- Today’s main news: OnDeck prices $125M securitization. Kabbage issues $200M in ABS notes. LendInvest expands buy-to-let to Scotland. Celsius surpasses $4B in crypto lending. ID Finance raises 4.95 GBP on Crowdcube. IOU Financial releases 3- and 9-month financial results.
- Today’s main analysis: Why the banking system is broken.
- Today’s thought-provoking articles: Productivity trends and LendingClub earnings. Consumers and holiday credit activity. Gen Z FICO scores are higher than Gen X and Millennial scores. Fintech’s third wave.
- OnDeck prices $125 million securitization. This will be the highest rating ever for an ABS in the small business loan category of online lending. Congratulations!
- Kabbage issues $200 million in notes to 2019-1 ABS series. Added to $700 million outstanding.
- Productivity trends. A PeerIQ analysis. Also includes a bit on LendingClub Q3 earnings.
- Consumers to continue strong credit activity over holidays. According to TransUnion.
- Gen Z has higher FICO scores than Gen X and Millennials. Just give them to default.
- Fintech’s third wave will change banking.
- Rob Frohwein on the growth of Kabbage.
- LendingPoint makes No. 9 on Deloitte 2019 Technology Fast 500.
- Fundrise touts 5-year performance.
- Digital assets are the future of real estate investing.
- Bankers association wants to shut down shadow banking.
- StreetShares costs, losses soar.
- Toast to help restaurants secure loans.
- There is a tech firm for your loan.
- Reliant Funding debuts free business guide for veteran-owned businesses.
- Loan Doctor launches online 6 percent APY high yield CD account.
- RefiJet is LendingTree’s top-rated auto refinance company for fourth straight quarter.
- JOUST partners with AFFINITY.
- BFS Capital names chief operating officer.
- LendInvest expands buy-to-let offering into Scotland.
- Celsius Network surpasses $4 billion in crypto loans.
- Larger businesses can get loans at MarketInvoice.
- MarketInvoice rebrands to MarketFinance.
- Why the banking system is broken. This is an excellent analysis from Hacker Noon with some insight into peer-to-peer lending.
- 2019 DeFi inflows doubled.
- TrustToken partners to offer interest on 5 currencies.
- Lending is one way to earn from cryptocurrencies.
- Spain: ID Finance raises 4.95 million GBP on Crowdcube.
- China: Yirendai digital Q3 earnings preview.
- Canada: IOU Financial releases 3- and 9-month financial results.
- China: Tencent plans blockchain-based virtual bank.
- Canada: Sezzle opens office in Toronto.
- India: Who bears fintech risk?
- Netherlands: Fintech comparative guide.
- China: OneConnect Financial Technology files for $100 million IPO in the U.S.
- Indonesia: ALAMI claims first sharia-based VC funding round in Southeast Asia.
- France: Crowdfunding association gets new chairman.
- China: Jack Ma says Singles’ Day shopping misses expectations.
- United States
- OnDeck Announces Pricing of $ 125 Million Securitization (OnDeck), Rated: AAA
- Kabbage issues $ 200M in additional notes to 2019-1 ABS series (Asset Securitization Report), Rated: AAA
- Rob Frohwein on the Growth of Kabbage, from Lending to Payments (The Financial Revolutionist), Rated: A
- Productivity Trends, LC Q3 Earnings (PeerIQ), Rated: AA
- Consumers Poised to Continue Strong Credit Activity this Holiday Season (Markets Insider), Rated: AAA
- Gen Z is turning around credit: Survey of NearPrime borrowers finds Gen Z FICO scores higher than Millennials & Gen X (LendingPoint Email), Rated: AAA
- LendingPoint No. 9 Fastest Growing Company in North America on Deloitte’s 2019 Technology Fast 500 (Yahoo! Finance), Rated: A
- How Fintech’s Third Wave Will Change How You Bank (Fortune), Rated: AAA
- Real Estate Investment Platform Fundrise Touts Performance Over Past 5 Years (Crowdfund Insider), Rated: A
