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Category: identity verification
Thursday April 11 2019, Weekly News Digest
News Comments Today's main news: Lending Club loans $159M in the past week. OnDeck offers same-day funding. Kabbage secures $700M in funding. RateSetter ISA passes 200M GBP in subscriptions. Funding Circle CEO pocketed 4M GBP last year. Klarna launches global customer authentication platform. Today's main analysis: Drivers of global growth in FSB's shadow banking. (A […]
The post Thursday April 11 2019, Weekly News Digest appeared first on Lending Times.
Today's main news: Lending Club loans $159M in the past week. OnDeck offers same-day funding. Kabbage secures $700M in funding. RateSetter ISA passes 200M GBP in subscriptions. Funding Circle CEO pocketed 4M GBP last year. Klarna launches global customer authentication platform.
Today's main analysis: Drivers of global growth in FSB's shadow banking. (A MUST-READ)
Today's thought-provoking articles: Jamie Dimon's letter to shareholders. Zopa redefines money idioms. Fintech unicorns lead in London job creation. The rise and fall of P2P lending in China.
LendingClub loans $159 million the week before tax day. We can't assume all of these loans are for tax purposes, but it's interesting that so many borrowers are accepting loans at this time.
OnDeck offers same-day funding for small businesses. This ups the game significantly.
Highlights from Jamie Dimon's shareholder letter. An awesome read from PeerIQ. It looks like JPMorgan concedes that alternative lenders are a force to reckon with.
Kabbage secures $700 in funding. Congratulations!
Investor says Kabbage's secret sauce was real-time data.
Upstart raises $50 million and gets new partners.
PeerStreet lowers investment minimum to $100.
Sharestates wins top real estate platform award at LendIt Fintech USA 2019.
stREITwise acquires $32 million mixed-use facility in Indiana.
13 cities where renting is cheaper than buying a home.
BlueVine adds term loan to suite of online working capital solutions.
Aura approves 350,000th loan.
The collateral you need for a business loan at Nav.
Prime and above may drive next phase of personal loan growth.
Student debt isn't just an employee problem.
Amount announces cloud-based account verification platform.
Onfido raises $50 million for global business identity verification standard.
Forward Financing expands capital base with $90 million credit facility.
Credibly announces investment grade senior debt offering.
Mitek expands auto-capture across digital channels.
58% of lenders will use artificial intelligence in two years.
Fintech alone won't boost credit union mortgage volumes.
Groundfloor wins two fintech awards.
Pulte Mortgage, Finicity partner.
Hudson Data, LendingPoint partner on synthetic ID fraud.
Dharma goes live with crypto lending.
RateSetter ISA passes 200 million GBP in subscriptions. Congratulations! A great achievement.
Funding Circle CEO pocketed over 4 million GBP last year.
Zopa rewrites money idioms.
Fintech unicorns lead London job creation.
And looks to overtake San Francisco as fintech unicorn leader.
LendInvest gets 200 million GBP funding from HSBC.
Stepladder, for first-time home buyers, launches.
CrowdProperty surpasses 900,000 GBP on Seedrs.
Fluid talks about fish-hooking.
How debt and equity funding can accelerate business growth.
Arbuthnot Latham launches Arbuthnot Direct.
Klarna launches global customer authentication platform.
Klarna sees payments evolving from function to engagement.
Klarna helps retailers build consumer trust.
The rise and fall of P2P lending.
Shenzhen police arrest Zhang Wei.
China's crypto funds lend $60 million.
International: The drivers of FSB's shadow banking growth. A MUST-READ report from DBRS.
Middle East: The future of digitization, artificial intelligence, and fintech. Interesting Bloomberg video panel discussion.
International: Salt adds support for Dash as collateral.
Indonesia: Housing sector is major source of complaints, including P2P lending.
India: RentoMojo looking to raise $40 million.
Indonesia: Batumbu to help finance SMEs.
Need a loan for Tax Day? According to Lending Club data, you're not aloan… er, alone (Thinknum), Rated: AAA
ONDECK OFFERS SAME DAY FUNDING TO EMPOWER SMALL BUSINESS (OnDeck), Rated: AAA
Highlights from Jamie Dimon's Annual Letter (PeerIQ), Rated: AAA
Online lender Kabbage rakes in $700m funding (Verdict), Rated: AAA
Real-time data was Kabbage's secret sauce, its first investor says (American Banker), Rated: A
Upstart Raises $ 50 Million and Announces New Bank Partners (Lend Academy), Rated: A
PeerStreet Lowers Minimum Real Estate Investment to $ 100 (Think Reality), Rated: A
Sharestates Wins Top Real Estate Platform Award at LendIt Fintech USA 2019 (PR Newswire), Rated: A
The stREITwise Platform Brings Real Estate Investment to All (Realty Biz News), Rated: B
13 cities where renting is cheaper than buying a home (AOL), Rated: A
BlueVine Adds Term Loan to Suite of Online Working Capital Solutions to Fuel Small Business Growth (GlobeNewswire), Rated: A
Aura Approves 350,000th Affordable Loan (Bakersfield.com), Rated: A
What Kind of Collateral Do I Need for a Business Loan? (Nav), Rated: A
Next Wave of Personal Loan Growth May be Driven by Prime and Above Consumers (MarketWatch), Rated: A
Student Debt Isn't Just An Employee Problem — It's Also An Employer Problem (Killer Startups), Rated: A
Amount Announces Cloud-Based Account Verification Platform (Kake), Rated: A
Onfido raises $ 50M to create the Identity Verification Standard for Businesses Globally (Markets Insider), Rated: A
Forward Financing Expands Capital Base with $ 90 Million Credit Facility (Yahoo! Finance), Rated: A
Credibly Announces Investment Grade Senior Debt Offering (Yahoo! Finance), Rated: A
Mitek Expands Auto-Capture User Experience Across All Digital Channels with the Addition of Desktop (GlobeNewswire), Rated: A
58% of lenders will use AI in next two years (AI Foundry Email), Rated: A
Fintech alone won't be enough to boost credit union mortgage volumes (Credit Union Journal), Rated: A
GROUNDFLOOR Wins 2 FinTech Awards (Groundfloor Email), Rated: B
Pulte Mortgage and Finicity Partner to Combat the Home Loan Paper Chase (MarketWatch), Rated: B
Hudson Data and LendingPoint partner to prevent Synthetic ID fraud (Finanzen), Rated: B
Dharma crypto lending platform officially goes live (CoinGeek), Rated: B
RateSetter ISA Milestone: Passes £200 Million in Subscriptions (Crowdfund Insider), Rated: AAA
Funding Circle boss pocketed more than £4m last year (P2P Finance News), Rated: AAA
Zopa rewrites outdated money idioms (The London Economic), Rated: AAA
Fintech unicorns are leading job creation in London (Business Insider), Rated: AAA
London to take San Francisco's fintech unicorn crown (The Innovation Enterprise), Rated: A
LendInvest gains £200m HSBC funding as it seeks home loan market entry (Verdict), Rated: A
Peer-to-peer scheme for first-time buyers launches (FT Advisor), Rated: A
P2P Lender CrowdProperty Surpasses £900,000 During the Final Days on Seedrs (Crowdfund Insider), Rated: A
Why fish-hooking is damaging our industry (Mortgage Introducer), Rated: A
HOW CAN TAKING ON DEBT AND EQUITY ACCELERATE GROWTH IN YOUR BUSINESS? (Business Leader), Rated: A
Arbuthnot Latham launches Arbuthnot Direct for those seeking long-term interest returns (Arbuthnot Email), Rated: B
The rise and fall of P2P lending in China (Finextra), Rated: AAA
Shenzhen police arrest Zhang Wei, calling China Create Capital a 'mafia-like gang' (SCMP), Rated: A
$ 60 Million and Rising: China's Crypto Funds Try Lending to Beat Bear Market (CoinDesk), Rated: A
Klarna launches global customer authentication platform (Klarna), Rated: AAA
Klarna Sees Payments as Evolving From Function to Engagement (WWD), Rated: A
This New Tool Is Helping Retailers Build Consumer Trust During Online Checkouts (Footwear News), Rated: B
Drivers of Global Growth in FSB's Shadow Banking (DBRS Email), Rated: AAA
Crypto Lending Platform Salt Adds Support for Dash as Collateral (Crypto-Economy), Rated: A
RentoMojo in talks to raise $ 40 million from GMO, others (livemint), Rated: A
Housing sector remains major source of complaints: BPKN (The Jakarta Post), Rated: A
Batumbu to help finance SMEs (The Jakarta Post), Rated: A
The Future of Digitization, AI and FinTech in the Middle East Region (Bloomberg), Rated: AAA
As seen in data from Lending Club ($NYSE:LC), there is a cyclical spike in the number of loans, as well as the money needed by those needing loans, right around the end of tax season. While this finding may seem pretty clear without any data, it essentially confirms an adage in the lending industry.
RIght now, there was only $21.5 million loaned out to lendees from April 8 to today. This past week, there was about $159 million worth of all sorts of loans — personal, mortgage, etc. — loaned out by the platform.
Lending Club Total Principal Loaned (Weekly)
OnDeck today announced that it will offer to fund and debit customer bank accounts with Same Day ACH transfers, eliminating a decades long pain point for small business owners accustomed to the traditional ACH transfer process, which can take multiple days and lacks certainty on when the transactions will hit bank accounts.
Same Day ACH transfers from OnDeck provide qualified OnDeck Term Loan and Line of Credit customers with funds up to the National Automated Clearing House Association (NACHA) cap of $25,000 by 5:00 pm local time on the same business day the customer books or makes a draw on their line of credit.* Qualified customers are also debited via the same day ACH service, providing them additional predictability in transaction clearing times and offering better clarity around day-to-day cash flow management.
US payrolls rose by 196 k in March and the unemployment rate remained at 3.8%.
Source: Bloomberg, PeerIQ
Highlights from Jamie Dimon's Letter to Shareholders
Jamie Dimon published his annual letter to shareholders. We look at some highlights below:
The banking system, and JPM in particular, is over-capitalized – Under the Fed's most extreme stress-testing scenario, where 35 of the largest American banks bear extreme losses (as if each were the worst bank in the system), the combined losses are about 6% of the total loss absorbing resources of those 35 banks.
Source: JPM, PeerIQ
PM is investing billions in technology to compete – the cloud, AI, ML and digital banking
JPM customers can now open a bank account online in under 5 minutes and can reduce their mortgage closing times to 3 weeks.
The bank now has 49 Mn active digital customers, including 33 Mn active mobile customers
JPM is looking at fintechs in the US and in China as not just opportunities but also looming competition.
Online lender Kabbage rakes in 0m funding (Verdict), Rated: AAA
Kabbage, an online lender for small businesses, has fetched $700m in asset-backed securitisation (ABS) funding.
With the securitisation, the company's debt funding increases to $940m.
The firm started life as a small, scrappy fintech startup in Atlanta in 2008, but has grown rapidly. It made $2 billion worth of loans in 2018 and more than $600 million in the first quarter of 2019. It also recently agreed to provide financing at the point of sale on Alibaba.com as part of a program called Pay Later.
One of the big announcements on day one of LendIt Fintech USA 2019 is from consumer lender Upstart. They have announced a $50 million equity raise as well as three new partners for their "Powered by Upstart" banking as a service program. Oh, and they are getting into credit cards.
The burgeoning peer-to-peer lending platform PeerStreet has unveiled product updates that enable investments of only $100.
The company recently announced it's lowered the minimum investment to $100 for "small balance reinvestments" when using its automated investing product. The upgrade also expands the investment types available for automated investing to include cash offer loans and 30-day notes, which offer shorter terms than typical bridge loan investment options, the company said.
Sharestates, a marketplace lending platform that connects real estate developers with investors, was crowned Top Real Estate Platform at LendIt Fintech USA2019 in San Francisco, California on April 9, 2019. The Top Real Estate Platform award is based on performance, volume, growth, product diversity, and responsiveness to stakeholders.
Now operating in 46 states, Sharestates offers diversified asset classes including residential, multi-family, mixed-use, commercial properties, and land acquisitions.
Since launching in 2015, Sharestates has closed on over $1.7 billion in total loan volume and returned over $675 million in principal to investors. Average annualized returns have exceeded 10% every year. As a result of its strong performance and valued relationships, 82% of Sharestates loan volume has come from repeat borrowers and 81% of its investors are repeat investors.
The company has just announced a new acquisition to its investment portfolio, a $32 million mixed-use building in Carmel, Indiana, one of the most affluent suburbs of Indianapolis. The 140,000-square foot Allied Solutions Building, already around 87 percent leased, stands poised to increase dramatically in value thanks to its location in the heart of downtown Carmel in the heart of a busy mixed-use development surrounded by restaurants, coffee shops, fast-casual dining, service-oriented retail, and the locally renownedSun King distillery and food hall right next door.
Americans' homeownership rate is 64.8%, according to the latest U.S. Census data.
Following are the 13 metros where renting is cheaper by more than $150 a month, beginning with cities with a smaller advantage for renters.
BlueVine, which provides small- and medium-sized businesses with access to fast and simple online financing, announced that it is making term loan financing available for business owners through its suite of online financing solutions. The BlueVine Term Loan provides small- and medium-sized business owners with fast and simple access to financing to grow their businesses through BlueVine's advanced online platform. More than 59 percent of businesses are looking for funds to grow their business, according to the 2017 Federal Reserve Small Business Credit Survey Report on Employer Firms. With a BlueVine Term Loan, business owners can quickly pursue larger projects and investments to bring their businesses to new heights.
