- Today’s main news: SoFi loan performance suffers, earnings projections missed. Ant Financial to pursue equity fundraising at potential $100B valuation. Elevate publishes FY 2017 results. Symphony, OpenFin join forces. Openwrks, Zopa, TrueLayer get into open banking. Rupeek raises $6.8M.
- Today’s main analysis: MPL securitizations comparison (SoFi 2018-A, MFT 2018-1, SCLP 2018-1).
- Today’s thought-provoking articles: Silicon Valley investors fund education. Loans.com.au slashes home loan rates. APAC fintech to reach $72B by 2020, mobile payments & SME lending dominate in Singapore.
- SoFi disappointed in earnings while loan performance suffers. AT: “A large part of the reason SoFi has focused on high income earners is because they believed that those borrower were more likely to pay back their loans on time. That seems that hasn’t been the case.”
- Top MBA schools for income-to-debt ratio. AT: “SoFi’s studies on income earners after college are quite interesting and usually deliver a few surprises. For instance, Wharton School of Business MBA graduates earn the highest average income three years after graduation (which isn’t surprising), but the University of Pennsylvania program isn’t even in the top 10 for salary-to-debt ratio. The top school there is the University of Wisconsin-Madison. Brigham Young is second. The question is, what determines the debt part of this scenario? If those attending the top 10 schools for salary-to-debt fund their education with daddy’s money instead of student loans, then this list is an indication of which schools are most likely to be attended by students who do not seek loans for education–on the average.”
- Elevate announces FY 2017 results. AT: ” As expected, Elevate is looking good. Y-over-Y growth is at 16%. Y-0ver-Y growth for combined loans receivable is at 28%. Adjusted EBITDA is up 45% compared to the prior year.”
- GS M&A acceleration + MPL securitization comparisons. AT: “The chart comparing SoFi’s and Marlette Funding’s most recent securitizations is quite interesting – two from SoFi (student loan and consumer loan) and one from Marlette.”
- Symphony, OpenFin join forces. AT: “This looks like a good partnership, and a bit surprising considering that both of these organizations are quite young.”
- Immigrants need credit too–and untapped market.
- Lenda expects 2018 growth spurt.
- Subaru offers 0% financing, and auto prices are up.
- Independent financial advisors rebuild online presence.
- The new Worthy bond.
- Narmi integrates several companies into digital banking platform for credit unions.
- Community banking and small business lending.
- Zelle’s next phase takes shape at BNY Mellon.
- Webster Bank offers automated digital investment platform.
- Inc Authority partners with Sure on small business insurance.
- Zopa, Openwrks, TrueLayer open Open Banking initiatives.
- Elliott takes majority stake in Chetwood Financial, an online bank.
- Risks, rewards for P2P platforms to scale operations via IFISA.
- Rupeek gets $6.8M in funding.
- Eduvanz Financing gets injection from Blinc Advisors.
- EarlySalary makes emergency loans affordable.
- On P2P lending.
- What’s driving the fintech boom?
- How fintech will change banking.
- P2P lending picks up pace.
