Strategy for ODX, a wholly owned subsidiary of OnDeck that assists banks with streamlining and digitizing small business credit origination.
My Quarterly Marketplace Lending Results – Q1 2019 (Lend Academy), Rated: AAA
My overall returns for the twelve months ending March 31, 2019 was 6.09%. This is up from 5.35% that I reported in Q4 and 4.77% in Q3. My original six LendingClub and Prosper accounts had another full percentage point jump. Last quarter I reported the returns on those six accounts had jumped from 3.19% in Q3 to 4.16% in Q4. We see this quarter they are at 5.18%. This is quite a remarkable turnaround and while I still think 5% is not a high enough return for unsecured consumer lending, it is certainly moving in the right direction.
Metros With the Biggest Jump in Private Million-Dollar Businesses (LendingTree), Rated: AAA
- Austin, Texas topped the list with a 15.1% increase in privately held companies surpassing $1 million in revenue between 2014 and 2016. The number of Austin firms in that category rose by 1,857.
- Jacksonville, Fla. and Riverside, Calif. came in a nose behind, with an increase just under 15%. The number of firms rose by 963 and 2,359, respectively.
- Buffalo, N.Y. was the only metro on our list to lose businesses with seven figure revenues: The city in upstate New York was down by four such firms, a reduction of 0.1%.
- Baltimore and Oklahoma City made the smallest gains, at just over 1%, or 187 and 117 businesses, respectively.
- Los Angeles had the largest number of firms to pass the million-dollar mark – 6,664 – followed closely by New York at 6,568. Those large numbers represent increases of almost 8% and 5.2%, respectively, leaving them in the 16th and 29th spots on the list.
Lendio Marries SMB Loan Management With Accounting (PYMNTS), Rated: A
Small business loan marketplace Lendio has announced the acquisition of bookkeeping software provider Billy.
A press release Tuesday (July 23) said Lendio is rebranding Billy to Sunrise, a small business bookkeeping solution that integrates accounting, cash flow management, loan management and credit data into a single solution.
How AI can advance the cause of fair lending (American Banker), Rated: A
The rightful prohibition of ZIP codes in underwriting is one example of how financial regulators ensure fairness by protecting against discriminatory lending. But the increasing reliance on artificial intelligence and machine learning, or “automated insights” as I prefer to call it, has made testing a wide variety of inputs for specific outcomes a sophisticated, scientific process carried out by companies. Lawmakers should consider these varied new data options when they evaluate machine learning during a hearing later this week.
Aura Closes $ 28.7 Million Expansion Loan from Angel Island Capital (Business Wire), Rated: A
Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, today announced it has closed $28.7 million in residual debt financing from Angel Island Capital (“AIC”) to help the company grow and keep pace with the demand for its loans.
Drip Capital raises $ 25 mn from Accel, Sequoia (IBS Intelligence), Rated:
Drip Capital, a technology-enabled cross border trade financier, has raised $25 million in Series B funding from investors led by Accel Partners. Existing investors Sequoia Capital, Wing VC and Y Combinator also participated in the round.
More options to save on student loans at Credible (Credible), Rated: A
With Ascent and MEFA on board, Credible’s student loan marketplace now provides access to eight lenders, including traditional banks, online lenders, and state student loan authorities.
This is how fintech solutions are speeding up mortgage closing times (Housingwire), Rated: A
Financial technology is transforming the mortgage industry by making the origination process more convenient and secure for borrowers.
In 2018, BOK began leveraging Roostify’s digital platform to provide its customers a secure way to upload, send and receive loan documents remotely.
Few would expect it was a good idea to start a bank right as the recession raged a decade ago.
Fewer still would say any bankers eager to do that, as Cross River Bank did, would go on to become one of the state’s most impressive growth stories.
Fitch Ratings: Questions Increase Around Fringe Players in U.S. ABS (ABL Advisor), Rated: A
While U.S. core ABS performance remains strong due largely to low unemployment, many investors are zeroing in their questions on some of the sector’s non-core assets, according to Fitch Ratings in its 2019 Virtual Investor Video Series for structured finance.