- The Future Of Real Estate Investing: Digital Assets Are Here, Now (Forbes), Rated: A
- Independent Community Bankers of America Supports Closure of Industrial Loan Charter “Loophole” to Eliminate “Shadow Banking” (Crowdfund Insider), Rated: A
- Costs, Losses Soar At StreetShares (deBanked), Rated: A
- Reliant Funding Debuts Free Comprehensive Business Guide for Veteran-Owned Businesses (The Grunion), Rated: B
- Toast Launches Toast Capital To Help Restaurants Secure Loans (Crunchbase), Rated: A
- Want a loan? There is a tech firm for It (Keyc.tv), Rated: A
- Loan Doctor Launches Online 6% APY High Yield CD Account (Markets Insider), Rated: B
- RefiJet Is LendingTree’s Top-Rated Auto Refinance Company for the Fourth Consecutive Quarter (Benzinga), Rated: B
- JOUST Partners With AFFINITY To Shake Up The Home Loan Landscape (BandT), Rated: B
- BFS Capital Names Brian Simmons as Chief Operating Officer (BusinessWire), Rated: B
- United Kingdom
- LendInvest expands Buy-to-Let offering into Scotland (Property Funds World), Rated: AAA
- Celsius Network surpasses $ 4 billion in crypto loans (CryptoSlate), Rated: AAA
- Larger businesses can now get loans in new borrowing scheme (Elite Business Magazine), Rated: A
- MarketFinance Set to Transform Business Lending Industry (PR Newswire), Rated: B
- Yirendai Digital Q3 2019 Earnings Preview (Seeking Alpha), Rated: AAA
- Tencent plans blockchain-based virtual bank on back of new Hong Kong licence (Fintech Futures), Rated: A
- Ping An fintech spinoff OneConnect Financial Technology files for a $ 100 million US IPO (Nasdaq), Rated: A
- Alibaba’s Jack Ma Says Singles’ Day Shopping Results Miss Expectations (The Epoch Times), Rated: B
- European Union
- Fintech ID Finance Raises £4.95 Million on Crowdcube, Claims Record for Spain (Crowdfund Insider), Rated: AAA
- FinTech Comparative Guide (Mondaq), Rated: A
- French Crowdfunding Assocaition Appoints New Chairman (Crowdfund Insider), Rated: B
- The Banks Have Gone Mad and the System is Broken (Hacker Noon), Rated AAA
- DeFi Inflows Doubled in 2019 (Cryptovest), Rated: AAA
- TrustToken Partners to Offer Industry-Leading Interest on 5 International Currencies (Yahoo! Finance), Rated: A
- 7 Practical Ways of Earning From Cryptocurrency (Cryptomorrow), Rated: B
- Who Bears the Risk in Fintech? (FinDev Gateway), Rated: A
- Indonesia’s ALAMI gets funding, claims to be the first sharia-based VC funding round in SEA (e27), Rated: A
- IOU Financial Inc. Releases Financial Results for the Three and Nine-Month Period Ended September 30, 2019 (Yahoo! Finance), Rated: AAA
- Sezzle opens office in Toronto, taps PayPal executive to lead it (StarTribune), Rated: A
OnDeck Announces Pricing of $ 125 Million Securitization (OnDeck), Rated: AAA
On Deck Capital, Inc. announced today that it has priced $125 million initial principal amount of Series 2019-1 Fixed Rate Asset-Backed Notes (the “Notes”) in a private securitization transaction. The Notes, which will be issued in five classes, were priced with a weighted average fixed interest rate of 3.04% per annum. It is expected that DBRS, Inc., in satisfaction of one of the closing conditions, will rate the Notes at closing. The anticipated AAA(sf) DBRS rating for the Class A Notes would be the highest rating ever for a class of notes in an asset-backed securitization of small business loans in the online lending industry.
Productivity Trends, LC Q3 Earnings (PeerIQ), Rated: AA
The labor department released the latest productivity data, which showed a contraction in productivity – a 30 bps decline in the recent quarter (vs +90 bps growth expectation), the biggest decline in 4 years. Economists have attributed the surprise decline to the ‘cat memes’ and Instagram. (#wekid.)
