- Today’s main news: Bank Q1 earnings increase by 13% to $44B while loan origination slows down. SoFi co-founder Dan Macklin exits company. OnDeck extends $100M credit facility. Prosper closes $495M securitization transaction. RateSetter confirms IPO. BBVA launches open API market.
- Today’s main analysis: Alt finance in Americas grows to $352B last year.
- Today’s thought-provoking articles: China Rapid Finance announces Q1 results. RateSetter turns green.
- Bank Q1 earnings increase by 13% to $44B while loan origination falls. GP:”Apparently the banks are doing between fine and great.”
- SoFi co-founder Macklin announces departure. GP:”After the departure of #2 person last week, this change raises the question ”
What could be driving so many top people at SoFi to leave while the company is apparently doing the best it ever did?” Very strange. Macklin’s departure leaves Cagney as the last remaining co-founder at the company.”
- OnDeck extends $100M credit facility with SunTrust Bank. GP:”Most importantly it decreased funding cost by 50 basis points. $500k per year more in OnDeck’s pockets.”
- Prosper closes $495M securitization transaction. GP:”The bond market is doing great.”
- LendingTree launches life insurance comparison platform. AT: “This is a welcome addition to the life insurance market. I can’t wait to see how much use it gets.”
- LendingClub releases iOS mobile app. GP:”Prosper had launched theirs practically 1 year ago.”AT: “It’s hard to believe this hasn’t already been on the table.”
- Prumentum Group to building hybrid robo wealth manager with $25M funding. AT: “They’re going to need more funding than this, I think, in the long run, but it’s an interesting addition to the wealth management field. It looks like the hybrid model is catching on.”
- Robo-advisor takes a stake in Plancorp. AT: “Prumentum Group.”
- A look back at LendingClub’s 10 years as an online lender. AT: “Nothing new here. See the full timeline of LendingClub’s 10 year in yesterday’s Lending-Times. Nevertheless, this is Lend Academy’s take, a short quick read.”
- Venture funds flood startups with cash. GP:”Financial services saw a bump of 15% vs last quarter and across all market the bump is 37% “AT: “Venture funding is going up.”
- Understanding online real estate lending as an investment strategy. AT: “The key takeaway for lenders: Online real estate marketplaces are still illiquidity zones. I’m still waiting for that first viable secondary market. Everything has a downside.”
- Five technology tools and apps reshaping the real estate industry. AT: “Instagram? These are not the five that I would pick.”
- MoneyLion enhances product line.
- SimpleLoanGuide helps people find the best loan solution.
- R3 Consortium closes record $107M funding round. AT: “Someday, I hope blockchain makes a real impact somewhere.”
- RateSetter boss confirms IPO, plans increase in asset-backed finance. GP:”We have seen in the past in other finance sectors IPOs that behave very differently in London vs New York. Companies tend to have higher valuations and to be better understood on one side of the Atlantic then the other. Therefore I wouldn’t use Lending Club’s story to try to predict what will happen to RateSetter’s IPO and I expect RateSetter to do very well in fact in a 1st P2P originator IPO in London. “
- Zopa to revamp P2P lending model. AT: “We reported this news yesterday.”
- UK businesses turning to alt finance as Brexit tightens credit conditions.
- Secondary markets bring promise of efficiency.
- Institutional money making waves in UK P2P market.
- It’s time to stop robo-advice mislabelling. AT: “Advice means something different to Brits than to Americans where it’s expected the robot will do it for you.”
- Are advisers warming up to P2P?
- China Rapid Finance reports unaudited Q1 results. GP:”2milion unique borrowers. Loan volume per quarter is about $500mil.”
- Ant Financial Services to open first auto insurance points.
- China Merchants Bank to use annual profit to set up fintech special fund for in vitro incubation.
- BBVA launches open API market. GP:”Very interesting. BBVA is pioneering what we think all banks will eventually have to do by law or to remain competitive. “AT: “Initially open only to Spanish businesses, but eventually to be rolled out internationally.”
- RateSetter heads to the green market.
- Government invests $20M in RateSetter’s green lending platform.
- Green lending market. AT: “From the horse’s mouth.”
- Five tech trends changing financial advice. AT: “I would say these are five dimensions of the same tech trend.”