Should fintechs be regulated like banks? (BAI.org), Rated: A
According to the U.S. Treasury report, more than 3,330 new technology-based financial services industry were founded from 2010 to the third quarter of 2017, creating industry investment worth more than $22 billion: a thirteen-fold increase since 2010. Lending by these firms now makes up more than 36 percent of all U.S. personal loans, up from less than 1 percent in 2010.
Examples of Financial Services Business Ideas (Entrepreneur), Rated: A
If you’re financially savvy, you can start your own peer-to-peer lending business. This is when you give small amounts of money to a business or private person, while collecting interest on the returns. Before you start lending out money, here is a successful business you can learn some strategies from:
Business Name: RainFin
Established date: 2012
About the business:
RainFin offers an online marketplace that enables borrowers to access affordable debt capital and investors to access new asset classes. RainFin is a registered credit provider and aims to remove traditional costs and barriers for borrowers and investors through innovative technology, designed to create a transparent and fair marketplace.
NASAA Warning on Initial Loan Procurements: “Crowdfunding Meets Blockchain” (Crowdfund Insider), Rated: A
NASAA describes initial loan procurements as a crowdfunding method that allows borrowers and creditors to enter into loan agreements through legally binding smart contracts stored on the blockchain.
To quote NASAA:
“Companies using blockchain technology need to raise capital just like any other company. One way these companies accomplish that is through initial coin offerings (ICOs), which require the new company to create tokens that can be sold to investors and used for the development of new projects. An alternative fundraising method is catching the interest of investors. Initial loan procurements allow companies to raise capital without the added burden of creating tokens.”
Examples of Online Business Ideas (Entrepreneur), Rated: A
Online real estate investing platforms now exist, and they enable anyone to invest a percentage into a property instead of the whole amount. If you have the right skills, you can start your own online business.
Before you launch your business, learn a few strategies from this example of an online business:
Business Name: Real Estate Crowdfunding
About the business:
Real Estate Crowdfunding offers its clients lower fees, the option to invest in a development nearby and transparency, which enables their customers to find out more about projects before investing.
Mynd Property Management Acquires HomeUnion, a Real Estate Investing Portal (Yahoo! Finance), Rated: B
Mynd Property Management, a modern property management company powered by on-the-ground experts and technology, has acquired HomeUnion, a company that enables investing in small residential properties in 20 U.S. markets. The acquisition comes on the heels of Mynd’s recent merger with RentVest, which doubled Mynd’s property management footprint to more than 8,000 small residential rental units in a total of 16 markets.
Monzo and Starling took first and second place in a ranking of banking apps (Business Insider), Rated: AAA
UK-based Monzo has taken the top spot in a ranking of bank apps by MoneySavingExpert.com, beating out both peers and incumbents, The Irish News reports. Seventy-eight percent of the consumers surveyed said the neobank’s app had plenty of features and strong usability.
Competing neobank Starling picked up second place, with 70% of consumers approving of its app’s features and usability. The rest of the top five was rounded out by Barclays (57%), Lloyds Bank (49%), and NatWest (47%).
Lord Myners heaps further pressure on FCA over Lendy failings (P2P Finance News), Rated: A
FORMER City minister Lord Myners is keeping the pressure on the Financial Conduct Authority over its decision to authorise now-collapsed peer-to-peer lending platform Lendy.
A series of written parliamentary questions show Lord Myners is seeking answers on whether better regulation is needed and the creditor status of Lendy investors.
Lessons from Lendy (Brismo), Rated: A
Innovate Finance expands national network with three regions added (ComputerWeekly), Rated: A
Last week Innovate Finance announced the addition of Fintech Northern Ireland, Fintech Wales and Fintech West to the national network.
Growth Street pledges £75m overdraft funding for East Anglia (P2P Finance News), Rated: A
GROWTH Street has pledged to commit £75m of overdraft-style financing to small- and medium-sized enterprises (SMEs) in East Anglia.
The peer-to-peer business lender, which provides a revolving credit facility for borrowers, said it is already 10 per cent towards its target having lent £7.5m in the region.