Aura, a mission-driven financial technology company that offers affordable loans to hard-working families, this week approved its 350,000 th loan.
Since its launch in 2014, Aura has provided more than $437 million in credit-building loans to borrowers at approximately 1,200 partner locations using technology that enables local businesses to administer loan applications. Currently, Aura's average loan size is around $1,600.
In total, Aura has raised over $403 million in social bonds across 21 bond issuances. The most recent issuance was in March for $50 million.
Before you can qualify for a commercial loan, you'll need to prove that doing business with your company is a good risk. This means you'll need to pass successfully through a lender's qualification process.
The prime and above risk tiers have become a greater focus for lenders in recent years. Nearly two-thirds of unsecured personal loan balances originated in the first three quarters of 2018 were lent to prime and above consumers. FinTechs drove this shift as originations for prime and above grew to 62% in 2018, up from 52% in 2013. While still less conservative than banks, FinTechs' overall risk profile for originations now aligns tightly with credit unions. At the end of 2018, FinTechs held the majority share of personal loan balances with 39%, while banks and credit unions followed with 28% and 21%, respectively.
The Federal Reserve Bank of New York reported in its Quarterly Report on Household Debt and Credit for the fourth quarter of 2018 that outstanding student loan debt increased to $1.46 trillion, which is $15 billion more than the previous quarter. It also reported that student loan debt rose by $79 billion in 2018.
The student debt load isn't just impacting the individual students who enter the workforce, hoping they can find a job that enables them to make those monthly payments. I's also slowing economic growth. A January 2019 Federal Reserve paper noted that young adults report their student loan debt is the reason they're unable to buy a home. The same report also cited other research concluding that 20 percent of the decline in homeownership among young adults relates to student loan debt that's been rising since 2005.
Amount today announced AmountVerify, a cloud-based platform for risk management across financial products. AmountVerify marks the first time industry leading fintech provider Avant is making a component of its cutting edge online lending platform available to financial service companies as a standalone product through Amount.
Onfido, the global identity verification provider, today announced it has raised $50M in funding, bringing the total investment in the company to over $100M. The round was led by SBI Investment and Salesforce Ventures, with support from M12 (formerly Microsoft Ventures), FinVC and others, including existing investors.
Forward Financing has closed on a $90 million credit facility, consisting of a $60 million senior revolving credit facility and a $30 million junior term loan. AloStar Capital Finance ("AloStar"), a division of Cadence Bank, N.A., served as the Agent on the senior facility.
Today, Credibly announces the next phase in its balance sheet growth strategy with a $10 million Investment Grade-rated senior debt offering. The transaction closed on March 28, 2019.
Mitek today announced it has upgraded its desktop browser experience to support auto-capture so customers can rapidly verify the identity of applicants across all digital channels: desktop browsers, mobile web and native applications.
According to Javelin Research, today only one third of users (34 percent) still complete the entire account opening process on their desktop.
MiSnap delivers a superior auto-capture experience for desktop and across mobile devices through:
Guided commands: Real-time commands such as where to place a document in relation to the camera or detection of glare on the ID document are some of the conditions evaluated in order to help the user capture an optimal image, which improves image acceptance rates and reduces capture retries.
Advanced image analysis: Once MiSnap has achieved an optimal capture of the ID document, the software then further analyzes the image and makes the necessary adjustments in order to process all images consistently and accurately.
Modern architecture: Because MiSnap uses WebAssembly, it can perform at native speeds and is easy to integrate into customers' web-based apps and requires minimal footprint.
Fannie Mae recently put out a
Nearly two-thirds of lenders are familiar with AI
But, only 27% are using it in their businesses now, and…
Only half of that group are currently using it with customers (the rest are doing trials)
However, looking ahead two years – 58% of lenders expect to use AI/ML in their mortgage business.
Of the rest:
22% predict they'll be investigating AI
19% foresee being in a "wait and see" mode
These data points show us that "prime time" is coming soon for AI/ML in mortgages.
How can credit unions, especially small institutions, compete with Quicken Loans' Rocket Mortgage "Push button, get mortgage" campaign?
They can't – and, sources said, they shouldn't try.
GROUNDFLOOR was named Best Crowdfunding Platform by the
Pulte Mortgage announced today it is partnering with Finicity — a leading provider of real-time financial data access and insights, to provide its borrowers with a faster, simpler and more secure way to navigate the home financing process.
Hudson Data and LendingPoint announced that they are partnering to create an industry solution to prevent synthetic identity fraud using powerful graph machine learning.
Dharma Labs completed a Series A funding round earlier this year to support its cryptocurrency lending platform project. The San Francisco-based company raised $7 million from companies such as Polychain Capital, Coinbase Ventures and others and, if there was any concern about the platform not going live, those concerns are now extinguished. Dharma announced this past Monday in a Medium post that the platform is now live.
UK-based peer-to-peer lender RateSetter recently announced its ISA has now passed the milestone of attracting £200 million in subscriptions.
"Investors have enjoyed an average annualised return of 4.5%, tax-free of course, since the RateSetter ISA launched in February 2018. The average RateSetter ISA balance stands at £11,000."
FUNDING Circle founder Samir Desai (pictured) earned more than £4m last year, having cashed in some of his shares at the time of the peer-to-peer lender's stock market flotation.
Desai took home a salary of £210,000 last year, according to Funding Circle's annual report, a four per cent increase from his salary of £202,000 in 2017.
The majority of his total remuneration of £4.081m came from cashing in share options.
Each future-looking idiom challenges the status quo. For example, according to Zopa, the 'signing for the bill' gesture will be redundant soon. Instead, when people have finished their meal, people will be more likely to signal facial or iris recognition to the waiter. Jonesy gives his take and takes it one step further by illustrating a customer displaying his eyeball to request the bill.
Source: The London Economic
In 2018, there was a 61% increase in fintech job creation within London from the previous year, per a new report by Robert Walters, making it the fastest growing sector for vacancies in the city.
The UK houses 25% of all fintech unicorns and their growth plans call for more talent. There are 29 fintech unicorns worldwide, seven of which are based in the UK, making the UK second only to San Francisco, which is home to nine.
Over 30% of jobs in the UK's fintech industry are for IT-related roles, compared with 24% in 2017. And fintech unicorns' hiring for IT professionals increased 74% year-over-year (YoY).
However, the report has predicted that London could take the lead as early as this year, as the city receives 39% of European fintech venture capital funding, with the runner-up, Berlin, taking just 21% of the total investment.
With 50% against a global average of 33%, the UK also enjoys the highest rate of consumer fintech adoption of any Western country, only beaten by India and China, the report found.
LendInvest, which operates an online marketplace for mortgages, has received an investment of £200m ($261m) from HSBC UK to support its foray into the regulated home loan sector.
Start-up company Stepladder is promoting a new way for first-time buyers to save for a house deposit.
As part of the project Stepladder matches savers with other members who have similar goals, which effectively creates a 'circle' of members who pay a fixed amount each month.
For example, Stepladder would bring together 10 people who wanted to save £10,000 each. For 10 months, the 10 people pay in £1,000 to the group pot, leaving the group pot at £10,000 every month and this £10,000 gets awarded to a member on a monthly basis.
According to Stepladder, 87 per cent of members get their deposits faster this way than saving alone and are three times more likely to reach their savings goal.
Peer-to-peer property lender CrowdProperty is set to close its equity crowdfunding campaign on Seedrs with more than £900,000 in funding from over 500 investors. The campaign, which launched last month, quickly topped the minimum target of £600,000 for a 3.68% equity stake in the platform. The online lending platform has a pre-money valuation of £15.7 million.
Fluid Bond offers a 6% fixed interest rate to investors with the option for their investments to be held in an IFISA wrapper, the Fluid ISA. Their investments are ultimately used to provide asset-backed bridging loans to businesses in need of short-term capital, via Fluid Trust. The fact that the ultimate loans are asset backed does not guarantee a return for bond holders.
But what are the trends that business owners and commercial teams – operating companies between £1m and £50m – should know about? To help, BLM has spoken to the leading operators in this space.
Arbuthnot Latham & Co., Limited ("Arbuthnot Latham") is pleased to announce the launch of its new platform under the trading name of Arbuthnot Direct. Arbuthnot Direct offers fixed term deposits online, targeting retail customers who are seeking interest returns on their money over the longer term. The platform held a successful soft launch in February 2019 and has already met with a positive reception.
It is worth mentioning that the size of China's P2P industry is larger than that of the rest of the world combined, with outstanding loans of US$217.96BN.
China's online P2P lending industry grew rapidly between 2011 to 2015, with the number of P2P lenders growing from 50 to nearly 3,500 respectively.
Trouble started brewing in China back in 2016, when statistics released by the Chinese Banking Regulatory Commission showed that about 40% of P2P lending platforms were in fact Ponzi schemes.
This triggered the shutdown of P2P lending platforms; over 900 closed by the end of 2016. For 2018, only 1,021 providers remained in place.
Source: Bloomberg News
China Create Capital Limited, the investment holding company headed by the 46-year-old Heilongjiang native is a "mafia-style gang" involved in illegal fundraising, harassment, blackmail, illegal detention of people and the possession of firearms, the Shenzhen police said in a notice. The whereabouts of Zhang, who was arrested with 43 other executives of China Create, could not be ascertained.
The arrests are the latest in the Chinese government's crackdown on crime and corruption in the country's financial system and capital markets, where 1,129 "mafia-like" syndicates were broken up across 10 provinces last year, with 4.94 billion yuan (US$737 million) of assets seized, according to the police. A number of Chinese oligarchs including Anbang Group's
former chairman Wu Xiaohui
, CEFC Group's founder Ye Jianming and financier Xiao Jianhua had fallen from grace since 2017.
These new crypto lenders include such notable names as Bixin Capital, FBG Capital and DGroup, founded by Dong Zhao, who made a name by operating one of the longest-running over-the-counter (OTC) trading desks in China. Along with a startup called Babelbank, these investors have originated a combined $60 million worth of loans over the last five months, denominated in cryptocurrencies or, in one firm's case, Chinese yuan.
Klarna today announced the launch of its global authentication platform — an aggregator with multiple global and local authentication solutions. The platform allows multinational businesses, including merchants and other banks, to provide a simple, secure and personalised customer authentication experience irrespective of market, through a one-time integration.
Klarna's Hannah Bravo says customers chose brands based on payment options.
The Klarna platform enables businesses to choose from a range of global and local authentication methods so that they can find one that works best for their customer. Whether using SMS verification or emailed one-time passwords, brands and retailers can verify their customers' identities with minimal interruption to the consumer's shopping journey.
DBRS sees significant risks stemming from continued growth in shadow banking globally. Assets are now at $52 trillion globally, up from $30 trillion in 2010, according to the FSB. The U.S. has the largest concentration with 29% of global shadow banking assets. But, this is down from 48% in 2010, as other regions are growing faster.
Summary highlights of the commentary include:
Shadow banking is still growing. This narrow, but rapidly growing, subset of nonbanks had assets of $52 trillion in 2017, up 75% from $30 trillion in 2010.
Since 2010, assets of nonbanks are also growing, up 61% to $185 trillion. That is 49% of the $378 trillion in total global assets in all financial institutions at the end of 2017, up significantly from 44% in 2010.
The key driver of this growth in nonbank assets is the expansion of OFIs. These OFIs are defined as all financial institutions that are NOT central banks, banks, insurance companies, pension funds, public financial institutions, or financial auxiliaries. Assets at these OFIs grew 71% since 2010 to a record $117 trillion in 2017, or just over 30% of assets in financial institutions globally.
By far, the largest segment of shadow banking globally is collective investment vehicles, which are subject to runs. These include fixed income funds, mixed funds, MMFs and hedge funds. Since 2010, this segment has grown by 130% to $36.7 trillion in assets. By contrast, growth in other segments has been less than $1 trillion, or even negative.
Cryptocurrency lending platform Salt will now be allowing its users to collateralize their Dash holdings including their Masternode staking coins to access loan facilities.
For RentoMojo, the latest fundraise comes almost two years after it raised $10 million in July 2017 from Bain Capital, Accel and Chiratae Ventures. Renauld Laplanche, chief executive of US-based Lending Club, also took part in his personal capacity.
The BPKN received 154 complaints in the first quarter, most originating from the housing sector. BPKN communications and education coordinator Arief Safari said the agency had received 129 complaints on the housing sector in the first quarter, followed by six complaints on online peer-to-peer (P2P) lending, three on banking and the remainder on various sectors, including travel and e-commerce.
PT Berdayakan Usaha Indonesia has announced that it aims to help small and medium enterprises (SME) access financial capital through a partnership program with its digital platform Batumbu.