- United States
- Bank 1Q earnings jump to $ 44B, while loans fall: FDIC (FDIC Press Release), Rated: AAA
- SoFi co-founder Dan Macklin is leaving the company (TechCrunch), Rated: AAA
- OnDeck Announces Extension of $ 100 Million Credit Facility with SunTrust Bank (PR Newswire), Rated: AAA
- Prosper Closes $ 495 Million Securitization Transaction (BusinessWire), Rated: AAA
- LendingTree Launches Life Insurance Comparison Platform Powered by PolicyGenius (Marketwired), Rated: A
- The LendingClub iOS mobile app has arrived (LendingClub Email), Rated: A
- LendingClub, ex-CEO must face U.S. shareholder litigation (Reuters), Rated: A
- With $ 25 million in funding, Prumentum Group is building a “hybrid robo” wealth manager (TechCrunch), Rated: A
- Robo-adviser takes a stake in Plancorp (Investment News), Rated: A
- A Look Back at Lending Club’s 10 Years as an Online Lender (Lend Academy), Rated: A
- Venture Funds Flood Startups With Cash (WSJ), Rated: A
- Understanding Online Real Estate Lending As An Investment Strategy (Forbes), Rated: A
- Five Technology Tools And Apps That Are Reshaping The Real Estate Industry (Forbes), Rated: B
- MoneyLion enhances product line to help consumers manage and improve their financial health (MoneyLion Email), Rated: B
- SimpleLoanGuide Helps People Find the Best Loan Solution (Digital Journal), Rated: B
- Distributed Ledger Consortium R3 Closes Record $ 107 Million Funding Round (Coindesk), Rated: B
- United Kingdom
- RateSetter boss confirms IPO hopes and plans to increase asset-based finance (P2P Finance News), Rated: AAA
- Zopa to revamp peer-to-peer lending model (Financial Times), Rated: AAA
- UK businesses turning to alternative finance as Brexit tightens credit conditions (The Investment Observer), Rated: A
- Secondary Markets Bring Promise of Efficient Markets (AltFi), Rated: A
- City slickers (P2P Finance News), Rated: A
- It’s time to stop robo-advice mislabelling (Citywire), Rated: A
- Talking Heads: Are you warming up to P2P? (Professional Adviser), Rated: B
- China Rapid Finance Reports Unaudited First Quarter 2017 Financial Results (PR Newswire), Rated: AAA
- Ant Financial Services announced to the insurance industry to open the first “auto insurance points” (01Caijing), Rated: B
- China Merchants Bank announced the use of annual profit of 1% set up Fintech special fund to support in vitro incubation (01Caijing), Rated: B
- European Union
- BBVA launches Open API marketplace (Finextra), Rated: AAA
- Americas Alternative Finance Grows to $ 35.2 Billion in 2016 (Crowdfund Insider), Rated: AAA
- Australia/New Zealand
- RateSetter matches investors with borrowers for clean energy (The Sydney Morning Herald), Rated: AAA
- Government invests $ 20m in P2P RateSetter’s green lending initiative (Finder), Rated: AAA
- Green Loan lending market (RateSetter), Rated: A
- Five tech trends changing financial advice (Bluenotes), Rated: B
- Indonesia: Govt extends P2P lending license application deadline (e27), Rated: AAA
- Secured P2P Lender Silver Bullion Reports Topping S$ 30 Million in Loans (Crowdfund Insider), Rated: A
- Japan Lender Mizuho to Launch Fintech Venture (US News), Rated: A
Bank 1Q earnings jump to $ 44B, while loans fall: FDIC (FDIC Press Release), Rated: AAA
- FDIC-Insured Institutions Earn $44 Billion in First Quarter 2017
- Community Bank Net Income Rises to $5.6 Billion
- Quarterly Net Income Is 12.7 Percent Higher than a Year Earlier
- Community Bank Net Income Rises 10.4 Percent from a Year Ago
- Annual Loan Growth Rate Slows to 4 Percent, On Par With Nominal GDP Growth
- “Problem Bank List” Falls to 9-Year Low
“Revenue and net income growth were strong, asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall,” Gruenberg said. “Community banks reported another quarter of solid revenue and net income growth.”
Gruenberg continued: “In the past two quarters, the industry has seen a slowdown in loan growth that is broad-based across major lending categories. This slowdown has occurred as the economy approaches the end of the eighth year of a relatively modest expansion. Still, loan growth has remained at or above nominal GDP growth.
Highlights from the First Quarter 2017 Quarterly Banking Profile
Quarterly Industry Net Income is 12.7 Percent Higher than a Year Earlier: Quarterly earnings were 12.7 percent higher than in the first quarter of 2016 due to growth in net operating revenue. Net operating revenue – the sum of net interest income and total noninterest income – was $183.6 billion, an increase of $10.9 billion (6.3 percent) from a year earlier. Loan-loss provisions totaled $12 billion, a decline of $541 million (4.3 percent) compared to first quarter 2016. Noninterest expenses of $109.2 billion were $4.5 billion (4.3 percent) higher than a year earlier, as a 2 percent year-over-year increase in employment was reflected in higher payroll expenses. The improvement in revenue also caused the average return on assets to rise to 1.04 percent from 0.97 percent a year earlier.
Community Bank Net Income Rises 10.4 Percent from a Year Ago: The 5,401 insured institutions identified as community banks reported a $522.9 million (10.4 percent) increase in net income in the first quarter. Net operating revenue was $1.5 billion (7 percent) higher, as net interest income was up $1.2 billion (7.1 percent), and noninterest income rose by $304.4 million (6.8 percent). Loan-loss provisions increased by $32.7 million (5.2 percent), while noninterest expenses were $721.9 million (5 percent) higher.