Below we show an excerpt of long-run productivity growth. Takeaways:
- Long-run US GDP and productivity growth is at a lower trend level (2.3%) than observed during the 1960+ period (3.1%)
- This means that the ‘speed limit’ for GDP and income growth is about ~2% (consistent with 10-year bond yields of ~1.9% – another rough correlation for growth)
Deserve, a FinTech startup, led by CEO Kalpesh Kapadia, raises $50 million in funding led by Goldman Sachs. Deserve is a lending-as-a-service infrastructure provider that sells their platform to firms that want to offer their own branded cards. Sallie Mae, Accel, Aspect Ventures, Pelion Venture Partners and Mission Holdings also invested in the Series C round.
LendingClub Beats Earnings, Markets Expect Q4 GAAP Profitability
The earnings are a milestone in that it is the first time that LC experienced a positive adjusted net income since the turnaround Sanborn led since becoming CEO in 2016.
- Revenue also topped records at $204.9 million, up 11% year over year.
- LendingClub crossed a record $3.3 billion in originations for the quarter, up 16% year over year
- GAAP net loss of just $400,000 compared to the prior year period where they lost $22.8 million. Analysts expect Q4 GAAP profitability
- Adjusted net income came in at $8 million, up from a loss of $7.3 million, in the prior year period.
Consumers Poised to Continue Strong Credit Activity this Holiday Season (Markets Insider), Rated: AAA
New TransUnion (NYSE: TRU) data from the just-released Q3 2019 Industry Insights Report point to a few factors that could portend good things for retailers this holiday season.
TransUnion found that private label card originations increased 2.4% to 12.4 million in Q2 2019 (latest data available), marking the first such year-over-year increase in 11 quarters. Origination growth is being driven by prime and above consumers, with their share of new accounts growing faster than non-prime borrowers. The number of new bank-issued credit cards also rose in Q2 2019, increasing 5.2% to 16.6 million, the fifth straight quarter of yearly growth.
As a result of this growth, the number of consumers with access to revolving credit now stands at a record high 200.5 million consumers as of Q3 2019, up from 198.0 million in Q3 2018. On average, bank-issued credit card balances for individuals have grown to $5,668, while private label average card balances, per individual, grew to $2,022 in this timeframe.
Charging Up Credit Cards in November and December; Paying Them Down in the New Year
| Percent of Bankcard
Debt Paid Down in the
|Q4 Private Label
Debt Paid Down
in the Following
|2018/2019||$31.9 billion||92%||$6.6 billion||102%|
|2017/2018||$32.6 billion||84%||$6.3 billion||94%|
|2016/2017||$33.3 billion||72%||$8.5 billion||30%|
Gen Z is turning around credit: Survey of NearPrime borrowers finds Gen Z FICO scores higher than Millennials & Gen X (LendingPoint Email), Rated: AAA
We recently analyzed just over 5 million NearPrime loan applications received between July 2018 and July 2019 to find that Gen Z, or those born after 1996, have an average FICO score that’s higher than both Millennials and Gen X. This is especially interesting when you consider that how long you’ve had credit is a key factor when it comes to credit scoring. And even with the duration of credit use playing a role in FICO scores, Gen Z is off to a strong start in building their credit profile.
Making up 40% of consumers by 2020, this rising post-Millennial generation thinks about personal finance differently than any other age group, setting the stage for lasting change across the financial landscape.
What does Gen Z want personal loans for?
- 3X more likely than a Millennial to apply for loans for a major purchase.
- 2X more likely than both Gen X and Millennials to apply for loans for healthcare.
- More than 2X more likely than a Millennial to apply for loans for auto needs.
LendingPoint No. 9 Fastest Growing Company in North America on Deloitte’s 2019 Technology Fast 500 (Yahoo! Finance), Rated: A
Data and technology platform LendingPoint today announced it ranked No. 9 on Deloitte’s Technology Fast 500™, a ranking of the 500 fastest growing technology, media, telecommunications, life sciences and energy tech companies in North America and now in its 25th year. LendingPoint grew 8,812.87% since its start in 2015, hit successive usage records year-over-year and is now running $100 million per month in loan originations through its platform.
How Fintech’s Third Wave Will Change How You Bank (Fortune), Rated: AAA
The first wave met demands resulting from the aftermath of the financial crisis: A need for credit fueled alternative lenders. Online and peer-to-peer marketplaces, such as Prosper and LendingClub, flourished, while laid-off workers seeking to re-skill buoyed student loan providers like Social Finance, or SoFi.