George Popescu
Author Allen TaylorPosted on April 11, 2019 Categories Amount, Arbuthnot, Arbuthnot Direct, Artificial Intelligence, Aura, Batumbo, BlueVine, business lending, China Create Capital Limited, credibly, CrowdProperty, crypto lending, crypto lending china, Daily News Digest, DBRS, debt funding, Dharma, equity funding, Events, Featured, Finicity, fintech, Fluid, Forward Financing, Funding Circle, Groundfloor, Hudson Data, identity verification, Indonesia p2p, jamie dimon, kabbage, Klarna, Lending Club, LendingPoint, LendInvest, LendIt Fintech USA, Middle East, Mitek, Nav, ondeck, Onfido, p2p china, p2p lending, PeerStreet, personal loans, prime, RateSetter, real estate crowdfunding, RentoMojo, Salt, Shadow Banking, Sharestates, SME financing, Stepladder, stREITwise, Student Loans, Unicorns, Upstart, Zopa
Wednesday August 22 2018, Daily News Digest
News Comments Today's main news: Elevate Credit expected to announce $203.49M in sales. Ant Financial delays IPO again. SocietyOne getting close to $500M in total lending, six years in. ClearScore to offer credit scores in India. Capital Float buys Sequoia and Walnut. Today's main analysis: 10 years after financial crisis, credit market on upward curve. Today's thought-provoking articles: New […]
Today's main news: Elevate Credit expected to announce $203.49M in sales. Ant Financial delays IPO again. SocietyOne getting close to $500M in total lending, six years in. ClearScore to offer credit scores in India. Capital Float buys Sequoia and Walnut.
Today's main analysis: 10 years after financial crisis, credit market on upward curve.
Today's thought-provoking articles: New measures on P2P lending are a credit positive, says Moody's. How non-U.S. countries determine creditworthiness. Mexican government wants banks, fintechs to help with financial inclusion.
Elevate Credit expected to announce quarterly sales of $203.49 million. I think investors will be pleased whatever the number is.
10 years after financial crisis, consumer credit market on upward curve. A must-read report.
Lawmaker questions fintech over lending practices.
Small banks need big data.
Blockchain meets REIT.
JPMorgan launches Roar for crowdsourced data.
Report shows identity verification a priority for online lending.
Bank of the West exec bails for Varo Money.
White Oak Healthcare Finance closes $40 million in financing.
TradeStation launches fully paid lending program.
US wakes up to SME cybersecurity needs.
Ant Financial delays IPO again.
China's new measures on P2P lending are a credit positive, according to Moody's.
The next step to regulating P2P lending firms is to figure out who owns them.
Police launch global search for alleged P2P lending scam fugitive.
HuaAn targeted for alleged fraud.
How non-U.S. countries determine credit worth. A very good read.
Blockchain can help P2P car lending schemes gain traction.
ClearScore to offer credit scores in India.
Capital Float buys Sequoia, Walnut.
OfBusiness raises INR 200 Crore.
Five Star Business Finance raises $100 milion.
Finzy completes $2.3 million pre-series A round.
Five things to know about P2P lending before you invest.
United Kingdom: Private credit offers escape from miserly bond yields.
Australia: SocietyOne celebrates sixth anniversary, closes in on $500 million in lending.
Singapore: Police recover $27 million linked to Chinese P2P lending Ponzi scheme.
Mexico: Government wants fintech, banks to help with financial inclusion.
Brokerages Anticipate Elevate Credit Inc (ELVT) Will Announce Quarterly Sales of $ 203.49 Million (Baseball Daily Digest) Rated: AAA
Financial Crisis – 10 Years Later: Consumer Credit Market on an Upward Curve (Nasdaq) Rated: AAA
Lawmaker Questions FinTech Industry Over Lending Practices (Govtech) Rated:A
Small banks need big data to maintain customer service edge (American Banker) Rated: A
Blockchain Meets REIT – A New Era in Real Estate Investing (Market Insider) Rated: A
JPMorgan launching Roar platform for crowdsourced data (Business Insider) Rated: A
New Report Shows Identity Verification a Priority for eCommerce and Online Lending Businesses (Global News) Rated: A
Bank of the West exec bolts for startup, sees chance 'to redefine retail banking' (American Banker) Rated: A
White Oak Healthcare Finance Closes $ 40 Million Financing for LifeCare Holdings, Inc. (Business Wire) Rated: A
TradeStation Launches New Fully Paid Lending Program (GlobeNewswire), Rated: A
US wakes up to SME cybersecurity needs (Fintech Futures) Rated: B
Private credit offers an escape from miserly bond yields (Citywire) Rated: AAA
Ant Financial IPO plans pushed back again (Financial Times) Rated: AAA
Moody's: China's new measures on P2P lending are credit positive (ECNS) Rated: AAA
Next Step to Regulating P2P Lending Platforms — Figuring Out Who Owns Them (Caixin Global) Rated: A
In-Depth: Police Launch Global Hunt for 'Solar King' Caught Up in P2P Bust (Caixin Global) Rated: AAA
HuaAn Finds Itself Target of Investor Ire After P2P Company Accused of Fraud (Caixin Global) Rated: A
Many countries don't use credit scores like the US — here's how they determine your worth (Business Insider) Rated: AAA
Blockchain Can Help Peer-To-Peer Car Lending Schemes Gain Traction (Market News) Rated: A
SocietyOne Celebrates Sixth Anniversary; Total Lending Now Approaching $ 500 Million (Crowdfund Insider) Rated: AAA
UK's fintech startup ClearScore set to offer credit scores in India (Economic Times) Rated: AAA
Capital Float buys Sequoia & SAIF-backed Walnut for $ 30 mn (VC Circle) Rated: AAA
OfBusiness Raises INR 200 Crore in Series C Financing (FinSMEs) Rated: A
Five Star Business Finance Raises USD$ 100M in Funding (FinSMEs) Rated: A
P2P Online Lending Startup Finzy Completes $ 2.3 Mn Pre-Series A Fund Raise (Indian Web) Rated: A
Five things you should know before lending on P2P platform (Economic Times) Rated: A
Singapore police recover S$ 27 million linked to China Ponzi scheme (Channel News Asia) Rated: AAA
Mexico's new government wants fintech, banks to help financial inclusion (Channel News Asia) Rated: AAA
Equities research analysts forecast that Elevate Credit Inc (NYSE:ELVT) will post $203.49 million in sales for the current fiscal quarter, Zacks reports. Two analysts have issued estimates for Elevate Credit's earnings, with estimates ranging from $201.00 million to $205.97 million. Elevate Credit reported sales of $172.85 million during the same quarter last year, which indicates a positive year-over-year growth rate of 17.7%. The firm is expected to report its next quarterly earnings report on Monday, October 29th.
According to Zacks, analysts expect that Elevate Credit will report full-year sales of $803.23 million for the current financial year, with estimates ranging from $801.00 million to $805.45 million. For the next financial year, analysts expect that the company will report sales of $927.09 million per share, with estimates ranging from $926.97 million to $927.20 million. Zacks' sales calculations are a mean average based on a survey of research firms that follow Elevate Credit.
Ten years after the biggest financial crisis to hit the United States since the Great Depression, much has changed in the consumer credit marketplace. Serious delinquency rates have recovered since that period, and the credit quality of consumers has broadly improved. Yet the crisis has had a profound effect on consumer access to credit and the relationship they have with it.
TransUnion's (NYSE:TRU) just-released Q2 2018 Industry Insights Report allows for comparisons between Americans' credit preferences today versus 2008, specifically in the auto finance, credit card, mortgage and unsecured personal loan markets.
Source: TransUnion
Rep. Emanuel Cleaver (D-Mo.) released a report Friday detailing the lending practices of some prominent fintech companies, finding that some companies could be discriminating against minorities and calling for more transparency from the fintech sector.
Fintech companies are somewhat controversial because many engage in traditional banking practices, and some consumers and regulators are calling for them to be regulated like traditional banks.
Big data isn't just for big banks.
The modern banking customer wants advanced online and mobile banking options, and delivering such services requires even the smallest community bank to get a handle on customer data, said Corey LeBlanc, chief technology officer and vice president at Origin Bank.
Building Block, Inc. announced today it is the first North American REIT (Real Estate Investment Trust) to embrace the emerging efficiencies of blockchain technology and provide a new way to invest in one of the world's most well-known and trusted assets, real estate. Blockchain technology will enable Building Block REIT to virtually eliminate friction in REIT shareholder communication by allowing direct dividend disbursement, secure user voting, and smart contract functions that execute automatically when pre-set parameters are met.
Building Block REIT plans to raise funds in the form of a digital initial public offering (Digital IPO) accepting payments via U.S. Dollars or fractional Ethereum cryptocurrency. Investors worldwide will be able to purchase shares in Building Block REIT on SEC compliant alternative trading systems (ATS) or peer-to-peer exchanges with whitelisted parties to invest in US commercial office, multi-family and mixed-use real estate.
JPMorgan's corporate and investment bank is best known for advising businesses on billion-dollar acquisitions, helping private unicorns tap into the public markets, and managing the cash of Fortune 500 companies.
But now it is quietly working on a new platform that would go far beyond anything the firm has previously done, using crowdsourcing to accumulate massive amounts of data intended to one day help its clients make complex decisions about how to run their businesses, according to people familiar with the project.
The platform, called Roar by JPMorgan, would store sensitive private data, such as hospital records or satellite imagery, that's not in the public domain. Typically, this type of information is exchanged between firms on a bilateral arrangement so it is not improperly used. But Roar would allow clients to tap into this data, which they could then use in a secure fashion to make forecasts and gain business insights.
A new report from Whitepages Pro shows that an overwhelming majority of North American companies in ecommerce and financial services surveyed consider identity verification to be a top business priority but many still don't believe they do it well or have all the data and tools they need to be successful. For the report, "The State of Identity Verification Maturity in North America," businesses were asked, among other things, to rank themselves on a 4-stage scale of identity verification maturity for how they use identity data to combat fraud and improve the customer experience.
Among the report's key findings:
Driven by the belief that fraud attempts are increasing in frequency and sophistication, identity verification is a priority for most organizations (93 percent). While they vary in the degree to which they use advanced techniques, most organizations want to improve their identity verification methods and outcomes. Just 2 percent believe they are completely successful at identity verification.
Organizations want access to more data points (just 13 percent say they have all the data they need) and see data linkages (the relationships between data elements) as a way to improve their identity verification processes. While access to traditional data (like a street address) is common, many still don't have or use digital data (like an IP address). Most of the survey respondents believe linking data reduces fraud with 77 percent believing it increases confidence in a customer's identity.
Organizations want more and improved identity verification automation. However they often rely on in-house (such as historical data and white/black lists) that make it difficult to expand the use of automation, resulting in an over reliance on costly and time consuming manual reviews. A large majority (71 percent) believe machine learning can play a role in reducing manual reviews and making identity verification more effective.
Thibault Fulconis, who until recently was chief operating officer of Bank of the West, has joined the fintech digital banking startup Varo Money as its chief financial officer.
Varo Money is a mobile-first challenger bank that aims to help Americans achieve financial health. It is in the same league as Chime, Digit, Moven, MoneyLion, Qapital and N26.
White Oak Healthcare Finance, LLC ("White Oak"), today announced it acted as lead lender and administrative agent on the funding of a $40 million asset based senior credit facility for LifeCare Holdings, Inc. ("LifeCare"). The funds were primarily used to refinance existing indebtedness. White Oak previously announced the financing of LifeCare Home Health LLC, the home health entity owned by LifeCare.
TradeStation, a Monex Group company and award-winning online broker-dealer and futures commission merchant, today announced the launch of its Fully Paid Lending Program. This program allows qualified equities account holders the opportunity to earn interest income on lendable securities in their accounts.
Under the Fully Paid Lending Program, TradeStation identifies stocks in qualified accounts that are eligible for lending. Based on market demand, some or all of a qualified client's fully paid positions or excess-margin securities may be lent out to other financial institutions to satisfy their customers' position requirements. While their stocks are on loan, clients automatically receive 50% of the net proceeds earned by TradeStation for lending out the shares, which is accrued daily and automatically posted monthly to their accounts. Daily income ceases to accrue when the client sells a lendable stock or the stock is no longer on loan.
US President Donald Trump has signed the National Institute of Standards and Technology (NIST) Small Business Cybersecurity Act, a bill which will provide a set of resources for small businesses to best protect their digital assets from cybersecurity threats.
For reasons that are quite clear if you follow my writings on a regular basis, equities and bonds will most likely deliver disappointing returns for many years to come.
My central forecast is an annual average inflation-adjusted return of 0-2% on a global portfolio consisting of 40% bonds and 60% equities between now and 2050.
The good news next. Fortunately, there are many things you can do to improve on those lacklustre numbers. Those returns are for the lazy investor; someone who invests passively.
A blockbuster listing of Ant Financial, the fast-growing electronic payment affiliate of China's leading tech group Alibaba, has again been delayed as it continues to burn through cash and come under pressure from Beijing's crackdown on non-traditional financial institutions.
Ant was valued at $150bn in its last private fundraising in June, a round that bankers said paved the way for an initial public offering as early as this year.
The global credit rating agency Moody's called China's newly-issued regulations on peer-to-peer lending platforms are "credit positive", because they will strengthen protections to individual lenders and prevent risk spilling over to the broader financial system.
Moody's commentary came after Chinese regulators announced 10 measures to address risks related to P2P lending platforms on August 12. The P2P platforms enable individuals to lend directly to borrowers through the Internet.
The new regulations clarified responsibilities of P2P platforms and their shareholders, stipulated conditions for orderly liquidation of failed platforms, outlined penalties for borrowers that escape their debt obligations and prohibited registration of new platforms.
Months into the crisis in China's online lending industry, regulators want to know who actually owns the country's peer-to-peer (P2P) lending platforms.