Annual Loan Growth Rate Slows to 4 Percent: Total loan and lease balances increased $358.1 billion (4 percent) during the 12 months ended March 31, compared with a 5.3 percent growth rate over the 12 months ending in March 2016. The slowdown in loan growth occurred across all major loan categories. During the first three months of 2017, total loan balances declined by $8.1 billion (0.1 percent) from the fourth quarter, as borrowers reduced their credit card balances by $43.7 billion (5.5 percent). Community banks increased their loan balances by $16.7 billion (1.1 percent) during the quarter and by $109.9 billion (7.7 percent) over the past 12 months. Still, loan growth has remained at or above nominal GDP growth.
“Problem Bank List” Falls to 9-Year Low: The number of banks on the FDIC’s Problem Bank List fell from 123 to 112 during the first quarter. This is the smallest number of problem banks since March 31, 2008, and is down significantly from the post-crisis peak of 888 in the first quarter of 2011. Total assets of problem banks fell from $27.6 billion to $23.7 billion during the first quarter.
Deposit Insurance Fund’s Reserve Ratio Remains at 1.20 Percent: The Deposit Insurance Fund (DIF) balance increased $1.8 billion during the first quarter to $84.9 billion at March 31, largely driven by assessment income, including surcharges on large banks. Estimated insured deposits increased 2.3 percent in the first quarter. The DIF reserve ratio remained unchanged from year-end 2016 at 1.20 percent, due in part to strong insured deposit growth.
SoFi co-founder Dan Macklin is leaving the company (TechCrunch), Rated: AAA
Another one of the co-founders of online lending startup SoFi is leaving the company, the company has confirmed to TechCrunch. Dan Macklin, who served as VP of Community and Member Success at SoFi, announced internally that he’ll be stepping down from his position on June 6th.
Most recently, Macklin was charged with managing the community and customer success at SoFi, which sees its member meetups and community events as a key differentiator against more traditional financial services businesses. Prior to that, he served as the company’s first VP of Business Development.
After six years, SoFi now has more than 300,000 members and has underwritten more than $20 billion in loans, according to a person familiar with the business. It’s also raised nearly $2 billion in outside funding and has about 1,000 employees.
Of course, it’s not unusual for founders to leave after a period of several years, but Macklin’s departure leaves Cagney as the last remaining co-founder at the company.
OnDeck Announces Extension of $ 100 Million Credit Facility with SunTrust Bank (PR Newswire), Rated: AAA
OnDeck® (NYSE: ONDK) announced today that it had extended its current asset-backed revolving credit facility with SunTrust Bank.
As a result of the transaction, OnDeck extended the maturity date of its $100 million credit facility with SunTrust Bank to November 2018 and decreased funding cost by 50 basis points.
Loans will continue to be made to Receivable Assets of OnDeck, LLC, or RAOD, a wholly-owned subsidiary of OnDeck, to finance RAOD’s purchase of small business loans from OnDeck. The revolving pool of small business loans purchased by RAOD serves as collateral under the SunTrust facility. OnDeck is acting as the servicer for those small business loans.
Prosper Closes $ 495 Million Securitization Transaction (BusinessWire), Rated: AAA
Prosper, a leading marketplace lending platform for consumer loans, today announced the closing of the first securitization from the Prosper Marketplace Issuance Trust, Series 2017-1, “PMIT 2017-1.”
Approximately $495 million of notes were issued, increasing from an initial $450 million. Credit Suisse Securities (USA) LLC and Jefferies LLC served as joint bookrunners on the transaction, which was rated by Fitch Ratings, Inc. and Kroll Bond Rating Agency, Inc.
LendingTree Launches Life Insurance Comparison Platform Powered by PolicyGenius (Marketwired), Rated: A
LendingTree, the nation’s leading online loan marketplace, announced a new partnership today with PolicyGenius, a fast-growing consumer insurance startup, that will bring PolicyGenius’ term life insurance comparison shopping platform to millions of LendingTree customers.
Since the launch of its intuitive insurance shopping platform in 2014, PolicyGenius has helped hundreds of thousands of customers shop for over $100 billion in term life insurance coverage. The companies both plan to use the partnership to continue to bring choice, transparency and convenience to a traditionally convoluted and complex shopping process.
PolicyGenius empowers customers with accurate quotes, side-by-side comparison of insurance policies from dozens of the country’s top-rated insurance providers, and independent advice. The company’s proprietary tech delivers the most accurate quotes available online by evaluating a shopper’s health and lifestyle factors and matching to insurers’ underwriting rules.
The LendingClub iOS mobile app has arrived (LendingClub Email), Rated: A
We are excited to announce that we have launched the LendingClub Invest app on iOS.
We’ve heard the feedback from our investors and have been hard at work building out a mobile experience. You can download our new iOS app here.