The next wave swelled atop a flood of mobile devices that came after Apple debuted the iPhone in 2007. Access to consumers became the primary object for upstarts. Apps appealed to younger generations, used to flicking and tapping smartphone screens rather than visiting branch offices.
This paradigm is still in full swing. Some of its best-known champions: Credit Karma, a free credit score provider, Internet-only “neobanks” like Chime, Monzo, and N26, and online stock traders like Robinhood.
Even as the second wave crests, a third is beginning to rise: Automation.
Real Estate Investment Platform Fundrise Touts Performance Over Past 5 Years (Crowdfund Insider), Rated: A
Fundrise reports that during the past five year period, the platform portfolio has averaged a 10.79% return. In comparison, Vanguard’s Total Stock Market ETF and Real Estate ETF produced average returns of 7.92% and 7.40%, respectively, states Fundrise.
The Future Of Real Estate Investing: Digital Assets Are Here, Now (Forbes), Rated: A
Some of the most proven use cases include agricultural supply-chain management and food safety, tokenization of real estate assets, foreign exchange transactions, immutable voting, interbank settlements, securing patient data and land registry. And the list goes on.
Be it company equity, asset-backed securities, cryptocurrencies or security token offerings (STOs), the age of digital assets is now, and they are real-deal investments, with nearly $1 billon raised through STOs alone in the last 18 months with another $1 billion USD in digitized real estate assets in the pipeline.
Independent Community Bankers of America Supports Closure of Industrial Loan Charter “Loophole” to Eliminate “Shadow Banking” (Crowdfund Insider), Rated: A
The Independent Community Bankers of America (ICBA) has issued a statement of “strong support” regarding pending legislation targeting Industrial Loan Charters (ILC).
The Eliminating Corporate Shadow Banking Act of 2019 (S 2839) was introduced to the Senate Banking Committee yesterday sponsored by Senator John Kennedy.
Costs, Losses Soar At StreetShares (deBanked), Rated: A
StreetShares increased revenue by nearly 40% year-over-year, according to the company’s latest fiscal year 2019 filing, but costs soared and increased by almost 90%.
StreetShares reported a staggering $12.3M loss on only $4.4M in revenue. That loss was much wider than the previous year’s loss of $6.5M on $3.2M in revenue.
Reliant Funding Debuts Free Comprehensive Business Guide for Veteran-Owned Businesses (The Grunion), Rated: B
In honor of celebrating America’s heroes during the month of November, Reliant Funding announces the release of “The Complete Veteran Business Owner Resource Guide.” The informative, 40-page handbook serves to provide industry tips and resources for veterans on entrepreneurial journeys.
According to Bunker Labs, nearly 25 percent of transitioning veterans indicate they would like to start a business. Currently, over 2.5 million businesses in the US are majority-owned by military veterans. Since 2008, Reliant Funding has provided working capital to veteran owned businesses across the US.
To access the guide, click here.
Toast Launches Toast Capital To Help Restaurants Secure Loans (Crunchbase), Rated: A
LendInvest expands Buy-to-Let offering into Scotland (Property Funds World), Rated: AAA
LendInvest has expanded its Buy-to-Let offering into Scotland as demand for long-term property finance in the Scottish housing market increases.
The move comes months after the announcement that LendInvest has received GBP200 million in funding from the National Australia Bank for the business to expand its capacity to lend in the UK BTL market.
Celsius Network surpasses $ 4 billion in crypto loans (CryptoSlate), Rated: AAA
Celsius Network, a cryptocurrency lending platform, announced that it has surpassed $4.25 billion in loan origination. In a press release shared with CryptoSlate, the company said that it was a 93 percent increase from the $2.2 billion it recorded at the beginning of 2019.
Larger businesses can now get loans in new borrowing scheme (Elite Business Magazine), Rated: A
MarketInvoice has launched a new specialist team called Corporate Solutions to provide bigger loans for Britain’s larger businesses. Estimated to be a £13billion finance market, these businesses can now secure a credit facility of up to £5 million (based on their revenue) and up to £500K as a business loan on a flexible term of up to three years from MarketInvoice. These limits will increase steadily over the next 12 months.