- United States
- SoFi Reports Disappointing Earnings as Loan Performance Suffers (WSJ), Rated: AAA
- You won’t believe how much grads from these top business schools rake in (Moneyish), Rated: A
- Elevate Announces Full Year 2017 Results (Crowdfund Insider), Rated: AAA
- Equity Market Volatility, GS Dialing Up M&A (PeerIQ), Rated: AAA
- Taking a cut of student’s future paychecks has Silicon Valley investors funding education (Quartz), Rated: AAA
- 2 startups are joining forces — and together they could pose a threat to Bloomberg (Business Insider), Rated: AAA
- Fintechs find another untapped market: New immigrants needing credit (American Banker), Rated: A
- San Francisco mortgage fintech Lenda expects growth spurt in 2018 (San Francisco Business Times), Rate: A
- New Retail P2P Investment: The Worthy Bond (P2P Lending Expert), Rated: A
- Prices up for January, Subaru 0-percent financing (Kelley Blue Book), Rated: A
- Eyeing robo advisors, IBDs to launch new client portals (FinancialPlanning), Rated: A
- Narmi integrates top fintech companies into digital banking platform for credit unions (CUInsight), Rated: A
- When fintech lite is the right small-business lending strategy (American Banker), Rated: A
- Zelle’s next phase takes shape at BNY Mellon (American Banker), Rated: A
- Webster Bank Offers Customers An Automated Digital Investment Platform (PR Newswire), Rated: A
- We’re partnering with SURE to bring you Small Business Insurance (Inc Authority Email), Rated: B
- United Kingdom
- Openwrks, Zopa and TrueLayer get into Open Banking groove (Finextra), Rated: AAA
- Elliott takes majority stake in new Welsh online bank (The Times), Rated: A
- Risks and rewards for P2P platforms to scale up their operations via the IFISA (AltFi), Rated: A
- China’s Ant plans equity fundraising at potential $ 100 billion valuation – sources (Reuters), Rated: AAA
- China Fintech Watchdog to Step Up ICO Oversight (CoinDesk), Rated: A
- Loans.com.au slashes home loan rates for owner-occupiers, investors (mozo), Rated: AAA
- Bank lending in spotlight as Australian inquiry begins (Reuters), Rated: A
- Online gold loan platform Rupeek gets $ 6.8 mn from Accel, Sequoia (VC Circle), Rated: AAA
- Eduvanz Financing raises funds from Blinc Advisors (livemint), Rated: A
- Fintech start-up EarlySalary is making emergency loans more affordable (Business-Standard), Rated: A
- Preventive measures (The Hindu Business Line), Rated: A
- What’s Driving India’s Fintech Boom? (Wharton), Rated: A
- Fintech Will Change How We Bank (Business-Standard), Rated: A
- Peer to peer lending picks pace (Telengana Today), Rated: B
- Asia-Pacific Fintech Market to reach US$ 72 billion by 2020, finds Frost & Sullivan (Business Insider), Rated: AAA
- Moneylenders turn toward young adults in Korea (The Korea Times), Rated: A
- Blockchain spending surges in China and Asia (Shine), Rated: B
SoFi Reports Disappointing Earnings as Loan Performance Suffers (WSJ), Rated: AAA
Customers of online lender Social Finance Inc. are missing their loan payments at an unexpectedly high rate, a misstep for a company that has boasted that its focus on high-earning individuals would yield better borrowers.
The privately held San Francisco-based company said it missed its internal fourth-quarter earnings projections, due in part to a markdown in the “value of certain personal loan assets due to lower-than-expected credit performance,” according to a letter to investors that was reviewed by The Wall Street Journal. The company also cited increased hiring costs and expenses related to recent management changes.
These 10 programs have the best salary-to-debt ratio in the US:
1. University of Wisconsin-Madison: Avg. salary = $122,532; avg. debt = $52,568
2. Brigham Young University: Avg. salary = $114,559; avg. debt = $50,224
3. Harvard University: Avg. salary = $184,463; avg. debt = $83,337
4. Stanford University: Avg. salary = $186,534; avg. debt = $85,443
5. Villanova University: Avg. salary = $136,464; avg. debt = $63,014
6. University of Pittsburgh: Avg. salary = $149,157; avg. debt = $71,471
7. Loyola University, Maryland: Avg. salary = $122,915; avg. debt = $59,029
8. North Carolina State University: Avg. salary = $92,184; avg. debt = $46,140
9. University of Florida: Avg. salary = $110,942; avg. debt = $56,035
10. University of Houston: Avg. salary = $105,476; avg. debt = $54,308
Elevate Announces Full Year 2017 Results (Crowdfund Insider), Rated: AAA
- Fourth quarter GAAP net loss due to federal tax law charge, but fourth consecutive quarter of net income on an adjusted basis: Fourth quarter 2017 net loss totaled $12.2 million, or $(0.29) per diluted share, reflecting a one-time $12.5 million charge associated with the change in the federal tax law resulting from the tax reform in 2017. Excluding the impact from the tax law change, net income for the fourth quarter of 2017 would have been $0.3 million, or $0.01 per diluted share, versus a net loss of $4.4 million, or $(0.34) per diluted share, for the fourth quarter of 2016. The net loss for full-year 2017 totaled $6.9 million, or $(0.20) per diluted share. Excluding the impact of the federal tax law, net income for full year 2017 would have been $5.5 million, or $0.16 per diluted share, compared to a net loss of $22.4 million, or $(1.74) per diluted share, for full-year 2016.