With our new app, you’ll be able to:
- check your account summary
- invest in Notes
- move money back and forth
- adjust Automated Investing strategies and more
LendingClub, ex-CEO must face U.S. shareholder litigation (Reuters), Rated: A
A federal judge on Thursday rejected efforts by LendingClub Corp (LC.N) and former Chief Executive Officer Renaud Laplanche to dismiss shareholder litigation accusing them of concealing material weaknesses in the online lender’s ability to monitor its operations.
The decision by U.S. District Judge William Alsup in San Francisco lets shareholders pursue most of their claims over the contents of LendingClub’s registration statement for its December 2014 initial public offering.
With $ 25 million in funding, Prumentum Group is building a “hybrid robo” wealth manager (TechCrunch), Rated: A
A new wealth management startup called Prumentum Group is coming to market with a unique value proposition, looking to combine the technology chops of a roboadvisor with the human touch of a registered investment advisor. To do so, the company has built a tech platform, raised $25 million in funding, and acquired a minority stake in a financial advisory firm.
On the one hand, the company has been working on a tech platform called BrightPlan, which is set to compete with the likes of Wealthfront and Betterment in the robo-advisory game. That platform was built by a team comprised of former employees from Silicon Valley firms like Salesforce and Cisco.
According to Prumentum co-founder and CEO Marthin De Beer, the company has taken an initial 40 percent stake in Plancorp, with the option to purchase up to 100 percent of the company through an equity exchange later.
Robo-adviser takes a stake in Plancorp (Investment News), Rated: A
Financial advice firm Plancorp has attracted a novel investor. The 34-year-old advisory firm is now partially owned by a fintech firm launching a digital advice platform later this year.
The St. Louis, Mo.-based registered investment advisory firm, which has $3.6 billion in client assets, will become the live adviser component for the hybrid robo to be known as BrightPlan.
Plancorp, which has 55 employees, has a $5,000 annual fee minimum for clients. It was one of the nation’s first fee-only advisory firms when it was founded in 1983 by Jeff Buckner, who is still one of the firm’s 14 employee shareholders that control the other 60% of Plancorp.
A Look Back at Lending Club’s 10 Years as an Online Lender (Lend Academy), Rated: A
Lending Club launched a marketing campaign and website celebrating their 10-year anniversary and outlining the major milestones for the company. What started out as a Facebook application has morphed into one of the largest online consumer lenders in the US.
In 2008, Lending Club entered a quiet period where it worked with the SEC to come up with a path to move forward. Coming out of the quiet period Lending Club began to offer its loans as securities and remains one of the few platforms open to retail investors.
The company had its first $10 million origination month in 2010. The company now originates nearly $2 billion per quarter. To put the growth into perspective, the company reviewed on average four loans per day in 2007 and it took two weeks to facilitate their first $100,000 in loans. The company now reviews around 1,700 loans daily and facilitates $100,000 in loans every six-and-a-half minutes. Originations now top $26 billion.
Other major milestones include the IPO in December of 2014 as well as product expansions into small business loans and more recently, auto refinance. As of Q1 2017 the company has successfully brought a significant amount of banks on the platform which now represent 40% of loan funding.
Venture Funds Flood Startups With Cash (WSJ), Rated: A
Investors injected $14.5 billion into U.S. venture-backed startups in the first quarter, up 37% from the previous period, according to data from Dow Jones VentureSource.
Recipients of venture funding included financial services, which saw a 15% bump in investment to $913.1 million, compared with the $792.4 billion raised in the prior quarter. Fintech startup Social Finance Inc. hauled in a big chunk of that in the latest round, raising $500 million in the period.
After a cooling period the past year, information-technology investment edged higher, hitting $3.05 billion in the quarter, up 13% from the $2.7 billion in the prior period. A slice of that, investments in software, returned to favor as well, as investors put to work $2.14 billion, up about 13% from the $1.9 billion unlocked in the previous quarter.
Understanding Online Real Estate Lending As An Investment Strategy (Forbes), Rated: A
I’ve been working in the field of online real estate investing for several years now, and the good news is that today’s technological innovations have made investing in real estate online a newly viable way to access secure, short-term investments.
For first-time investors, you should be looking for the following in any platform you consider investing your money in:
- Lower investment minimums: In this era of peer-to-peer lending and crowdfunding, online lending platforms provide investors with access to investments at minimums as low as $1,000.
- Risk management through quality underwriting: Before a loan is listed, online platforms should run detailed underwriting reviews on the loan offering by looking at borrower bank statements, running credit checks, reviewing asset purchase contracts, underwriting the renovation budget, etc.
- Secure monthly income: Lending money on house flips typically comes with a lien on an asset.
- Investment management: Online platforms don’t just help get access to investments, but also manage the same for individual investors.
A few important points to consider:
- Illiquid investment: There doesn’t exist a secondary market today where individuals may liquidate an online investment, at will.
- Limited correspondence with borrower: Online platforms create a barrier to direct communication with the borrower.
- Industry maturity: The biggest unknown today is how the young industry’s underwriting guidelines will hold, should there be an economic correction.