Is Short-Term Financing Right For Your Business? (Nav), Rated: A
If you need a short-term capital boost, there are a number of options available to you. Here are a few short-term financing examples that you may want to consider.
Superdry collaborating with Klarna (Fibre2Fashion), Rated: B
British contemporary fashion brand Superdry and leading payments provider Klarna have entered into a collaboration, enabled by Adyen. Superdry customers can now use the Pay later or Pay in 3 in the UK, and later this month will be able to Pay in 4 in the US. This will make everything from jackets to jeans more accessible to Superdry customers globally.
OakNorth completes £11.4m loan to Ocea for major new residential development in Redhill, Surrey (Fintech Finance), Rated: B
OakNorth Bank – the UK bank powered by OakNorth – has provided an £11.4m property development finance facility to Ocea, one of the UK’s leading developers which specialises in commercial to residential property conversions.
LendInvest boosts business development team with new hires (P2P Finance News), Rated: B
Nigel Robbins has joined LendInvest from specialist mortgage lender Magellan to source deals across the South West of England.
In-house marketing at Klarna: Interview with Elin Svahn (BannerFlow), Rated: AAA
In-house marketing is transforming the industry. It is a movement rising in popularity year on year, with over 91% of European decision-makers moving operations in-house.
How do you structure your in-house marketing at Klarna?
When I started, Klarna was in the process of a complete restructuring of their in-house operations. The brand was divided into many separate domains, with different teams having different priorities, and ‘issues’ to solve.
Today, we have four marketing domains: Branding, Merchant Aquisition and Growth, Communications and PR, Consumer Growth and Loyalty. Within each of these domains, we have different competencies. So for example, within the Branding domain, we have a mix of marketers, designers, and copywriters.
AdviceRobo has launched an open banking capability for lenders (Business Insider), Rated: A
AdviceRobo focuses on offering credit risk management solutions, and its latest API product enables lenders to categorize transactional data and predict defaults to make sound credit decisions.
The Netherlands-based fintech’s new API, dubbed CatRobo, is powered by PSD2 — a regulation that came into effect in January 2018 forcing banks to open up their data to third-parties.
Here’s what it means: The API will help lenders make better use of their data, better compete with alt lenders, and lend out more cash to underserved consumers.
Who Cancels Lunch With Warren Buffett? A Chinese Tycoon Did, but Why? (The New York Times), Rated: AAA
Justin Sun denied reports that he had postponed a charity lunch with the investing guru after attracting regulatory scrutiny. In China, where executives sometimes vanish, such reports are not unusual.
Embedded finance, or why fintech mega VC rounds have become so common (TechCrunch), Rated: A
This morning, it was personalized banking app MoneyLion, which raised $100 million at a near unicorn valuation. Last week, it was N26, which raised another $170 million on top of its $300 million round earlier this year. Brex raised another $100 million last month on top of its $125 million Series C from late last year. Meanwhile, companies like payments platform Stripe, savings and investment platform Raisin, traveler lender Uplift, mortgage backers Blend and Better, and savings depositor Acorns have also raised massive new rounds this year.
Cryptocurrency loan site YouHodler exposed unencrypted user credit cards and transactions (TechCrunch), Rated: A
A cryptocurrency loan startup exposed reams of customer credit cards and user transactions for almost a month — because it forgot to protect the server with a password.
Security researchers Noam Rotem and Ran Locar found the database belonging to YouHodler, a lending platform designed for cryptocurrency, which claims to have processed $10 million in loans to more than 3,500 customers.
The database contained 86 million lines of daily updating records of the lending platform, containing streams of logs and computer commands based on users’ interactions on the front-end website. That also included sensitive information such as every time a transaction or a loan went through.
Crypto Lending Market ‘Continues to Experience Sustained Growth’ (CryptoGlobe), Rated: A
In the Q2 2019 edition of its quarterly ‘Digital Asset Lending Snapshot’ report, Genesis Capital made several interesting observations:
- At the end of Q2 2019, the total value of “active loans outstanding” was $452 million versus $181 million in Q1 2019, i.e. a quarter-over-quarter (QoQ) increase of 149%.