- 16% year-over-year revenue growth: Revenues for the fourth quarter of 2017 increased 14.5% from the fourth quarter of 2016 and were up 16.0% for full-year 2017 versus 2016. Revenues totaled $193.4 million in the fourth quarter of 2017 compared to $169.0 million for the prior-year period. Full-year 2017 revenues totaled $673.1 million compared to $580.4 million for full-year 2016.
- More than 28% year-over-year growth in combined loans receivable – principal: Combined loans receivable – principal totaled $618.4 million, a 28.5% increase from $481.2 million for the prior-year period. The Rise installment loan and Elastic line of credit combined loans receivable – principal balances as of December 31, 2017 were up 19.6% and 47.4% over the prior year-end balances, respectively.
- Adjusted EBITDA up 45% compared to prior year: 2017 Adjusted EBITDA totaled $87.5 million, up 44.7% from $60.4 million in 2016. Adjusted EBITDA margin was 13% for both the fourth quarter of 2017 and full-year 2017.
- The ending combined loan loss reserve as a percentage of combined loans receivable was 14.3%, lower than the 16.1% reported for the prior-year period due to the improved credit quality and the continued maturation of the loan portfolio. Charge-offs as a percentage of originations for full-year 2017 continued to trend below previous years at less than 25% of principal originations.
- The total number of new customers acquired during the fourth quarter of 2017 was approximately 95,000 with an average customer acquisition cost of $231, below the targeted range of $250-$300. This represented a 34.6% increase over the approximately 70,000 new customers acquired in the fourth quarter of 2016.
Equity Market Volatility, GS Dialing Up M&A (PeerIQ), Rated: AAA
Volatility made an abrupt return to capital markets after a nearly 18 month hiatus. Equity markets dropped almost 10% from their peaks, as investors focused on rising US treasury yields. 10-year yields touched 2.88% – nearly a four-year high. Corporate bonds (CDX.IG spreads) widened 5bps this week to 60bps, while high-yield widened 16bps to 353bps.
US consumer credit grew by $18.4 Bn in December 2017, at an annualized growth rate of 7.7%. Revolving credit card debt increased by $5.1 Bn to $1.03 Tn, the highest on record. Consumer spending has boosted US GDP, although the increasing cost of leverage and rising rates could create a drag on growth.
GS M&A Accelerating
For new immigrants, buying a home or getting a cellphone is complicated and expensive. Even if they have financial identities and wealth in their home countries, they have no credit history in the U.S.
It’s a challenge for millions of people, and a handful of fintechs, including Nova Credit, CreditStacks, and Petal, see an opportunity to help with some creative solutions.
Others, like Deserve (formerly SelfScore) and Petal have been hoping to woo immigrants and other thin files with their own credit products, while still others like eCredable are crunching alternative data to help people build up their credit history.
And in January, CreditStacks announced a credit card product aimed at immigrant professionals who want to have a U.S. credit card in hand when they arrive in America.
San Francisco mortgage fintech Lenda expects growth spurt in 2018 (San Francisco Business Times), Rate: A
San Francisco mortgage fintech Lenda, which offers mortgages faster and at lower cost than traditional rivals, expects growth to accelerate this year as it expands into a dozen states and puts to work the $5.25 million it raised in its first venture round.
New Retail P2P Investment: The Worthy Bond (P2P Lending Expert), Rated: A
When I wrote my book on P2P Lending for the retail investor, P2P Investing 101 (the paperback version here), that came out in November, there were only 7 options for retail investors. Those options were Lending Club and Prosper, as well as 5 options that take advantage of the adjustment to SEC Regulation A known as Reg A+.
We now have an 8th investment option. The Worthy Bond, which uses Reg A+ and comes from Worthy Financial. By using Reg A+, the Worthy Bond is available to retail investors as a proxy savings account within the p2p lending landscape.
Prices up for January, Subaru 0-percent financing (Kelley Blue Book), Rated: A
While the average transaction price (ATP) for light vehicles hit $36,270 in January, a whopping $1,360 or 3.9-percent gain over a year earlier, the ATP declined from December’s record, dropping $486 or 1.3 percent month over month.