PeerStreet partners with top-tier originators across the country and makes their loans available to registered investors. What makes PeerStreet unique is its ability to onboard partners who underwrite deal flow, allowing PeerStreet to serve as a liquidity portal for originators.
AlphaFlow is another interesting platform that diversifies a $10,000 investment from an investor across 75-100 loans originated by other platforms in the space, yielding returns from 8-10%.
Since its founding in 2004, BiggerPockets has turned into the LinkedIn for real estate investing.
Five Technology Tools And Apps That Are Reshaping The Real Estate Industry (Forbes), Rated: B
Streak CRM is a Chrome app that integrates into Gmail. This makes it a seamless integration with your existing email, which eliminates all the data entry overhead that kills your flow when you’re working your lead funnel.
RealTelligence is launching a mobile app that scores all real estate agents based on their probability of success for home sellers and buyers in their area of town and price range.
Wholesaledealslist.com is a brand new web and app platform where real estate investors can find and sell wholesale deals.
Keep an eye out for Point. They’re trying to disrupt the home mortgage by offering to buy equity in a home.
MoneyLion enhances product line to help consumers manage and improve their financial health (MoneyLion Email), Rated: B
Mobile personal finance and consumer lending platform, MoneyLion, today launched new features designed to make the financial goals of its 1 million-plus users easier to achieve. As part of the launch, MoneyLion also redesigned its website and mobile app.
MoneyLion is launching its new features to address the financial challenges consumers face today. A Federal Reserve study showed that 46 percent of Americans don’t have $400 saved for an emergency, and two-thirds of Americans were unable to pass a financial literacy test according to another study. MoneyLion’s new features have been designed to help users overcome these challenges by simplifying their day-to-day relationship with money and making it easier to build positive, sustainable financial habits.
MoneyLion has introduced the following new app features in a refreshed interface to help reduce the friction consumers face when it comes to their finances:
- Simple, data-driven advice, wherever you go: From the moment users open the MoneyLion mobile app, they receive personalized recommendations that encourage positive financial behaviors based on their individual spending habits and credit profile. These recommendations are refreshed daily with the user’s latest data to ensure they remain aligned to their current financial situation and objectives.
- Streamlined borrowing experience: MoneyLion’s personal loan process has been streamlined to improve speed, convenience and lower the cost of borrowing. Customers can receive a loan offer in as little as 15 seconds, access funds as quickly as the same business day, and now have even more options for reducing their interest rates.
- New ways to improve credit health: In addition to the free credit score already available to every user, MoneyLion now offers full credit reports from TransUnion® and Equifax, and access to credit counseling and repair options. Customers can also avoid credit surprises with expanded push notifications alerting them to changes to their credit.
These latest updates build on the financial progress and behavioral changes users have already made with MoneyLion. According to data collected in 2016, MoneyLion has helped its users improve their financial health in the following ways:
- Customers have earned over $5 million in savings via MoneyLion’s rate reduction and rewards program, which enables users to earn points for demonstrating good financial behavior.
- Loan takers who make use of the platform’s free credit monitoring tools were 28 percent less likely to default.
- MoneyLion’s platform and products have helped customers save on average about $46 per month on overdraft fees. It’s estimated that these fees cost American consumers about $11 billion every year according to Banks.org.
- Users enrolled in MoneyLion’s credit health tools were 6 times more likely to see an increase in credit score than a decrease.
SimpleLoanGuide Helps People Find the Best Loan Solution (Digital Journal), Rated: B
SimpleLoanGuide (simpleloanguide.com) is based in Starkville, Mississippi. They offer matching services only but are not in any way acting as a representative or agent of their partner companies. Except for Arkansas, New York, Vermont, and West Virginia, other states may avail of their services. Completing an online form on the website does not guarantee a successful match with a lender, an offered loan with satisfactory rates or terms, or granting of the loan amount requested. Partner lenders may still verify information and compare it with national databases. A user who sends their information on the website signifies their compliance to credit check and verification.
Distributed Ledger Consortium R3 Closes Record $ 107 Million Funding Round (Coindesk), Rated: B
Global banking consortium R3 has closed the largest funding round in the history of distributed ledger technology.
Revealed today at Consensus 2017, over 40 financial institutions participated in the $107m round, including top member investors SBI Group, Bank of America Merrill Lynch and HSBC. Additional major investors include ING, Banco Bradesco, Itaú Unibanco, Natixis, Barclays, UBS and Wells Fargo, plus more from around the globe.
The funds are expected to be deployed as part of plans for global technological development and, eventually, a push to bring what the firm calls Corda Enterprise to institutions around the world.
RateSetter boss confirms IPO hopes and plans to increase asset-based finance (P2P Finance News), Rated: AAA
RATESETTER’S chief executive Rhydian Lewis (pictured) has confirmed the peer-to-peer platform is eyeing an initial public offering (IPO) as a pivotal step to solidify its position as an “investor brand”.