- Originations went up 48% QoQ, which means that Genesis Capital has just experienced its fifth straight quarter of “strong growth.”
- Genesis Capital has originated over $2.3 billion in “loans and borrows” since the business was launched in March 2018.
What Is DeFi? (Bitcoin Market Journal), Rated: A
DeFi platforms leverage smart contract technology to provide decentralized financial solutions, such as digital currency-based peer-to-peer lending, dollar-pegged stablecoins, or investable tokenized asset baskets. The existing DeFi market is still at an early stage so we can expect more decentralized financial services that operate on a permissionless, transparent, and efficient manner on the blockchain to materialize soon.
Decentralised Finance in a centralised world (Business Times), Rated: A
THE growth of global financial markets has created enormous wealth, especially benefitting a few players who are closely connected to the world’s main financial centres.
The centralised nature of the industry has enabled these powerful intermediaries to position themselves in the middle of the system and thus extract rents from other participants.
This oligopolistic structure has stifled competition and decreased efficiency, while increasing the cost of financial services.
Time for a rethink? (Securities Lending Times), Rated: A
David Lewis of FIS discusses the dip in the securities finance industry’s global revenues and explains the factors changing the dynamics of the industry
Finacity Facilitates the Addition of UK Entities to USD $ 115 Million Receivables Securitization (Virtual Strategy Magazine), Rated: A
Finacity Corporation (“Finacity”), a member of the Greensill family of companies, and DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”) announces the addition of Volt Information Sciences, Inc. (“Volt”) United Kingdom subsidiaries as sellers of receivables to Volt’s existing trade receivables securitization. The 2-year facility supported by Volt’s US and UK receivables allows for up to USD $115 million in funding with a $35 million sublimit for letters of credit.
Harmoney makes maiden profit (MSN), Rated: AAA
The company, which is partly owned by Heartland Bank (17 percent share) and Trade Me (15 percent), made a net profit of $7.2 million in the year ended in March, compared with a loss of $1.8m the year earlier.
Its revenue was up 25 percent to $32.9m, with net interest income of $728,000 – nearly 10 times more than the year before.
Why bank hybrids are far too expensive (Cuffelinks), Rated: AAA
Yield chasing has spilled into nearly every asset class, with Australian listed bank hybrids no exception. The current average margin of bank bills at +2.40% is close to the lowest level for at least seven years.
Alternatives to bank hybrids
2. Marketplace lending
Institutional and retail investors can both access marketplace lending (also known as peer-to-peer lending) via a growing number of online platforms. There’s a mixture of residential and commercial property secured loans available, as well as unsecured business and personal loans. For more conservative investors, loans backed by residential property with an LVR of 60% or less typically yield 5-7%. Commercial property loans, business loans and personal loans usually come with higher yields. Investors in riskier loans should be expecting to lose a portion of their total return when some of the borrowers default and should set their return expectations accordingly.
India’s FinTech Cube Wealth expands asset management biz in UK, Hong Kong (IBS Intelligence), Rated: AAA
Cube Wealth, an Indian FinTech start-up for financial planning and wealth management, is entering the global markets in this quarter (July-September) of 2019. The plan is to set up a tech-enabled asset management company in the UK, Hong Kong and Switzerland to start with so that customers in those markets can get an access to some leading fund managers in the emerging markets, including India.
Hedge Funds Help Fuel Southeast Asia Consumer Lending Boom (Bloomberg), Rated: AAA
A small but rising number of hedge funds are being established to help finance the boom in online and peer-to-peer lending across Southeast Asia.
Pilgrim Asia Consumer Finance Fund, founded by Brian Yonghui Tan and Paul Sheng, aims to raise up to $20 million in its first year and generate a return for investors of around 8% per annum. It will charge a 2% management fee.
OJK Condemns Fintech Lender over Indecent Post of Debtor (Tempo), Rated: A
The Financial Services Authority (OJK) condemns fintech lender Incash for posting a photo of one of its debtors online, with captions saying she was willing to have sex for money so she could pay her debts to the online lender.