Subaru 0-percent financing
Subaru, which has been setting sales records, typically runs tight inventories and keeps a close rein on incentives. However, through the rest of February it is offering 0-percent financing for 63 months on select models along with a couple of enticing fleet deals.
The 0-percent deal for 63 months is being extended on 2017/18 Legacy models, 2017/18 Outbacks and 2017 Foresters. On the 2018 Legacy, there’s also a $185 per month lease for three years with $2,595 down. The 2018 Outback is being offered on a 3-year lease deal for $239 per month with $1,739 down, while the 2018 Forester can be leased for 36 months at just $219 with $1,719 down.
Interest rates climb
According to Bankrate.com, the average 60-month new car loan is averaging 4.51 percent interest, a two-basis point increase over rates being offered at the end of November. Shorter 48-month loans are slightly cheaper, averaging 4.44 percent, again, two basis points higher than two months ago. On the used car side of the ledger, rates are closing in on the 5 percent level, averaging 4.97 percent on 3-year loans. That’s up from an average of 4.78 percent at the end of November.
Narmi integrates top fintech companies into digital banking platform for credit unions (CUInsight), Rated: A
Narmi, a financial technology company, showcases two of its remarkable fintech integrations – Billshark and Lemonade.
Billshark – Helping Reduce Monthly Bills for Millions of Americans
Billshark helps consumers reduce monthly bills on cable, satellite TV, wireless phone, internet and many other categories. There are currently approximately 375 million monthly bills in America and roughly 80% can be negotiated. The average amount saved per bill is $280-300.
Lemonade – Reinventing Insurance Through Artificial Intelligence
Lemonade provides a mobile-first, artificial intelligence-infused way to obtain a home insurance policy. The company’s focus is on homeowners and renters insurance, and policies start at $25 a month and $5 a month, respectively.
When fintech lite is the right small-business lending strategy (American Banker), Rated: A
Adding a community touch to automation has proved a profitable lending strategy for one bank.
Marquette Bank in Chicago has been able to digitize its lending processes and improve its credit memo creation time by upwards of 25% using technology from the cloud-based loan origination software firm Baker Hill.
Small-business lending has long been a staple of community banking, but in recent years customers have turned to online lenders and other fintechs for credit, in large part due to the speed and digital aspect of the experience.
Zelle’s next phase takes shape at BNY Mellon (American Banker), Rated: A
The banks behind the Zelle network had more in mind than P-to-P payments between consumers, and BNY Mellon is beginning the network’s evolution by targeting the business payments market.
Zelle will help support tokenized digital payments for institutional and corporate clients in a market that is notoriously resistant to automation. BNY Mellon hopes corporates will see the Zelle network’s ability to increase control over cash flow through near-instant processing.
Webster Bank Offers Customers An Automated Digital Investment Platform (PR Newswire), Rated: A
Webster Investments, a division of Webster Bank, N.A., now offers Guided Wealth Portfolios (GWP), an advisor-enhanced, digital investment platform designed to enhance customer experience by providing an additional option to manage their investments. The online investment platform was designed as an innovative option for clients seeking a technology-enabled investment solution combined with the opportunity to have a relationship with a financial advisor.
We’re partnering with SURE to bring you Small Business Insurance (Inc Authority Email), Rated: B
Small Business Insurance is an all-in-one policy that protects you and your growing business from critical risks. Your policy will cover:
- General liability
- Get up to $2 Million of coverage in legal and litigation issues tied to 3rd party claims of property damage, and bodily injury and associated medical costs.
- Business personal property
- Replace lost or damaged property owned by your business, such as computers, furniture, and machinery.
- Lost business income
- Receive up to $250,000 in lost income if your business has to close due to a covered loss.
- And other coverage
- Includes coverage for data breaches, litigious employees, non-business automobiles, and more.
Openwrks, Zopa and TrueLayer get into Open Banking groove (Finextra), Rated: AAA
The UK’s major banks are being shown a clean pair of heels by non-bank competitors in the Open Banking space, with new announcements by TrueLayer in tandem with Zopa, and Openwrks demonstrating the determination of third party providers to open up access to consumer account data.