He also said the business and consumer lender would not expect or be interested in any takeover approaches from banks as it focuses on floating the business.
Meanwhile, the firm said it is looking to step up its asset-based lending, increasing the portion of loans that are secured against tangible assets or other type of securities as opposed to personal guarantees.
Zopa to revamp peer-to-peer lending model (Financial Times), Rated: AAA
Zopa, the world’s first peer-to-peer lending company, plans to revamp its offering to investors as it launches its new Isa.
The company currently offers investors access to a “safeguard fund”, a pool of cash intended to protect investors partially from loan defaults, but will jettison this as part of its new Innovative Finance Isa offering.
The new product, to be made available from June — more than a year since the government legislated for the new Isa structure — makes it possible for investors to hold their peer-to-peer loans within a tax-efficient Isa wrapper. Investors will be offered a target return of 3.9 per cent after fees, compared to the 3.7 per cent offer on Zopa’s current “classic” investment product.
UK businesses turning to alternative finance as Brexit tightens credit conditions (The Investment Observer), Rated: A
UK businesses are turning to alternative finance to seek funding for expansion, as credit conditions tighten in the face of Brexit uncertainty.
With the UK in the early stages of Brexit and now facing a General Election, new research conducted by RateSetter Business Finance found that 32 percent of SMEs that had considered raising finance said that it was now harder than six months ago.
Peer-to-peer lending services are becoming the go-to choice for many small businesses seeking finance.
Secondary Markets Bring Promise of Efficient Markets (AltFi), Rated: A
Private transactions, both private equity and debt, have been inefficient and littered with information asymmetry due to the way the transactions have been made. The emergence of public distribution of information on private transactions seeks to change that and the quickly arriving secondary markets for private transactions can bring liquidity and efficiency to typically cumbersome asset classes.
Recently Seedrs announced the establishment of a secondary market for equity crowdfunding transactions in the UK. Private companies are among the most inefficient as an asset class, given the apparent lack of information, information asymmetry and long lock in periods. The situation in the US is no different, where private companies are even more private compared to the UK with publicly reported information even on private companies.
Private equity is however not the only sector that benefits from liquidity. From private loans in peer-to-peer markets, a liquidity offer through a secondary market offers shorter cycles in the market and more trust in the underlying asset class. Many peer-to-peer or marketplace lenders globally run internal secondary markets, as yet there is no overarching liquidity destination for the sector. Both Lending Club and Prosper have offered secondary markets in the US, but only Lending Club’s remains open for business. Last October Prosper announced the closing of its secondary market, which the company said was underutilized by investors.
City slickers (P2P Finance News), Rated: A
Institutional money already dominates the US peer-to-peer lending market and now it’s making waves in the UK. Is this a natural evolution or is it eroding the true essence of P2P?
There was a time when marketing peer-to-peer lending was straightforward – the solid certainty of a mass of consumers standing on both sides of a P2P platform was enough to make its bank-disruption mission a success story.
People lending to people was a healing and redeeming message at a time when banks were still cleaning up the mess they had scattered around the globe by mixing consumers’ savings and investors’ bets.
But then the idealism of youth needs to make room for the pragmatism of maturity, and an insidious realisation started to cloud P2P’s coming of age: retail money alone is not enough to keep the ball rolling and let platforms become believable competitors of traditional lenders.
However, justifying such a shift in the UK may prove a tougher job, as the P2P sector here is still split by the burdensome dilemma of whether to welcome money from institutional investors with open arms or relegate it to a ‘diversification allowance’ pot.
The largest US P2P lender was running a 70 per cent ratio of institutional funds when its corporate governance scandal started to unfold.
According to an industry source, the mix-up of retail and institutional money could be the main hurdle standing between some of the UK’s largest platforms and Financial Conduct Authority (FCA) approval.
In the not-so-distant future, regulators could go as far as requiring a clear separation of retail and institutional investments through P2P platforms, the source says.
It’s time to stop robo-advice mislabelling (Citywire), Rated: A
It is time that we question robo-advice. Not the concept, but the name which has been used to describe any company that offers something related to investment management, online.
The label ‘robo-advice’ is misleading for a number of reasons. There are no robots who give advice, but also, most of the firms that have been described as such do not even offer advice.
‘We prefer online or digital wealth manager,’ said Ella Rabener, UK co-founder at Scalable Capital.
Meanwhile, Nutmeg CEO Martin Stead, echoing Rabener, said: ‘We prefer to call ourselves an “online investment manager”, rather than a “robo-adviser”. We find the term robo-advice to be misleading. It evokes images of robots offering face-to-face advice and making decisions for people.
Robo-advice is a term that came out of the US and unfortunately, because of the differences in how the advice market actually functions, while it makes sense to use it there, it does not in the UK.
Talking Heads: Are you warming up to P2P? (Professional Adviser), Rated: B
Peer to peer (P2P) lending is often considered risky business, but as the industry and regulation have moved on, have advisers become more willing to recommend the products to clients?