The National Internet Finance Association of China (NIFA) issued a notice on Monday designed to help it keep tabs on key stakeholders in China's online P2P lending platforms as financial and legal difficulties continue to engulf the business.
The effort to bring greater clarity to the workings of P2P platforms comes after hundreds of online platforms have encountered financial and legal troubles in the last few months. In July, at least 165 P2P platforms had difficulties meeting cash-withdrawal demands, saw their owners abscond with investor funds, or were investigated by police, according to a report by internet lending research firm Wangdaizhijia. The number was nearly triple that in June, Wangdaizhijia said.
Peng Xiaofeng was once China's youngest billionaire and a rising star in the solar industry. But the founder of now-bankrupt LDK Solar has been put on China's most-wanted list, hunted by law enforcement agencies for illegal fund-raising by his peer-to-peer (P2P) lending platform Solarbao.com.
Police in the city of Suzhou, where Solarbao.com is registered, want Interpol to issue a Red Notice against 43-year-old Peng, who is accused of swindling more than 5,000 investors and leaving a trail of debt amounting to 220 million yuan ($32.1 million). They have also branded the platform, a subsidiary of Nasdaq-listed SPI Energy Co. Ltd., a fraud.
The Shanghai office of fund manager HuaAn Future Asset Management Co. Ltd.was surrounded on Monday by throngs of angry investors who blame the company for what they perceive to be its role in an online-lending fraud. HuaAn denies any involvement.
Monday's protest centered on P2P site PPMiao.com, which was accused of illegal fundraising by police in the eastern city of Hangzhou, where PPMiao.com operator Guangxi PPMiao Internet Technology Co. Ltd. is registered. HuaAn held a 37.5% stake on behalf of an asset management plan in PPMiao.com's former operator, Hangzhou Fuqian Network Technology Co. Ltd., as of June 30, making HuaAn the target of investor ire when PPMiao.com's financial problems surfaced.
In the US, a good credit score can feel like a key determinant of success. It defines how good an interest rate you can get on a car loan or mortgage, the quality of credit card you can get approved for, or if you'll get approved for any credit at all.
The better your score, the better the perks. A bad score can become a black mark that leads to missing out on the home you want (credit checks are a common aspect of apartment applications), higher car insurance rates, or even difficulty getting a cell phone, according to Nerdwallet.
But as monolithic as the credit score seems, many countries in the world handle credit very differently — with many having no credit score system at all.
Blockchain technology can help car-sharing companies to track a person using the car any time. According to industry analysts, the car sharing economy is expected to hit $335 billion by the year 2025.
The car sharing idea has been gaining a lot of interest among car drivers over the recent years. According to estimates by Global Market Insight, the peer-to-peer car sharing sector will amount to $11 billion. The growth has largely been attributed to raising cost of owning a car.
The biggest challenge with the Peer-to-peer lending system is trust. The car owner has to have total trust in the person hiring the car. Additionally, the car owner has to be sure that the hirer has enough money to cover the period the car is hired. The owner of the vehicle would also like to track where the car is as well as the condition in which it is being driven. On the side of the hirer, they would love to know if they are hiring the car from the original owner and that the data exchanged between the two parties is secure.
Australia-based marketplace lender SocietyOne announced celebrated its sixth anniversary of operations as total lending since inception approaches $500 million.
SocietyOne also reported it has more than 20,000 customers and since the beginning of 2016, total lending has grown nearly 6 times and the lender's loan book now totals over $220 million, up from $41 million at the start of 2016.
UK-headquartered fintech startup ClearScore is all set to start its business in India offering credit scores to Indian consumers in partnership with Experian, free of cost, to improve the awareness levels of the consumers regarding credit. India is their second international market after the company started operations in South Africa last year.
ClearScore will be available on Google Play Store and will provide details of the credit score, giving alerts about changes in the score and provide details about how consumers can improve the score.
Bengaluru-based digital lending platform Capital Float has acquired personal finance management app-maker Walnut for $30 million (Rs 209 crore) in a cash and stock deal, a company statement said. Both the companies count Sequoia Capital and SAIF Partners as common venture capital investors.
Walnut allows users to track spends, check on credit and bank balance, bill payments and split expenses within a group. In July 2017, it launched a small ticket credit line for its users called Walnut Prime based on user data and consumer behaviour. The platform has so far disbursed Rs 100 crore in consumer loans.
OfBusiness, a Gurgaon, India – based technology enabled SME financing platform, raised INR 200 crore (approx $29m) in Series C financing.
The round was led by Creation Investments and Falcon Edge with participation from existing investors Matrix Partners India and Zodius Capital. With this new round of funding, the company has raised a total of INR 500 crore of equity and debt funding to date. It has also raised debt lines from Kotak, Tata Capital, RBL Bank and Northern Arc amongst other lending partners.
The capital will be used for continued rapid growth and model scaling.
Five Star Business Finance Limited, a Chennai, India–based fully-secured small business financing company focused on South India, raises USD$100M in funding.
The round was led by alternative asset firm TPG, with participation from existing investors Norwest Venture Partners, an investment fund managed by Morgan Stanley, and Sequoia Capital. The company's first investor, Matrix Partners India, continues to stay invested in the company.
Led by D. Lakshmipathy, Chairman and Managing Director, Five Star is a non-bank finance company providing loans to nearly 40,000 customers.
Bangalore-based peer to peer (P2P) lending platform Finzy on Monday announced raising funds worth USD 2.3 million in Pre-Series A round, including USD 1.3 million raised in the first tranche in March 2018.
This funding round has been funded by senior professionals from BFSI industry and successful entrepreneurs. The startup plans to use the freshly raised capital for geographical expansion, technology investment and stronger distribution networks.
Founded in 2016, by Abhinandan Sangam, Amit More and Vishwas Dixit, Finzy is a premier P2P lending solution in India that connect borrowers with investors and make the entire process simple and easy so that one can get a loan in as little as 48 hours.
Don't let greed cloud your judgment. If you are in a tearing hurry to pocket double-digit returns, you are likely to overlook many warnings signs. That is why it is always better to start with a small amount, learn the ropes, before going for the kill.
Different platforms have different ticket size for lending. With companies like Faircent offering as low as Rs 750 per loan. The ROI would vary as per the borrower profile and loan tenure. The total amount invested by a lender across all P2P-NBFCs is capped at Rs 10 lakh, as per the existing RBI norms.
The RBI came out with regulations for P2P companies in October. There are around 30 online P2P companies in India, of which only eight have received a certificate of registration (CoR) from the RBI to carry out P2P lending activities.
Singapore police said on Tuesday (Aug 21) they have recovered more than S$27 million linked to one of the biggest Ponzi schemes in China, which saw 1.15 million investors cheated out of 38 billion yuan (S$7 billion).
Ezubao, once China's biggest peer-to-peer lending platform, folded in 2016 after it turned out to be an online scam that concocted fake projects to attract investment and pocketed funds instead of passing them to borrowers to generate returns.
Mexico's next government will look to fintech companies and large corporate banks to increase financial inclusion in the country, where only one-third of adults have a bank account, senior officials said on Tuesday.
Arturo Herrera, one of two future deputy finance ministers, said in an interview that the lack of financial inclusion was one of the biggest obstacles in the new government's fight against poverty, inequality and slow economic growth.
Author Allen TaylorPosted on August 22, 2018 Categories Ant Financial, Bank of the West, Banks, Big Data, Blockchain, Capital Float, ClearScore, Credit, credit market, Cybersecurity, Daily News Digest, elevate credit, ezubao, Featured, financial inclusion, fintech, fintech lending, Finzy, Five Star Business Finance, fraud, HuaAn, identity verification, IPO, JPMorgan, moody's, News, OfBusiness, Online Lending, p2p china, p2p India, p2p lending, REIT, Roar, Sequoia, SME, SocietyOne, TradeStation, Transunion, Varo Money, Walnut, White Oak
Digital Identity Verification for Alternative Lenders
Trust is the root of all business transactions. For any financial institution to lend money or offer a banking service, being able to identify the counterparty is a must. And though anonymity is a blessing in a lot of situations, business cannot be conducted under the cloak of secrecy. Financial services are a particular focus […]
Trust is the root of all business transactions. For any financial institution to lend money or offer a banking service, being able to identify the counterparty is a must. And though anonymity is a blessing in a lot of situations, business cannot be conducted under the cloak of secrecy.
Financial services are a particular focus area for the highest standards in identification, especially due to the strong regulatory push on money laundering, terrorism financing, and KYC (Know Your Customer). Also, according to the World Bank, around 1.1 billion people worldwide cannot prove their identity. They form a major chunk of the 2.5 billion people who don't have access to financial services. This highlights that identity is a fundamental part of financial inclusion.
Mitek Systems, a global leader in mobile capture and identity verification software solutions, is in the forefront of this growing niche industry. We had an exclusive chat with the company CTO, Stephen Ritter. He gave his views on the opportunity and developments in the ID verification space and how it will be an underlying pillar for the growth of fintech lending and blockchain-led services.
Mitek's Business Model and Technology
Mitek started as a software company and has evolved to become the leader in mobile banking and mobile deposit solutions. It enables bank customers to take picture of checks for depositing, rendering the physical deposit process redundant. It has entered the digital ID verification market and has developed artificial intelligence (AI) and machine learning-powered proprietary algorithms. It will verify the ID by having the user take a picture of a government-issued ID and compare it with a selfie. This allows the software to cross verify the selfie face with the picture on the government-issued ID.
Mitek's solutions specializes in accurately identifying the personal document, and can even recognize and evaluate IDs of multiple countries. It can also extract relevant information from the document. Its advanced forensic algorithms can detect signs of forgery or fake documents. Further, it can distinguish good and bad documents and provide a risk score to determine if the document can be trusted. Its algorithms can also determine if the human face is real or a spoof.
The company's core competency is computer vision, a specific niche within machine learning. The company has been developing software in the field for the last 15 years and considers itself among the pioneers in the space. With the intense speed of development in the field, the company is actively working with partners for integrating third-party sophisticated technology into their own solutions.
The main solutions provided by Mitek include:
Mobile Fill – A solution which allows personal information to be pre-filled in the forms of the applicants, taking help of the Mobile ID capture solution provided by Mitek.
Mobile Verify – A combination of Mitek's computer vision technology and auto capture experience, Mobile Verify validates the authenticity of identity documents thereby simplifying the KYC compliance processes.
Mobile Deposit – Mobile deposit is a solution that helps in saving time by allowing the person to deposit checks to the participating banks by uploading the image using the device's camera.
Mitek's Competition, and Its Impact on Lending
Mitek has an operating history of over two decades. With more than 6,100 banks and financial institutions as customers, the company has a wide moat compared to startups entering the field. Its direct competitors are few and usually early-stage companies. The more traditional players in the space would be the ones that follow the data bureau approach and are beginning to integrate mobile verify solutions for verification of IDs into their platforms.
Lending will receive a boost across the board as lenders, both traditional and alternative, will be able to onboard customers faster and more securely. Alternative lenders, in particular, should see higher approval rates for prospective borrowers with increased confidence they are not being defrauded. Mitek is currently processing over several million ID documents a month. Both MoneyGram and Kabbage use Mitek's MobileVerify technology. The company is seeing major traction in the fintech lending industry as players are nimble and the first target for most fraudsters.
Financial Inclusion, Privacy, and Real Life Applications
Ritter believes governments need to step up their efforts in ensuring everyone has access to an identity proof. Financial inclusion is positioned prominently in the United Nation's 2030 Sustainable Development Goals agenda, and the need for a digital identity goes far beyond the ability to participate in the formal economy. Its impact is multifold and helps to increase overall trade and access to healthcare and government services. Mitek is also focused on data privacy laws, with GDPR the hot topic in Europe. It has taken GDPR as its baseline for information security and is operating with GDPR recommended data security not only in Europe but across the globe.
Kabbage Case Study
Kabbage facilitates easy funding options to small and medium enterprises through its automated technology-backed data platform. With Mitek's digital identity verification solutions integrated into the Kabbage platform, users are able to automatically populate the loan application form with pre-filled data in less than a second allowing customers to access funding quickly. Mitek's solution applies advanced algorithms that automatically assess the authenticity of the driver's license, providing assurance about the identity of the ID's holder and reducing the likelihood of fraud during the loan application process.
Anonymous Payments Processor Case Study
Customers were facing a lengthy identity verification process, which forced them to leave the platform before completing the transaction. Driven by the need to comply with Anti Money Laundering (AML) and KYC regulations, a leading global payment processor selected Mitek's Mobile Verify to provide the customers with more efficient ways to reduce the verification process from days to just minutes. Mitek was able to eliminate 92% of the temporary restrictions that the company previously had to place on customer accounts whenever they would reach a certain dollar threshold. By eliminating these temporary restrictions, the company has improved customer experience as well as increased profitability.
Mitek's Collaboration with Nocks
Mitek's digital verification identity has enabled blockchain payments platform Nocks to improve their customers' onboarding by 98%. A cryptocurrency payments platform, Nocks also has to execute AML and KYC compliances. Nocks has now been able to verify the identity of applicants in real-time, dramatically improving new customer conversion rates due Mitek's Mobile Verify interface.
MoneyGram Case Study
MoneyGram, the money transfer giant, is also using Mobile Verify to validate its customers' ID. To complete the identity verification step in the money transfer process, MoneyGram customers simply take a picture of their passport or other identity document using their mobile device camera. Mobile Verify then uses advanced machine learning technology to instantly validate the authenticity of the ID.