China’s Ant plans equity fundraising at potential $ 100 billion valuation – sources (Reuters), Rated: AAA
China’s Ant Financial Services Group is planning to raise up to $5 billion in fresh equity that could value the online payments giant at more than $100 billion, people familiar with the move told Reuters.
The new round should start with a valuation of between $80 billion to $100 billion, the people said.
China Fintech Watchdog to Step Up ICO Oversight (CoinDesk), Rated: A
A self-regulatory association that draws support from China’s banking and securities sectors is vowing to increase its oversight over cryptocurrency and initial coin offerings (ICO) in 2018.
Loans.com.au slashes home loan rates for owner-occupiers, investors (mozo), Rated: AAA
Online lender, loans.com.au has today slashed rates for both owner-occupiers and investors on certain home loans, and is now offering some of the lowest mortgage rates in the market.
One of the changes was to cut the Essentials Variable 80 rate for owner-occupiers looking to make principal and interest repayments by 12 basis points, bringing it to a red hot 3.52% – the lowest rate for a loan of its kind in the Mozo database.
The rate on loans.com.au’s Offset Variable 80 for owner-occupiers making principal and interest repayments was also slashed by 12 basis points, bringing it down to a competitive 3.60%.
Online gold loan platform Rupeek gets $ 6.8 mn from Accel, Sequoia (VC Circle), Rated: AAA
Bengaluru-based Rupeek, which operates an online marketplace for gold loans, has raised $6.83 million (Rs 44 crore) in a fresh funding round led by Accel Partners.
Eduvanz Financing raises funds from Blinc Advisors (livemint), Rated: A
Eduvanz Financing Pvt. Ltd, an education technology start-up that provides loans for skill development to students, has raised $500,000 in a round of funding led by Blinc Advisors, a venture capital fund, a senior executive at the start-up said.
Fintech start-up EarlySalary is making emergency loans more affordable (Business-Standard), Rated: A
Neha Kumari needed a new phone urgently after her old one was damaged during a Saturday night party. To add to her difficulties, it was the beginning of the last week of the month and the salary day was 10 days away. Missing client calls for more than a couple of days was out of the question and the weekend was expensive anyway.
Neha, who did not have a credit card, could have borrowed from friends, but most of them were as broke as she was then. And borrowing from the family was ruled out. The last time she had borrowed Rs 10,000 from a friend to book emergency tickets was three …
Preventive measures (The Hindu Business Line), Rated: A
This is with reference to reports on market volatility. Regulators must ensure that this trend does not end up promoting alternative investment avenues of an uncertain nature. Investor interests demand that risk-based P2P lending via online/social marketplaces be regulated. Peer lending has significantly grown and enabled borrowers with a sub-par credit history. P2P lending is highly prone to performance risks on account of a higher probability of a borrower-default, credit risks owing to poor loan-sanctioning decisions & lack of fund-monitoring post disbursal, cash drag risks because of a larger borrower-population than the available lenders, platform Risks driven by borrower insolvency or frauds or technology risks/cybersecurity breaches and market risks owing to interest rate fluctuations and unemployment risks leading to non-payments.
What’s Driving India’s Fintech Boom? (Wharton), Rated: A
With more than 200 million active users in India — the largest anywhere in the world — WhatsApp is expected to drive large volumes on peer-to-peer (P2P) payments and also become a popular platform for merchant payments. India is slated to be the first country globally to get the payments facility from WhatsApp.
Other global giants, too, are zeroing in on this space. For instance, Google has already launched its payments app Google Tez (“Tez” in Hindi means fast), while Samsung has launched Samsung Pay and Amazon has introduced Amazon Pay.
Paytm, India’s largest online payments and mobile wallet company, has invested Rs. 5,000 crore ($786 million) in mobile payments to date.
This was 13% less than $14.6 billion in 2015. On the other hand, fintech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015.
Fintech Will Change How We Bank (Business-Standard), Rated: A
In the not too distant future, there may come a time, where we cease to interact with the banks as we know it. Banks which were monolithic organization who created the products, sold it directly and owned the customers are being slowly ceding ground to so called new breed fintech companies chipping away at the edges. While regulations and strict KYC/AML regulations still enable banks to continue to be in business, the power they once wielded is diminishing. As Niti Aayog Chairman, Amitabh Kant said “Debit cards, credit cards and ATMs might lose relevance in the next four years”.