In March, Orca CEO Iain Niblock said there has been “virtually no uptake” by financial advisers since the products were brought under the regulatory investment advice rules. At the same time he estimated 2.7 million people would be investing in the booming market by 2020.
“We Infrequently Recommend P2P To Clients” – Dennis Hall, managing director, Yellowtail Financial Planning
‘We Want It To Be Protected Under The Compensation Scheme’ – Patrick Connolly, financial planner, Chase de Vere
“An Area We Have No Intention Of Getting Into” – Ricky Chan, director, IFS Wealth and Pensions
China Rapid Finance Reports Unaudited First Quarter 2017 Financial Results (PR Newswire), Rated: AAA
China Rapid Finance Limited (“China Rapid Finance” or the “Company”) (NYSE: XRF), a leading online consumer lending marketplace in China, today reported its unaudited financial results for the quarter ended March 31, 2017. The Company will hold a conference call at 8 a.m. Eastern Time on May 25, 2017, or 8 p.m. China Time on May 25, 2017. Dial-in details are provided at the end of this release.
First Quarter 2017 Financial Highlights
- Total gross billings on transaction and service fees in the first quarter of 2017 increased by 13.1% to US$16.8 million from US$14.8 million in the prior year period.
- Gross billings from consumption loans increased by 336.8% to US$6.7 million in the first quarter of 2017 from US$1.5 million in the prior year period. Gross billings from consumption loans increased to 39.9% of total gross billings on transaction and service fees in the first quarter of 2017 from 10.3% in the prior year period.
- Gross billings from lifestyle loans were US$10.1 million in the first quarter of 2017, as compared with US$13.3 million in the prior year period. Gross billings from lifestyle loans were 60.1% of total gross billings on transaction and service fees in the first quarter of 2017, as compared with 89.7% in the prior year period.
First Quarter 2017 Operating Highlights
- Number of new borrowers added in the first quarter of 2017 was approximately 545,000. As of March 31, 2017, the Company had reached approximately 2.0 million unique borrowers on its marketplace since inception, and the total number of loans facilitated on the Company’s platform grew to approximately 15.0 million.
- Total loan volume facilitated on the Company’s marketplace in the first quarter of 2017 increased to US$485.0 million, primarily driven by the rapid expansion of consumption loans, which accounted for US$405.0 million of the total loan volume, while lifestyle loans accounted for US$80.0 million.
- Total number of consumption loans facilitated in the first quarter of 2017 was 4.0 million, while total number of lifestyle loans facilitated was 6,000.
- Repeat borrower rate on the Company’s marketplace accounted for 73% of the total borrowers as of March 31, 2017.
Ant Financial Services announced to the insurance industry to open the first “auto insurance points” (01Caijing), Rated: B
May 25, the Ant Financial Services announced to the insurance industry to open the first “auto insurance points”, the mass “from people” information through artificial intelligence and other technologies to dig, the owner of the portrait and risk analysis, quantify the 300-700 And so on to enhance the risk identification ability of the insurance industry.
The first batch of insurance companies, including human security, PICC Property Insurance, China Life Insurance, China Union, Taiping property insurance, land insurance, sunshine property insurance and Huaan property insurance, Ansheng balance auto insurance, follow- , The ability to use car insurance to enhance the risk of identification of the company open.
China Merchants Bank announced the use of annual profit of 1% set up Fintech special fund to support in vitro incubation (01Caijing), Rated: B
Recently, China Merchants Bank, an internal innovation fund has been in place, the amount of 790 million yuan, for the internal business units and all employees apply for financial technology innovation projects.The scope of innovation includes mobile interconnection, large data, cloud computing, artificial intelligence, security control and block chain and other fields.
According to the relevant person in charge of China Merchants Bank, “pre-tax profit of 1% of the fund is entirely incremental, for in vitro incubation, and will not squeeze the original investment in science and technology investment.”
BBVA launches Open API marketplace (Finextra), Rated: AAA
BBVA is making eight of its APIs commercially available to companies, startups, and developers worldwide, enabling the integration of customer banking data with third party products and services.
Americas Alternative Finance Grows to $ 35.2 Billion in 2016 (Crowdfund Insider), Rated: AAA
The Cambridge Centre for Alternative Finance (CCAF) and the Polsky Center for Entrepreneurship and Innovation and Booth School of Business Booth School of Business at the University of Chicago have revisited the alternative finance market once again with a benchmark study. The research which covers the United States, Canada, Latin America and the Caribbean (LAC) showed continued growth in alternative finance across the region as total market volume rose to $35.2 billion in 2016 – an increase of 23% versus year prior. The report noted that the prior Americas benchmarking report had been adjusted down due to changes in the research methodology. While total volume grew the pace of growth and entry of new platforms both slowed during the year.
The research found that the United States continues to be one of the world’s top markets for Fintech including online alternative finance channels and instruments. The 2016 US market volume of $34.5 billion marked a 22% year-on-year increase from 2015. The US sector was dominated by online lending both Marketplace and Balance sheet iterations.