MarketFinance Set to Transform Business Lending Industry (PR Newswire), Rated: B
MarketInvoice has today updated its name to MarketFinance. The fintech business lender established in 2011, has provided over £2.6 billion in lending to thousands of UK businesses.
MarketFinance current product suite
- Invoice finance: All businesses can get finance for selected invoices or finance all of them on a rolling basis (up to £1m in finance).
- Business loans: Qualifying business can access up to £250k over 1-3 years with monthly or weekly repayments. This will rise to up to £500k in the coming months.
- Corporate lending: Larger businesses can access up to £5m in structured facilities combining invoice finance and a business loan.
Yirendai Digital Q3 2019 Earnings Preview (Seeking Alpha), Rated: AAA
- Yirendai Digital (NYSE:YRD) is scheduled to announce Q3 earnings results on Thursday, November 14th, after market close.
- The consensus EPS Estimate is $0.48 (-44.2% Y/Y) and the consensus Revenue Estimate is $259.41M (+59.0% Y/Y).
- Over the last 2 years, yrd has beaten EPS estimates 100% of the time and has beaten revenue estimates 63% of the time.
- Over the last 3 months, EPS estimates have seen 1 upward revision and 0 downward. Revenue estimates have seen 1 upward revision and 0 downward.
Tencent plans blockchain-based virtual bank on back of new Hong Kong licence (Fintech Futures), Rated: A
Chinese conglomerate Tencent is planning to launch a blockchain-based digital bank after being granted a licence by the Hong Kong Securities and Futures Commission (SFC).
Ping An fintech spinoff OneConnect Financial Technology files for a $ 100 million US IPO (Nasdaq), Rated: A
OneConnect Financial Technology, a Ping An-backed provider of operations management tools for financial firms, filed on Wednesday with the SEC to raise up to $100 million in an initial public offering.
Revenue for the nine months ended September 30, 2019 grew 72% to $222 million (33% gross margin); operating loss widened to -$160 million.
Alibaba’s Jack Ma Says Singles’ Day Shopping Results Miss Expectations (The Epoch Times), Rated: B
Recent crackdowns on shadow banking—from insurance products to peer-to-peer lending—have likely put a dent in consumer income.
Fintech ID Finance Raises £4.95 Million on Crowdcube, Claims Record for Spain (Crowdfund Insider), Rated: AAA
ID Finance, based in Barcelona, has closed its crowdfunding round raising £4.95 million. The equity offering was listed on Crowdcube Spain and topped the previous record for equity crowdfunding in the country. ID Finance is an online lender, data and credit scoring company operating in Europe as well as Latin America.
According to the offering page, 1223 individual investors participated in the round which sought 5.76% equity at a pre-money valuation of £81,037,856. Investors averaged £4,049 of investment.
FinTech Comparative Guide (Mondaq), Rated: A
1.2 Do any special regimes apply to specific areas of the fintech space?
With regard to fintech credit platforms (ie, crowdlending, marketplace lending, peer-to-peer lending platforms), the Dutch legislature and the Netherlands Authority for the Financial Markets (AFM) have established a specific regime. Fintech companies that operate an online credit platform match lenders with borrowers when attracting a loan.
Nederland Crowdfunding has drawn up a code of conduct with which its members must comply. Through this self-regulatory code, which aims to ensure more transparent business operations, member platforms can distinguish themselves from other crowdlending platforms active in the Netherlands (https://nederlandcrowdfunding.nl).
As of September 2019, 44 lending platforms were registered in the public register of the Netherlands Authority for the Financial Markets. Peer-to-peer and consumer credit platforms, as well as crowdinvesting / equity platforms, are less active in the Dutch market.
French Crowdfunding Assocaition Appoints New Chairman (Crowdfund Insider), Rated: B
The French Crowdfunding Association (Financement Participatif France or FPF) has appointed Jérémie Benmoussa, co-founder of Fundimmo, as Chairman replacing Stéphanie Savel.