Mitek is Experimenting With the Blockchain
Mitek is also developing technology to leverage blockchain infrastructure. The public ledger approach in general is interesting as it could allow for generating self-sovereign IDs which are owned and managed by the users themselves. When businesses need their information, people can control their data and allow only limited or conditional access. Moreover, even banking customers are exploring blockchain-based solutions, and Mitek is experimenting to integrate its ID verification systems on a distributed ledger.
Mitek's Technology Leadership
Mitek was founded in 1985 and is listed on NASDAQ with a market cap of an estimated $250 million. Mitek's innovative solutions are embedded into the apps of more than 6,100 organizations and used by more than 80 million consumers.
Stephen Ritter is the Chief Technology officer (CTO) of San Diego-based Mitek Systems. He helps in the technological development of the key processes of the company, along with overseeing Mitek Labs. He has more than 22 years of experience bringing new commercial software solutions to market. Ritter worked as tech lead with Emotient (acquired by Apple) before he joined Mitek.
With the increase in regulatory complexities and fraudulent practices, it is critical for businesses to make sure that they are on the right side of the law and yet are simultaneously making their customers' life easier. Mitek helps them balance this fine line with its suite of sophisticated identification technologies.
Author Allen TaylorPosted on April 19, 2018 Categories alternative lenders, alternative lending, AML, Analysis, anti-money laundering, Artificial Intelligence, Banking, Banks, Blockchain, Cybersecurity, digital identity, Featured, financial inclusion, GDPR, ID verification, identity fraud, identity verification, kabbage, KYC, Machine Learning, Mitek, Mobile ID Verification, Mobile Identity Verification, Mobile payments, Mobile Verify, MoneyGram, Nocks, payments, personal data, self-sovereign identity
Tuesday April 17 2018, Daily News Digest
News Comments Today's main news: dv01 to expand into mortgages. Zopa prepares for next-gen bank launch. JD Finance raises over $2B. Moody's assigns ratings to Prospa. Namaste Credit raises $3.8M. Today's main analysis: Venture capital reaches record high. Today's thought-provoking articles: Interview with Prosper's CFO. Fintech lenders give mortgage borrowers an edge. Hexindai's IPO prospectus. Where top European banks are investing. What Aussie […]
Today's main news: dv01 to expand into mortgages. Zopa prepares for next-gen bank launch. JD Finance raises over $2B. Moody's assigns ratings to Prospa. Namaste Credit raises $3.8M.
Today's main analysis: Venture capital reaches record high.
Today's thought-provoking articles: Interview with Prosper's CFO. Fintech lenders give mortgage borrowers an edge. Hexindai's IPO prospectus. Where top European banks are investing. What Aussie SME lenders have learned from U.S. lenders.
dv01 expands into mortgages. AT: "Acting as loan data agent for $275 million securitization. I'll say it again: This will be the year of increased securitizations."
Interview with Prosper's CFO. AT: "Usama Ashraf has a lot to say about Prosper's past and future, the personal loan market, investing with Prosper, and the blockchain. A great read."
How fintech lenders give mortgage borrowers an edge.
Mastercard looks to blockchain to fight fake identities.
How U.S. banks are preparing for GDPR.
Cross River selected as two-time winner of LendIt award.
Stash partners with Green Dot to be a challenger bank. AT: "I thought Stash was appealing before. This makes them even more appealing, but will they compete?"
How local banks are staying ahead.
Plaid rolls out Assets, Day 1 Certainty.
Zopa prepares for next-gen bank launch. AT: "Zopa's bank launch will be a big splash in a fairly decent-sized pool. Challenger banks are more popular in the UK than the U.S. Zopa has already started restructuring to make its banking introduction."
RateSetter review.
Finastra uses Microsoft Azure to take mortgage lending solutions to the cloud.
Nuggets to lead tech mission to China.
JD Finance raises over $2 billion.
Hexindai's IPO prospectus.
Where the top banks are investing.
Decentalized Ventures opens crypto P2P lending on Malta.
Fintech VC investment hits record $27.4 billion.
Botbird offers crypto investing with P2P lending.
Innovative mobile money services on the horizon.
Alchemy is a blockchain P2P lending startup to watch.
Moody's assigns Prospa rating.
How fintech lenders have learnt from the U.S.
Online small business lending is growing fast.
Australians getting short-changed on financial advice.
Namaste Credit raises rs 25 crore.
P2P lenders consider blockchain for risk mitigation.
5 benefits to P2P lending.
FINT: Chaning microlending in Nigeria.
Africa: Are personal loan products useful?
Malaysia: Robo-advisors are a step forward.
dv01 Announces Expansion Into Mortgages; Signs As Loan Data Agent For CSMC 2018-RPL2 (Crowdfund Insider) Rated: AAA
CFO Usama Ashraf Talks Borrowing and Investing with Prosper (LEndEDU) Rated: AAA
How fintech lenders give mortgage borrowers an edge (Market Watch) Rated: AAA
Cross River Selected As Two-Time Winner In LendIt Fintech Industry Awards (PR Newswire) Rated: B
Mastercard Eyes Blockchain for Fighting Fake Identities (Coindesk) Rated: A
How US banks are preparing for the GDPR (Tearsheet) Rated: A
Stash Teams with Green Dot to Become a Challenger Bank (Finovate) Rated: A
'In this market, it's disrupt or die': The innovations local banks are using to stay ahead (Orlando Business Journal) Rated: A
Plaid Assets and Day 1 Certainty: a win-win solution for digital mortgage (Plaid) Rated: B
Bank and P2P boards take shape as Zopa prepares for next gen bank launch (Global Banking and Finance Review) Rated: AAA
Ratesetter review: peer-to-peer lender's best rates, risks and more (Love Money) Rated: AAA
Finastra brings mortgage solutions to the cloud with Microsoft Azure (Finastra) Rated: A
Government chooses fintech start-up to lead UK tech mission to China (Internet of Business) Rated: B
China: WeiyangX Fintech Review (Crowdfund Insider) Rated: AAA
Hexindai: Don't Miss Out On A Good Target Because Of Industry-Wide Concerns (Seeking Alpha) Rated: AAA
Where top European banks are investing in fintech – CB Insights (Fintech Futures) Rated: AAA
New Company Opens Door to Malta's Crypto Market (Nasdaq) Rated: B
Venture capital investment in FinTech reaches record $ 27.4 billion high (Consultancy) Rated: AAA
BotBird – Your cryptocurrency investment partner for modern trading! (AMBCrypto) Rated: A
Trends: More innovative mobile money services on the horizon (The Edge Markets) Rated: A
4 Blockchain Startups to Keep an Eye On (Coin Announcer) Rated: B
Online small business lender assigned Moody's ratings (Australian Broker) Rated: AAA
How Australia's fintech SME lenders have learnt from the US (Finder) Rated: AAA
Online small business lending growing fast (Australian Broker) Rated: A
Australians getting short-changed for financial advice, inquiry hears (Rueters) Rated: A
Namaste Credit raises ₹25 crore (Business Line) Rated: AAA
Insurance consortium partners Cognizant for data-sharing blockchain (VCCircle) Rated: A
5 Benefits of Online Peer-to-peer Lending That You Didn't Know (Entrepreneur) Rated: B
Meet FINT, the FinTech Company that wants to change micro-lending in Nigeria (Nairametrics) Rated: AAA
Personal Loan Products – Are they useful for repaying credit or a bad debt? (The South Africa) Rated: A
Robo-advisor seen as a step forward for investors (The Malaysian Reserve) Rated: A
dv01, the data management, reporting, and analytics platform that offers institutional investors transparency and insight into lending markets, announced on Friday it participated in its first mortgage securitization and acted as loan data agent for CSMC 2018-RPL2, a securitization of $275 million re-performing loans serviced by Select Portfolio Servicing (SPS). The company revealed it introduced the role of Loan Data Agent in 2016 and provides Loan Data Agent services for an aggregate securitized collateral balance in excess of $25 billion of online lending loans.
Recently, I had the privilege to pick the brain of the Chief Financial Officer (CFO) of an industry leading company in the fintech space. Usama Ashraf is the CFO of Prosper, the first peer-to-peer platform in the US that connects people who want to borrow with individuals and institutions that are looking to invest in consumer credit.
Q: What are some unique challenges that come with the job of managing the finances of Prosper?
A: If you look at our business today, we have a 10+ year track record. We launched in 2006, and we've done over $12 billion in cumulative loan originations. A key differentiator in this space is the ability to generate cash flow, and last year, we were cash flow positive for three consecutive quarters starting in Q2.
Q: How has the health of the personal loan market in the recent past impact Prosper's growth?
A: 2017 really allowed us to stabilize the business. We had stable funding. We had growth of over 30% on the platform, and as mentioned, we generated cash for three consecutive quarters. So, the business is now on a healthy footing, and we've returned to strong growth.
Q: Are you optimistic about the overall market in the next few years?
A: The total consumer credit market today is over $10 trillion. When you look at our originations last year, we did about $3 billion. The consumer credit space is a massive market, and it's also a key element of growth in GDP in the US. 70 percent of GDP comes from consumer spending, so consumer credit and spending is a massive part of the US economy. Since the US economy is mostly expected to grow over the next several years, we are optimistic about the opportunities that growth presents for us.
Fintech lenders reduced the time it takes to process a loan by roughly 10 days as compared with the average processing time for mortgages. For refinances, they're nearly 15 days faster than more traditional lenders.
In instances where a lender is seeing greater demand for loans, tech-based lenders are better at handling the larger inflow of applications. Double the application volume raised the loan processing time only by 7.5 days for fintech lenders, versus 13.5 days for traditional ones. Moreover, the researchers found that tech-based lenders lower their denial rates when there's a higher volume of applications.
In parts of the country where fintech lenders have a greater presence, existing borrowers are more likely to refinance. But the efficiencies created through their platforms make it more likely that borrowers will see an optimal result from a refinancing, including getting the market interest rate.
The default rate on Federal Housing Administration loans originated by fintech lenders is roughly 25% lower than traditional ones.
Cross River has been selected as the nation's Most Innovative Bank for the second year in a row at the LendIt Fintech Industry Awards, the world's leading annual event in financial services innovation, held in San Francisco at LendIt Fintech USA. Other nominees included BankMobile, CBW Bank, Marcus by Goldman Sachs and HSBC.
In an application released by the U.S. Patent and Trademark Office (USPTO) last Thursday, Mastercard describes a system in which a semi-private or private blockchain would be used to receive and store identity data, the pieces of which could include a "name, a street address, tax identification number" and more.
The company states in the filing, which was originally submitted in September 2017, that the tech could help it block the use of fake identity data within its systems.
On May 25, EU companies will no longer be able to collect and use personal data without the individual's consent, under the General Data Protection Regulation. U.S.-headquartered banks and fintech companies with global operations are anxiously preparing to comply with the new rules, anticipating a time when U.S. customers will demand the same protections from their home institutions.
Mobile financial services company Stash first revealed its plans to launch banking services in October of last year, positioning itself as a challenger bank with mobile-centric investment and retirement capabilities. And, as with all U.S.-based challenger banks, Stash will house the funds at a traditional bank. Today, the New York-based company announced it has selected Green Dot and its subsidiary bank, Green Dot Bank, Member FDIC, to keep user's funds safe.
Through the partnership with Green Dot, Stash will deliver debit cards with no overdraft fees and provide access to a network of free ATMs across the U.S. The app will also share insight into clients' financial health, with actionable advice on spending, saving, investing, and retirement via Stash Coach.
Many Central Florida bank customers nowadays want more than just the ability to move money around. David Stahl, senior vice president, SunTrust: We acquired an online lender called LightStream two years ago and that has been a huge opportunity for us. Personally, I used it. There is a need out there for consumers.
Today, we're thrilled to announce that our Assets product is out of beta and Plaid is officially approved to supply asset verification reports to Fannie Mae as part of their Day 1 Certainty initiative. This means that lenders can embed Plaid directly into their application experience and provide borrowers with a fast, seamless experience, reduce the time it takes a loan to close, and have peace of mind offered by Fannie Mae's protection against repurchase for key loan components. It's a win-win solution.
Using Plaid, borrowers can now share with lenders the data they need, directly from the source, including:
Bank account, transaction, and bank account owner information from multiple accounts and institutions in a single, standardized JSON report delivered via API
An auditable PDF version of the same information, also via API
The ability to permission secondary investors like Fannie Mae to securely retrieve the same data directly from Plaid, enabling programs like Day 1 Certainty
Zopa, the pioneering financial services company, has today announced a governance restructure in advance of launching its next generation bank.
The re-structure will establish separate boards for the Zopa P2P business, proposed bank (subject to banking licence approval) and Group in order to facilitate the increasing scale of the business, ensure good corporate governance and protect the interests of its customers.
The changes come with the appointment of two new board chairs as well as two new independent non-executive directors to the proposed bank. Christine Farnish will be chair of the P2P board and Peter Herbert will be chair of the proposed bank.
RateSetter was founded in 2010 by Rhydian Lewis (pictured) and has been used by more than 62,633 lenders, to lend more than £2.4 billion.
RateSetter will lend to either individuals or businesses. You start by deciding how much to lend: the average amount invested is £14,299, but you can start with £10.
You can borrow between £1,000 and £25,000 – depending on your circumstances.