LAC alternative finance markets grew by 209% to $342.1 million in 2016. LAC, collectively as a regional market, surpassed Canada’s national market in 2016. The growth was mainly led by high volume markets in Mexico, Chile, and Brazil.
Canada’s alternative finance market increased 62% to $334.5 million driven by both organic growth and expanded survey coverage included in the research.
Among the key findings of the report:
- The US, Marketplace/P2P Consumer Lending continued to account for the largest share of market volume with $21 billion recorded in the US in 2016 (up 17%).
- Balance Sheet Business Lending became the second largest model in the US in 2016 with $6 billion originated, surpassing Balance Sheet Consumer Lending which had $3 billion.
- Equity crowdfunding in the US, not including real estate, declined marginally in 2016 versus 2015.
- For LAC, Marketplace/P2P Business Lending remained the largest alternative finance market segment with $188.5 million registered in 2016, an increasing of 239% over 2015.
- In Canada, Donation-based Crowdfunding remained the top alternative finance model with $105.9 million, but balance sheet business lending became a close second, rising at a rate of 282% to $103.3 million in 2016.
See the full report here.
RateSetter matches investors with borrowers for clean energy (The Sydney Morning Herald), Rated: AAA
Investors will be able to lend to residents to install clean energy in their homes, such as solar panels, after a tie-up between peer-to-peer lender RateSetter and the government’s Clean Energy Finance Corporation.
He expects rates for investors and borrowers in the green loan marketplace to be around 7 per cent a year for loan terms of between three and seven years.
Loans facilitated through RateSetter will fund individual and business loans for a wide range of “green” purposes, including the purchase of solar panels and battery systems.
Government invests $ 20m in P2P RateSetter’s green lending initiative (Finder), Rated: AAA
Australian peer-to-peer (P2P) lender RateSetter has today announced the launch of a Green Loan lending market which will allow investors to fund the purchase and/or installation of clean energy products.
The Clean Energy Finance Corporation (CEFC), an Australian government body, has invested $20 million in the market to help kickstart the project.
Green Loan lending market (RateSetter), Rated: A
Lending market summary
- Investment amount: From $10
- Indicative term: 7 years, though loans may be 3 – 7 years in term
- Purpose: finance for purchase of Approved Green Products
- Loan repayment profile: monthly repayments of principal and interest
Invest through the Green Loan lending market to finance the purchase of:
Five tech trends changing financial advice (Bluenotes), Rated: B
While many financial advisers have already embraced it, the use of the “cloud” will continue to expand as advisers seek to have more of their business operations and applications hosted there.
Automation has already begun to reshape financial services. Especially in the areas of regulation, financial risk management and compliance, automation is going to have a big impact. Imagine an automated program that could identify and explain alterations in risk exposure and calculate business-related and data-related causes for such changes.
With advisers holding sensitive data as well as increasing regulation around the security of customer data and communicating breaches, maintaining data security will remain a growing priority and focus.
Roboadvisers have had a contentious start in Australia, though they’re unlikely to fade away as technology advances. In fact, according to BI Intelligence, it is predicted by 2020 roboadvisers will manage around 10 per cent of the total global assets under management, equating to around $A8 trillion.
Today consumers have access to almost the same information as advisers, and in real-time from almost anywhere.
No longer are investors bound to advisers for financial information as they once were and do-it-yourself investing is becoming more popular.
This means advisers have to continue to add value by providing expert analysis and advice.
Indonesia: Govt extends P2P lending license application deadline (e27), Rated: AAA
OJK extends P2P lending license application deadline
The Indonesian Financial Services Authority (OJK) announced that it has extended the deadline for P2P lending startups to apply for a license, from the previous deadline of June 29.
Secured P2P Lender Silver Bullion Reports Topping S$ 30 Million in Loans (Crowdfund Insider), Rated: A
Silver Bullion reports it has now facilitated S$30 million in peer to peer loans secured by precious metals like gold and silver. The Singapore-based platform expects to pay out S$1 million in interest as the loans mature.
Lenders are receiving an average return of 3.83% p.a for SGD loans and 4.1% p.a for USD loans. Tenures of loans range from 1 month to 24 months. Silver Bullion reports there have been zero defaults to date.
Japan Lender Mizuho to Launch Fintech Venture (US News), Rated: A
Japan’s Mizuho Financial Group will start a venture next month to create new businesses using “fintech,” an executive said, joining a global race in financial technology that threatens to unsettle traditional players.
Japan’s second-largest lender by assets said there were already 20 projects in the pipeline for the venture, utilizing blockchain technology and artificial intelligence programs in areas such as farming and travel.
For that reason, he said the bank would limit its stake in the yet-to-be named venture to less than 15 percent, though Yamada would be its president and the bank would send staff.
Yamada did not elaborate on the projects in the pipeline but said the venture planned to conduct an export trade transaction next month using blockchain technology, allowing all parties to exchange necessary documents online instead of waiting for hard copies.