The Banks Have Gone Mad and the System is Broken (Hacker Noon), Rated AAA
A US$ trillion market
The equity crowdfunding market is more known than the peer to peer lending market (crowdlending) and it has also a longer history. According to this research by Statista.com this global market was worth approx. US$ 7 billion in 2019. Less than peanuts. According to fundly.com, the equity crowdfunding industry is projected to grow to US$ 300 billion by 2025. Still nothing to be overly excited about.
Now let´s look at what the peer to peer lending sector is doing instead.
According to Statista.com it was worth US$ 9 billion at its very inception in 2014, the next year was already worth US$ 64 billion and it is projected to grow to a US$ 1 trillion industry by 2025. Now, that´s not peanuts.
Mintos is a Latvian Fintech company which was launched in 2015 to become a “global marketplace for peer to peer loans”.
According to their data small investors had lent through their platform almost € 1 billion up to August 2018. Then, in the following 15 months — thanks to the new wave of zero/negative interest rates — the investments have more than tripled to € 3.8 billion.
DeFi Inflows Doubled in 2019 (Cryptovest), Rated: AAA
DeFi is a growth sector in 2019, and funds held in various schemes have doubled in 2019.
Crypto lending started off a few years ago, with rock-bottom lending rates of 0.5% for Maker DAO. Later, skepticism brough interest rates to above 20%, with the fear of a mass exodus and liquidations.
Now, trust is back and more than 1.793 million ETH is locked with Maker DAO. The issuance of DAI has increased to 102 million coins, with the permission to expand to 120 million.
TrustToken Partners to Offer Industry-Leading Interest on 5 International Currencies (Yahoo! Finance), Rated: A
TrustToken is enabling holders of TrueCurrencies (fully collateralized stablecoins) to earn up to 10 times the local bank savings rate in five global currencies.
Users of TrueUSD (backed by US Dollars) may accrue up to 12% APR (annual percentage rate) while holders of other TrueCurrencies may gain between 4-6% APR.
TrustToken’s full suite of stablecoins, with respective earning opportunities:
- TrueUSD (backed by the US Dollar), offering up to 12% APR across all five partners
- TrueGBP (backed by the British Pound), offering up to 5.2% APR on Celsius Network
- TrueHKD (backed by the Hong Kong Dollar), offering up to 5.2% APR on Celsius Network
- TrueCAD (backed by the Canadian Dollar), offering up to 5.2% APR on Celsius Network
- TrueAUD (backed by the Australian Dollar), offering up to 5.2% APR on Celsius Network
7 Practical Ways of Earning From Cryptocurrency (Cryptomorrow), Rated: B
Lending cryptocurrency is becoming a popular way of earning from cryptocurrency where owner lends to other users to return a predefined percentage per defined period. A good number of exchanges now allow their users to lend out their holdings and earn interests. You deposit cryptocurrency and choose desired time to lock in or lend although you can take it back any time. In most cases, those taking the loans do so for purposes of margin trading and such exchanges do have those margin trading features.
Who Bears the Risk in Fintech? (FinDev Gateway), Rated: A
The excitement around fintech in India is palpable. This enthusiasm can be attributed to fintech’s potential as a market-led solution to the policy objective of financial inclusion. Fintech can expand the reach of formal finance by offering users personalized financial products in an economically viable manner. Unsurprisingly then, regulation of fintech is central to financial inclusion.
Our recent research, Financial regulation of consumer-facing fintech in India, aims to do just that, answering the question of how fintech is regulated in India.
Indonesia’s ALAMI gets funding, claims to be the first sharia-based VC funding round in SEA (e27), Rated: A
Indonesian sharia-based P2P lending platform ALAMI announced an undisclosed funding round led by Golden Gate Ventures, with the participation of Agaeti Ventures, RHL Ventures, and Hong Kong-based angel investor Aamir Rahim through Zelda Crown.
Sezzle opens office in Toronto, taps PayPal executive to lead it (StarTribune), Rated: A
Sezzle Inc. is opening an office in Toronto to expand usage of its “buy-now-pay-later” payments service by retailers and shoppers in Canada.
The Minneapolis-based financial-technology company first offered its service in Canada in April and subsequently hired marketers to reach out to retailers there. On Wednesday, it added a country manager, Patrick Chan, a former senior executive in PayPal’s Canadian office, to accelerate its growth.