Finastra is bringing its mortgage lending solutions to the cloud via Microsoft Azure. As part of the strategic alliance between the two companies to use Microsoft's enterprise-ready, trusted cloud platform as a base for a selection of Finastra's payments and retail banking technology, Finastra's Fusion MortgagebotLOS product is now available via the Azure cloud. As of today, US clients that access this service will realize streamlined access to their data, improved operational control and increased productivity.
Fintech start-up Nuggets has been chosen by the UK government and the Mayor of London to embark on two trade missions to China this year.
The company – which has developed a blockchain-based, e-commerce payments and ID platform – will help represent the Department for International Trade, the Greater London Authority, and the City of London Corporation on the trips.
According to a person with direct knowledge of the matter, JD Finance is nearing the closing of a new round of financing of over $2 billion (¥12.6 billion).
After this investment, the market valuation of JD Finance is expected to exceed $20 billion (¥126 billion).
CHINA SECURITIES led this financing, which was followed by Oriza Holdings and other institutional investors.
Hexindai Inc. had their IPO on NASDAQ on November 03, 2017, raising US$50 Million. HX is a fast-growing consumer lending marketplace facilitating loans to meet the increasing consumption demand of the emerging middle class in China.
This "online and offline" model led to significant business growth for HX since its inception. The total amount of loans facilitated through the online marketplace increased by 54.4% from Q2 2016 to Q2 2017. Also, the company has experienced a business shift from collateral loans (auto loans etc.) to credit loans, which drives the boost in the the company's customer base growth:
Source: HX's IPO prospectus
Research company CB Insights analysed the private market fintech investment activity of the top European banks and their venture arms, by assets under management (AUM), from 2012 to Q2 2018 (as of 11 April 2018).
According to the graphic below, created by CB Insights, European banks are placing strategic bets across wealth management, lending, payments and regulatory technology and also blockchain.
Source: Fintech Futures
Decentralised Ventures is a partnership between Malta-based Initial Coin Offering (ICO) specialist TokenKey and token research and Blockchain consultancy Strategic Coin.
Decentralised Ventures offers a complete list of end-to-end services for any organization involved in or looking to enter the token, crypto or peer-to-peer lending markets.
Confidence in FinTech has accelerated venture capital financing in the industry to a record level of $27.4 billion in 2017 – a growth of 18% from 2016. According to a recent report from consulting firm Accenture, the growth in FinTech investment has been driven by a surge in deal value in the US, UK and India.
In the US, the value of venture capital investment deals jumped 31% to $11.3 billion in 2017. Meanwhile, in the UK, deal values almost quadrupled to $3.4 billion, while India saw a near quintupling of investment to $2.4 billion in 2017. The volume of global FinTech deals also rose greatly, from about 1,800 in 2016 to almost 2,700 in 2017.
Source: Consultancy
BotBird is introducing Social Peer-to-Peer Lending Market where the community members can make use of their digital assets as collateral to get cash. This involves no risk and is equally benefited to both the borrowers and lenders. The main goal of BotBird is to connect the lenders and borrowers across the world through the P2P lending marketplace.
Lenders can earn up to 50 percent monthly interest while trading.
According to McKinsey & Co's global banking report released last month, digital finance has the potential to reach more than 1.6 billion new retail customers in emerging economies and increase the volume of loans extended to individuals and businesses by US$2.1 trillion (RM8.1 trillion).
According to statistics provided by Bank Negara Malaysia, the national transaction value per capita for e-payments amounts to nearly RM613.6 million last year, up 11.4% from RM550.6 million in 2016. There was no data for the total number of mobile payments made in 2016, but the central bank stated last year that it came to about RM500,000.
2. Alchemy
Founded by 21-year-old entrepreneur, Justin Jung, the P2P lending platform is looking to take existing P2P concepts and completely disrupt them by creating a CDO (collateralized debt obligations) market that will allow tranched investments within the platform.
Leading global ratings agency Moody's has assigned ratings to Prospa's Australian small business loan asset backed securities (ABS) trust.
This is the first rated ABS issuance backed by unsecured small business loans in the Australasian market. It is also one of the few that have been issued globally and rated by one of the big three credit rating agencies.
A total of $83.25million in debt securities were rated as follows: $64.8m Class A Notes assigned A3; $14.6m Class B Notes assigned Ba2 and $3.7m Class C Notes assigned B3.
Speaking at the AltFi Australasia Summit 2018, CEO of OnDeck US Noah Breslow discussed how it first launched in the US over a decade ago in 2007. And while it only launched its Australian lending business in 2015, the Australian small business lending market has traversed the same course as the US market in a markedly shorter time.
Source: OnDeck
While the actual alternative small business lending market remains largely unregulated, other initiatives put in place, such as the pursuit of open banking and comprehensive credit reporting (CCR), will have a marked impact on the sector.
In the US, 70% of SMEs perceived there to be more small business lending options than five years ago, but that number is only 30% in Australia.
The online small business lending market in Australia is growing at a faster rate than the US market did at a similar stage of development, the CEO of OnDeck Global has said.
Speaking at the AltFi Australasian Summit in Sydney, CEO Noah Breslow said it could reach more than $2billion in annual originations by 2020.
He said that despite over 6,000 banks offering small business lending options in the US, online lending to small businesses has flourished.
Australia's four biggest retail banks and wealth manager AMP (AMP.AX) have paid hundreds of millions of dollars in compensation to customers for poor advice over the past decade, a major inquiry into the financial sector heard on Monday.
Financial advice came under scrutiny at the start of a fortnight of hearings by the Royal Commission into corporate wrongdoing and abuse of power by Australia's financial sector, which could lead to greater regulation and criminal charges.
Namaste Credit, a digital marketplace and technology platform for SME loans, has raised about ₹25 crore ($3.8 million) in a Series A round from Nexus Venture Partners. It will use the money to expand to new markets, improve its technology and data analytics platform and scale the business. The company plans to increase its channel partner programme across India and expand its technology licensing partnerships with leading lenders globally.
Finzy gets ₹8.5-crore funding
Finzy, a peer-to-peer lending platform, has raised about ₹8.5 crore ($1.3 million) in a pre-Series A funding round from industry investors. It hopes to close a second round of fund raising in two months. The company will use the money to speed up growth by investing in technology, making the process leaner and faster, and in building the team. It will also use a large part of the money to expand across Tier-I cities.
(VCCircle) Rated: A
Indian peer-to-peer (P2P) lending startups are considering a private blockchain to facilitate sharing of information as a risk-mitigation strategy, and to identify fraudulent loan applications.
Easier and Faster
Lower Eligibility Criteria
Lower Interest charges
No hidden fees and charges
No penalty for repaying your loan before stipulated time
The guys behind FINT
FINT.ng is run by a team of 4; Chiwete John-Njokanma is the company's Chief Executive Officer, Nnamdi Okeke is the Chief Technology Officer, Eskor Toyo is the Chief Operating Officer while Reva Attah is Chief Strategy Officer.
The only restriction so far is that everyone who uses the platform must have a bank account that is linked to a BVN. Users can borrow anything between N60,000 and N2 million at rates as low as 8% for 3 – 12 months, which in Nigeria is remarkable because in the current environment, a loan from a formal financial institution with 20% interest would be a good deal.
If you're one of these people you might be interested in Wonga's new personal loans. The personal loan offers a repayment plan lasting up to 6 months, affording customers more flexibility through small monthly repayment instalments.
The issuance of robo-advisory licences by the Securities Commission Malaysia (SC) would allow regulators to provide high quality and cheaper investment advice for customers.
Main Street Capital Sdn Bhd CEO Julian Ng said through a robo-advisory licence, regulators are able to reach out to wider ranges of investors where previously only wealthy clients could afford the investment advice.
Author Allen TaylorPosted on April 17, 2018 Categories Alchemy, australia SME lending, Banks, Blockchain, BotBird, Challenger Banks, cross river bank, crypto lending, Daily News Digest, Decentralized Ventures, DV01, Featured, financial advice, Finastra, FINT, GDPR, Green Dot, Hexindai, identity verification, IPO, JD Finance, MasterCard, microlending, moody's, mortgage securitization, Namaste Credit, News, Nuggets, online lenders, Online Lending, p2p India, p2p lending, personal loans, Plaid, Prospa, prosper, RateSetter, Robo-advisors, securitization, small business lending, SME lending, Stash, Venture capital, Zopa
How Blockchain is Changing Alternative Lending
Cryptocurrencies entered the mainstream in 2017. The million dollar fortunes made and 1,000% returns hogged the headlines. But behind all the hoopla is blockchain, the technology behind cryptocurrencies, quietly and steadily changing the business universe. The technology has myriad applications. Also called distributed ledger technology (DLT), it can reimagine entire industries in hitherto unknown ways. […]
Cryptocurrencies entered the mainstream in 2017. The million dollar fortunes made and 1,000% returns hogged the headlines. But behind all the hoopla is blockchain, the technology behind cryptocurrencies, quietly and steadily changing the business universe. The technology has myriad applications. Also called distributed ledger technology (DLT), it can reimagine entire industries in hitherto unknown ways. From issues of security to scalability and cost effectiveness, entrepreneurs are incorporating DLT to bring the benefits to the masses.
Similarly, alternative lending has changed how Americans borrow. Small business and consumer lending was hard hit when banks decamped en masse after the 2008-09 crisis. Online lending came to the fore with players like Lending Club, SoFi, OnDeck building multi-billion dollar lending platforms.
Almost 10 years since, alternative lending is growing but not at the speed which experts had imagined. Morgan Stanley had predicted Trillion Dollar funding via such platforms in the coming future. The sector is nowhere close to these figures. Aside from corporate governance issues, fraud and high default rates have been the true bane of the industry. IdentityMind, a RegTech company, reports that fraud caused 12% of losses in P2P online lending. That translates to almost 1.2% of total funding, which is also 2-3 times as compared to banks or retail cards.
Blockchain and Alternative Lending
Blockchain is an open, distributed ledger that records transactions between two parties in a verifiable and efficient manner. Putting digital assets (contracts, documents, financial data, etc.) on blockchain technology helps build a wall against unauthorized access and prevents fraud. Blockchain helps maintains transparency between entities; it could be between buyer and seller, business and employee, or customers and investor.
A World Economic Forum report predicts that, by 2025, 10% of GDP will be stored on blockchains. Amalgamating blockchain and alternative lending has not only a technical appeal but is business common sense. Online finance decentralized lending allows savers to directly fund borrowers; they took away the middlemen, traditional banks, who otherwise used to take the major benefit away from the transaction. Now, it is the alternative lending sectors' turn to leverage the power of decentralization via blockchain.
The Benefits of a Decentralized Distributed Ledger
Currently, alternative lenders hold their complete data centrally, in either their own servers or on Amazon Web Services-type cloud structures. This is a honey pot for hackers. In 2017, an Equifax data breach collected 145.5 million users' data. The breach was caused by a software flaw that allowed the hackers to take over the company's website.
Lenders have access to extremely sensitive data such as bank account numbers, social security numbers, and other personal identification information. Losing control of that data can compromise the entire financial history of an individual or a business. Blockchain eliminates the risk by storing information on a decentralized ledger. So a massive data hack would never be possible because it will be practically impossible for the hackers to have access to each and every part of the distributed record.
A distributed ledger also provides transparency and allows that all transactions are recorded are on the blockchain in an immutable manner. Thus, backdating of contracts is not possible under any circumstance (Re: Lending Club backdating loans scandal). Corporate governance improves across the board, and investors and regulators can breathe easy knowing that the data they are seeing is the absolute truth.
Digital loans can be tokenized via blockchain and be constructed as a tradeable security. This, in effect, allows securitization for loans; so you don't need to wait till you are a billion dollar fintech lender. Othera, a blockchain lending platform, is doing just that. It creates an online marketplace where lenders can tokenize their cashflow by putting the loan on the blockchain and selling it to investors.
Apart from this, blockchain technology is more user-friendly as it is open to the public with no authentication or permission issues. It is scalable and cost efficient for businesses to incorporate into their existing systems and allows for all stakeholders to easily extract relevant information about their transactions without risking the entire system's database.
Identity theft is one of the biggest reasons for online lending fraud. That is exacerbated by the fact that the lender and the borrower usually never meet in real life. The old traditional way was to go through the lengthy and costly process of physical verification. But in the age of blockchain, by merging identity verification with decentralized blockchain principles, a tamper proof digital-id can be used as the digital signature for recording and validating all transactions.
How Blockchains Are Revolutionizing Lending
Alternate lending has seen many iterations and pivots since inception. From being a pure peer-to-peer platform, the sector has metamorphosed to one dominated by balance sheet lenders and institutional investors. Now, the era of Alt Lending 2.0 is emerging, which is going to be dominated by players who have co-opted blockchain as an integral part of their business processes.
Here is a brief description of some companies that are doing innovative work in the field.
The ERP giant is experimenting with blockchain on an enterprise level. One of its applications is focused on KYC. The distributed ledger solution is to store a customer's ID and link it to their personal documents, which are not stored on the blockchain. Once the transaction is cleared, the link is established and the documents are accessed to prove identity and the onboarding process continues. In this, SAP provides a solution to KYC issues, with running proof of identity. Thus, there is a single source of truth for all parties.
WishFinance is a Singapore- and Honk Kong-focused lender to merchants and small businesses. It is keeping its entire loan portfolio on a public blockchain to push transparency for investors. The investors can evaluate the performance of a loan at anytime (the data is anonymized so no identifiable borrower information is shared).
SALT is reversing the model by allowing crytpocurrency holders to cash out without actually selling their crypto assets. It allows loans for Bitcoin. The borrower can redeem his crypto assets once the loan is paid.
Blockchain has the power to allow alternative lending companies to scale effortlessly and solve fraud and KYC issues haunting the industry. Lenders who are able to get their blockchain game right should see renewed investor interest and benefit from higher unit economics.
Author Allen TaylorPosted on April 16, 2018 Categories alternative lending, Analysis, Banks, Blockchain, business lending, consumer lending, cryptocurrencies, data security, digital ID, Digital Identity Verification, distributed ledger, Equifax, Featured, identity verification, IdentityMind, KYC, Lending Club, lending fraud, Morgan Stanley, ondeck, Online Lending, Othera, p2p lending, personal data, Salt, SAP, SoFi, tokenization, WishFinance
How Identity Verification Maturity Impacts Loan Approval Speed
There were an estimated 1 million cyber attacks targeting online lending transactions in 2016, with total losses projected to be above $10 billion. This fear has some online lenders setting policies for new account creation that are too strict. For instance, Kabbage CEO Rob Frohwein recently shared that his company was rejecting as many as […]
There were an estimated 1 million cyber attacks targeting online lending transactions in 2016, with total losses projected to be above $10 billion. This fear has some online lenders setting policies for new account creation that are too strict. For instance, Kabbage CEO Rob Frohwein recently shared that his company was rejecting as many as 3% of its daily online loan applicants but noted that that some legitimate borrowers were likely included in the lot. Kabbage is not alone in establishing fraud policies that are too conservative; it's become the norm for many lenders. Fundamentally, they don't have the confidence – even after doing identity data checks – that a borrower is who they say they are. But it's possible to be smarter about fraud without alienating potential applicants – and sacrificing the lifetime value of a good relationship.
Sophisticated online lenders are adopting more advanced fraud prevention measures that keep fraud in check without being overly conservative, and declining good borrowers. Specifically, they are refining their identity verification strategies with more mature solutions that utilize quality data, sophisticated data science, secure pipelines capable of ingesting these quality data sets and machine learning models. These evolved practices help them expedite applicant onboarding and approvals while safeguarding against fraud.
When talking about identity verification maturity with customers, I find that it's helpful to discuss it using a progressive 4-stage scale. As companies advance up the scale, the faster they are able to move applicants through the pipeline, with confidence they are minimizing fraud. Each stage builds on the previous one, allowing organizations to ensure higher accuracy as they move forward.
The stages are broken down like this:
Stage #1: Not identity proofing yet. Most if not all online lenders have progressed past this stage and take at least some steps to verify the authenticity of applicants. However, in smaller transaction markets, or niche spaces, it's common for organizations that have yet to be hit by fraud to do no identity proofing.
Stage #2: Verifying a single identity attribute. The first step that online lenders take to protect themselves is often rather minimal, they focus on a single factor to authenticate new borrowers. Common data points to check include the age of email (to verify its been in use for a long period of time), just an address or phone number.
Stage #3: Multiple identity attribute verification. Online lenders that verify multiple attributes are not only able to authenticate applicants more confidently, but also more readily identify good borrowers.
Stage #4: Holistic identity verification. This stage involves verifying multiple identity attributes aren't just accurate but all link back to the applicant applying for the loan. In a single search it's possible to verify a name matches a home address, matches a phone number, matches an email and so on. When searching for linkages between the person and the address, email, phone and related people, it is a significant signal of risk if these cannot be established.
The use cases for identity linkages are broad. Take, for example, synthetic identity theft. In this scenario, a criminal combines real (often stolen) and fake information to create a new identity, which is used to open fraudulent accounts and conduct fraudulent financial transactions. Because "real" details can be verified alone, it is imperative to verify all of an applicant's attributes connect together.
Stage 4 also unlocks a powerful new set of opportunities to leverage machine learning, sophisticated data analysis and data science that aren't possible with simpler methods of identity verification. When a whole identity is considered, a world of networks, history and patterns can begin to be tapped for increased speed and accuracy.
Identity networks are extremely valuable to online lenders because they can see signals across millions of transactions and multiple applicants for a real time understanding of identity element velocities, transactional frequencies, and linkage histories. Machine learning and sophisticated data science can be applied to analyze these transactions to learn and adapt to patterns across different industries.
For the fastest identity verification, some identity data services are distilling the result of their sophisticated verification processes into a single number or a score for easy, real-time rule building or integration into a risk model.
Find More Borrowers Faster with Holistic Identity Verification
In an age where borrowers have so many lenders to choose from, lenders need to have a seamless onboarding process or risk losing borrowers to the competition. Key to this ability is having confidence in an applicant's identity. One of the simplest and fastest ways to do so is holistic identity verification.
When every applicant has the potential to become a return borrower, it's worth taking a step back and to make sure you are not too risk averse. Having a mature identity verification practice enables lenders to provide faster and more loan approvals for legitimate applicants, reduce fraud and lower good borrower rejection so they can compete and thrive.
Tom Donlea leads the global marketing efforts of Whitepages Pro, the worldwide identity verification data provider for risk management in banking and online lending. With over ten years of online payments and risk experience, he previously was the founding executive director of the Merchant Risk Council.
Author Allen TaylorPosted on March 19, 2018 Categories Analysis, Artificial Intelligence, data, Featured, fraud detection, identity verification, kabbage, lending fraud, loan approvals, Machine Learning, online lenders, Online Lending, Whitepages Pro
How to Avoid the Downstream Effects of Data Breaches
It seems like there's a news story almost daily about data breaches involving retailers, credit bureaus, or government entities. While many of the stories focus on the immediate consequences for consumers, the downstream effects of these data breaches can wreak havoc on online lenders and their customers. The trouble for lenders often starts when fraud […]
It seems like there's a news story almost daily about data breaches involving retailers, credit bureaus, or government entities. While many of the stories focus on the immediate consequences for consumers, the downstream effects of these data breaches can wreak havoc on online lenders and their customers.
The trouble for lenders often starts when fraud teams respond too aggressively to a major data breach. By setting overly conservative identity verification screening rules, for example, lenders can end up rejecting good customers, resulting not just in the loss of immediate business but also the potential for long-term customer revenue. Once they are denied a loan that they probably should have been approved for, customers are unlikely to return and certainly won't be likely to recommend the lender to others.
While it's a difficult balance to strike, there are proven methods for lenders to confidently verify a customer's identity in the era of constant data breaches. Here are three rules of thumb:
#1. Assume every identity has been compromised
In the first half of 2017, the number of data breaches climbed 29 percent. From the Republican National Committee contractor whose breach exposed voting data on nearly 200 million Americans to Verizon's breach that affected more than 14 million customers, data hacks are increasing in frequency and severity across all industries.
The recent breach of credit reporting giant Equifax is another example. Reported by the Wall Street Journal as the largest social security data breach in history, approximately 143 million U.S. consumers' confidential data, including social security numbers, names, birth dates, and addresses were compromised. What's more, the breach exposed the credit card numbers of 200,000 consumers as well as "dispute documents" with personal information of another 180,000.
Because personal data of every kind is readily available to fraudsters, online lenders face significant identity verification challenges. They need smarter systems to allow borrowers to use their own (likely compromised) data while being able to recognize when criminals are using the same data illegally.
#2. Go beyond Social Security Numbers
For many online lenders, the social security number has long been regarded as a key indicator of identity. But if it wasn't made abundantly clear by the Equifax data breach, social security numbers (SSNs) can no longer be a trusted piece of identity data. In fact, SSNs were never meant to serve this purpose in the first place. They were created solely as a way to keep track of an individual's earnings for social security and benefits purposes.
So, what do you do if SSNs are a key customer identifier for your business? Start incorporating modern identifiers into your verification process. Those include home address, email, phone, and IP address. Better yet, verify all of these elements and link them back to the customer.
#3. Confirm Whole Identities by Linking Identity Data Attributes Together
While it's easy to use and piece together stolen identity data, it is impossible to fabricate the linkages that effectively mimic a real person. Legitimate borrowers can be confirmed by verifying many identity data elements and ensuring they all connect to the individual behind the transaction, clearly distinguishing them from bad actors whose data elements won't correlate properly.
Linkage analysis can include connecting name, address, phone, IP, and other non-personally identifiable information (non-PII) data.
Some positive signals include things like:
an email address age of more than 720 days
an IP address within 10 miles of the physical address
a match between phone and address
a match between email and name
a match between phone and name
a match between address and name
And common risk signals include:
a mismatch between linked email, phone, or address details
an email address less than 90 days old
a non-fixed VoIP or toll free phone number
a phone country code and physical address mismatch
invalid phone, email, or address info
a proxy IP address
Eva Casey Velasquez, President and CEO of the ID Theft Resource Center, which provides non-profit resources and support to victims of identity fraud, has recommended businesses take action with multi-factor authentication processes. "We are encouraging businesses to be fearless in their security," she said. "At the end of the day, it is your customer base that you are helping."
The rate of data breaches continues to pick up speed with no end in sight. Lenders that fortify their fraud management strategies with a multi-layer approach will be able to avoid reactive decision-making in the aftermath of a data breach.
Just because the personal data of your borrowers is available on the dark web doesn't mean that verifying their identity is hard or impossible. It just means that basic identity data attribute verification won't work and whole identity verification will be required. Your teams will appreciate their newfound ability to excel through the wake of the next data breach and your growing base of happy customers will be more apt to refer your business to a friend.
Author Allen TaylorPosted on March 8, 2018 Categories alternative lending, Analysis, cybercrime, Cybersecurity, data breaches, data security, digital identity, Digital Identity Verification, Equifax, Featured, fraud, ID verification, identity verification, online lenders, Online Lending, Whitepages Pro
Wednesday January 3 2018, Daily News Digest
News Comments Today's main news: GreenSky raises $4.5B in equity, becomes most valuable online lender. Funding Circle has eye on IPO at 2B GBP valuation. P2P lenders in India blame lending limit on rising costs. GN Compass wants to disrupt lending liquidity in Canada. Today's main analysis: Can Mifid II spur growth in European ETF market? Today's thought-provoking […]
Today's main news: GreenSky raises $4.5B in equity, becomes most valuable online lender. Funding Circle has eye on IPO at 2B GBP valuation. P2P lenders in India blame lending limit on rising costs. GN Compass wants to disrupt lending liquidity in Canada.
Today's main analysis: Can Mifid II spur growth in European ETF market?
Today's thought-provoking articles: What 2018 means for marketplace lenders. Lend Academy predicts 2018. Why one former Netflix executive is betting on LendingClub. Outlook for fintech in 2018.
Who's the most valuable online lender? AT: "This is proof that alternative lending still has surprises. That forces me to ask, What other surprises are store for the industry in 2018?"
What does 2018 mean for marketplace lenders? AT: "The focus here is on Prosper, OnDeck, and LendingClub. While it's an interesting read, Lend Academy's analysis of 2017 and 2018 is a better one."
Predictions for 2018. AT: "From Lend Academy. Peter Renton doesn't just predict the coming year. He also looks back at 2017 to see how many predictions he got right. Four out of seven at least partially right, which isn't bad. Regarding his 2018 predictions, #1 is a no-brainer, #3 is somewhat bold but conceivable, #4 is likely and a fear of mine as well, Square is a tech giant? #6 is entirely likely, and probable."
The top 10 most important MPL stories of 2017. AT: "From Lend Academy, again."
An ex-Netflix exec bets on LendingClub. AT: "An interesting comparison, but LendingClub has to push through the veil."
Ousted SoFi CEO is back. AT: "Interesting comment on why it matters."
Affirm's business is marketing. AT: "Of course."
Where does alternative lending go from here?
RIAs are betting more on alternative investments.
2 alternative lending charts that surprised us in 2017.
Silicon Valley doesn't understand banking and fintech.
Will future core banking systems be open source?
Will banks buy into credit union fintech?
Another 2018 fintech prediction.
Bankers nervous about credit union regulator for head of Consumer Financial Protection Bureau.
Funding Circle plans IPO. AT: "I'm glad to see somebody thinking about an IPO rather than an ICO."
Urban Jungle raises 1M GBP. AT: "Congratulations."
Moneywise reveals top financial resolutions.
IFAs fight back against digital investment management.
Proplend looks back at 2017 successes, announces 2018 plans.
5 alternative investments.
Is 2018 the year for tech IPOs?
Will Mifid II spur Europe's ETF growth?
Fintech outlook for 2018. AT: "The Finanser is a banking blog with interesting insights from time to time on fintech and technology for banking."
Top 10 blockchain companies.
P2P platforms blame lending limit on rising costs.
AnyTimeLoan, Foyr, and Imanis fund raises.
Crowdo infographic: 2017 milestones.
GN Compass using ICO to disrupt lending liquidity.
Older Canadians don't trust P2P lending.
Opera browser invests on Kenyan OPay.
Who's the Most Valuable Online Lender? After This Deal, It's GreenSky (WSJ), Rated: AAA
What 2018 Will Mean For Marketplace Lenders (PYMNTS), Rated: AAA
Marketplace Lending Predictions for 2018 (Lend Academy), Rated: AAA
The Top 10 Most Important Marketplace Lending Stories of 2017 (Lend Academy), Rated: A
Ex-Netflix Exec Thinks This Fintech Company Has Netflix-Like Potential (The Motley Fool), Rated: AAA
Ousted SoFi CEO is back with a new startup (Axios), Rated: A
Affirm's big business for 2018 is marketing (Tearsheet), Rated: A
Where Does Alternative Lending Go in 2018? (Hackernoon), Rated: A
Alt investments on the rise among RIAs (InvestmentNews), Rated: A
5 fintech charts that surprised us this year (Tearsheet), Rated: A
What Silicon Valley Misunderstands About Banking & Fintech (The Financial Brand), Rated: A
Will tomorrow's core banking systems run on open-source software? (American Banker), Rated: A
For fintech owned by a CUSO, will banks buy? (Banking Exchange), Rated: A
Fintech Predictions For 2018 (Financial Advisor), Rated: B
Bankers anxious as Trump mulls credit union regulator for CFPB (American Banker), Rated: B
UK's Largest P2P Lender Funding Circle Said to be Planning IPO at £2 Billion Valuation (Crowdfund Insider), Rated: AAA
Urban Jungle Raises £1M in Seed Funding (FinSMEs), Rated: A
Moneywise reveals top 2018 financial resolutions for UK adults (London School of Business & Finance), Rated: A
When IFAs fight back against digital investment management (WhatInvestment.co.uk), Rated: A
Proplend Looks Back on 2017 P2P Successes & Announces 2018 Plans (Crowdfund Insider), Rated: A
5 alternative investments to the stock market (BM Magazine), Rated: B
Could 2018 be a bumper year for tech IPOs? (Computer Business Review), Rated: B
ETF providers hope Mifid II will spur European growth (Financial Times), Rated: AAA
The FinTech outlook for 2018 (The Finanser), Rated: AAA
Top 10 Companies of the Blockchain Industry in 2017 (Coin Telegraph), Rated: A
P2P players blame lending limit for rising costs (Business Standard), Rated: AAA
P2P lender AnyTimeLoan, prop-tech startup Foyr, tech firm Imanis raise funds (Deal Street Asia), Rated: A
Crowdo Recaps 2017 Milestones: 3,500+ Projects Funded (Crowdfund Insider), Rated: A
Meet GN Compass: The ICO Attempting to Disrupt Liquidity In The Lending Market (Equities.com), Rated: AAA
Older Canadians still leery of fintech despite flood of services, RateHub finds (IT Business), Rated: A
Internet firm Opera bets on Kenyan to steer Africa Fintech (Business Daily), Rated: A
Financial-technology firm GreenSky LLC raised new equity from Pacific Investment Management Co. in a deal that valued the digital lender at nearly $4.5 billion, said a person familiar with the matter.
It vaults GreenSky over Social Finance Inc. to become the most highly-valued online lender in the U.S. It also makes the Atlanta company the second most valuable privately held U.S. fintech company behind Stripe Inc., which processes payments for Internet businesses.
Pimco, the Newport Beach, Calif., money manager, invested at a valuation roughly 25% above the $3.6 billion GreenSky fetched in 2016.
2017 was a tough year for some of the biggest names in alternative financial services in the U.S. – Prosper, OnDeck and LendingClub, in particular.
Breslow is hyping OnDeck's future of partnerships with mainstream baking players – in particular, calling out a renewed partnership with JPMorgan Chase in August to expand the banks' SMB lending reach.
Prosper, perhaps unsurprisingly, is focused on remaining prosperous, as measured by profitability and further developing its new securitization platform.
LendingClub finally got investors to show them some love – and after its record low following its analyst day earnings accounting, stock jumped 15 percent in mid-December and has managed to hold relatively stable.
First, let's review my predictions I made exactly one year ago.
2017 will be the year of the bank partnership
I would say I was partially right on this one.
The OCC Fintech Charter will receive a positive reception
So, while many of the fintech platforms supported the charter there was no real positive movement this year.
Lending platforms will offer banking products
While we had a couple of platforms offering credit cards for the most part this prediction failed to materialize.
One large platform will be acquired
Student lender Earnest was acquired by Navient in a deal announced in early October.
There will be no new IPOs this year
I was almost right on this one but one US lending platform did have an IPO in 2017.
China will become an important source of capital outside the USA
I got this one right.
Artificial intelligence will take center stage
I think I read more articles about AI this year than in the previous five years combined.
My 2018 Marketplace Lending Predictions
Five top 25 banks will launch their own online lending platforms
Banks have realized that if you want to provide successful loan products today you need to have an online presence.
Two new pieces of legislation will be passed that will benefit the industry
One of the top five (non-bank) online lending platforms will be acquired
A major lending platform will get hit with a cyber attack
Here is the one prediction where I really hope I am wrong.
The tech giants consolidate their positions in online lending
Amazon, PayPal and Square have all started to roll out various online lending offerings to their huge customer bases.
2018 is the year of product line expansion
Messaging apps start to get integrated into online lending
Mike Cagney is Gone as CEO of SoFi Effective Immediately
The Cleveland Fed Retracts Their Report on "P2P Lending"
Prosper Finally Closes Their Big $5 Billion Deal
Renaud Laplanche is Back with a New Consumer Lending Platform Called Upgrade
The New Breed of Small Business Lenders: Amazon, Paypal and Square
The Fastest Consumer Lenders to $1 Billion in Originations
CFPB Announces No-Action Letter to Upstart
The OCC Publishes Details on the Fintech Charter
Bills Being Introduced to "Fix" Decision in Madden v. Midland
Takeaways From LendingClub's First Ever Investor Day
Netflix has completely disrupted the entertainment industry, sending large incumbents scrambling to compete with its vast global scale.
How did Netflix pull this off? Several reasons, but one is certainly Netflix's unique culture, outlined in its now-famous Culture Deck.
That deck was constructed by Patty McCord, who spent 14 years as Netflix's chief talent officer.
The company McCord joined is Lending Club (NYSE:LC).
In the press release, McCord stated:
I see a lot of parallels between where Netflix was as a company 10 years ago, where LendingClub is today, and where it can go in the next 10 years. I'm attracted to LendingClub for the stellar people and the way it exemplifies the concepts of freedom and responsibility. Culture can help drive innovation in companies that are paving new ground and transforming legacy industries, like Netflix did and like LendingClub is doing today. … In our innovative world, I see marketplaces like LendingClub as the future.
Why it matters: If 2017 was the year in which VCs began to fire controversial execs, 2018 may be the year in which they're forced to decide on quick-turn second acts.
Affirm isn't just a payment method or a personal loan anymore — it's a marketing lever for merchants
Affirm sees every transaction at the point of sale — who is buying, what they're buying and where; it's a departure from the way credit is underwritten today, where lenders have no idea why borrowers need the money or how they'll use it
When most people think of alternative lending, they immediately think of payday loans and other abusive loan products. In the tech world, the first thing that comes to mind are online lenders: those who take loans traditionally originated in person and move them online. That was the first wave of alternative lenders — think LendingClub, Prosper, OnDeck, to name a few.
Based on the success of the RIA industry, the trend of breakaway advisers interested in exploring the independent channel continues to gain momentum.
Propagated by wirehouse branch management to keep their top producers in their seats, this false campaign is now being revealed as its exact opposite; there are more customizable solutions for RIAs to access and deploy alternative investments for their high net worth clients than ever before.
For example, to access alternatives on their own, RIAs in the past typically would be looking at $25 million AUM minimums just to reach cost-effective scale, and many alternative managers have $10 million individual minimums themselves.
Loyalty and rewards incentives may not be enough to make consumers like mobile payments, and it could be on retailers to find what would keep people coming back to their mobile wallets. Mobile payment adoption among Apple, Android and Samsung Pay today is low. Paying with cash or card works just fine for them, customers say.
Transparency is the big sticking point when it comes to why small businesses still prefer banks to online lenders.
There are some relevant lessons learned about behavioral finance and digital adoption discussed in the book "FinTech Innovation." One of the most important lessons is the distinction between digital banking winners and laggards over time.
Disruptive innovation is ultimately less important than sustaining innovation.
Digital is a 'pull' technology, while much of financial serves are 'push' market places.
Platforms win on digital: bundling is more important than unbundling.
The Distinction Between 'Push' and 'Pull' Marketplaces
Digital brings many benefits to streamline the processes in financial services, but front office disintermediation could easily create financial exclusion in the Western world because many households operate in a 'push' modality. Only the few self-directed consumers are comfortable enough to 'pull' financial products.
This is the reason why the growth of first mover Robo-Advisor solutions were initially very promising but then faltered, while firms like Vanguard and Charles Schwab can still grow fast on digital.
Being a 'pull' marketplace means using digital with a purpose, like looking for a specific product on Amazon. However, very few households would google for the next investment fund or business loan. Instead, the majority would ask a friend, a banking organization or an advisor about their recommendations.
Banks, long committed to keeping customer data private and their own code proprietary, are now opening up to fintechs and third-party developers in new ways.
Open-source projects are underway at Deutsche Bank, which made code from its Autobahn commercial banking software publicly available this fall, and at JPMorgan Chase, whose Quorum blockchain software is available in the open-source software repository GitHub.
Morales, CEO of QCash Financial, a credit union service organization (CUSO) owned by WSECU (formerly Washington State Employee Credit Union), says that constraint may be lessening based on the final ruling on payday lending issued by the Consumer Financial Protection Bureau in October.
Credit unions, however, are interested in the QCash small-dollar lending platform. Morales says that nine credit unions have signed up for the product and five are currently live with it.
Identity verification will be a priority in 2018, with 60 percent of online marketplaces and other websites adopting technologies and techniques for verifying new users' identities, the company predicts.
The Trump administration's consideration of J. Mark McWatters to lead the Consumer Financial Protection Bureau is stoking fears among bankers that he will show favor to credit unions once in office.
Funding Circle, a UK based peer to peer lender, is reportedly planning an initial public offering (IPO) for 2018. The news of the new listing is courtesy of SkyNews that reports Funding Circle will begin meeting with investment banks during Q1 of 2018 as they sign up underwriters for the deal. Shares are expected to list at some point in late 2018. If Funding Circle trades on an exchange it will become the first UK P2P lender to do so thus representing a seminal event in the online lending industry.
Urban Jungle, a London, UK-based insurtech startup, completed a £1m seed funding round.
Research from financial advice website Moneywise has revealed the top financial goals of its users for 2018.
Moneywise found that cutting down on unnecessary spending was the top financial resolution for 2018, with 18 per cent citing this as their main priority.
Starting or boosting cash savings was voted the second most popular financial resolution for 2018, with this goal being set by 11 per cent of Moneywise users, whilst 10 per cent plan to start investing for the first time or boosting investments in a Stocks and Shares Isa.
More robo-advice platforms are on the market than ever before, and the number will grow rapidly during 2018. A joint report from the FCA and the Treasury, published last June, found that 100 robo firms are either on the market already or in active development.
IFAs may well find this frustrating – even with professional credentials and years of experience, they are subject to more distrust and scrutiny than a number of untested algorithms. Worse, these algorithms may come to represent their primary competition: they offer lower prices, they open up access to financial advice, and there is a range of options available for customers minded to use them, with more to come.
On Tuesday, online platform Proplend gave its 2017 peer-to-peer lending year in review.
The majority of platforms gained full Financial Conduct Authority (FCA) authorization
Many platforms sought ISA Manager Status to launch Innovative Finance ISA (IFISA) – with Proplend being among the early adopters.
LendInvest withdrew FCA approval application and stepped down from the Peer to Peer Finance Association as it moved from all P2P activity
RateSetter's wholesale lending practices notably proved costly. The lender eventually withdrew from the P2PFA after breathing the association's operating principles
The lender went on to note its plans for 2018:
The redesign of Lender Dashboards, Proplend.com website and the launch of our Auto-Invest product
Initially Proplend Auto-Invest will be a low-risk (Tranche A), three-year, Innovative Finance ISA product targeting returns of c.5% each year
The lender has built a "healthy" loan pipeline which will be available on the platform from early 2018, subject to due diligence, valuations, and legals.
Gold and other Precious Metals
Backing and Staking in Poker
Peer-to-Peer Lending
After a couple of quiet years on the IPO front, the market could be ready to bounce back with Funding Circle said to be the first targeting flotation.
In January 2017 the P2P site surpassed a £1bn valuation thanks to an £82m funding round, led by the likes of Accel.
With distribution deals with the likes of the Royal Bank of Scotland and Santander, Funding Circle lent more than £1.7bn in 2017.
The London Stock Exchange revealed that 106 companies floated on its markets in 2017, raising £15bn, up 63% by number and 164% by value on 2016. These numbers mean that the LSE surpassed all European exchanges in the year by both IPO number and by money raised.
ETF trading has since spread to 25 exchanges across Europe, but no accurate record of activity has been required by regulators. About 70 per cent of ETF trading in Europe goes unreported because it occurs via private bilateral over-the-counter transactions.
This should begin to end from Wednesday with the introduction of sweeping European rules designed to strengthen protection for investors and improve transparency across the continent's financial markets. The package of regulations, known as Mifid II, requires comprehensive, detailed reporting of ETF trades.
The passive investment industry, which is dominated by BlackRock, State Street and Vanguard, are betting Mifid II will set their European businesses on a growth path akin to the US, where usage has spread far more widely and deeply. Assets held in US-listed ETFs stood at $3.5tn at the end of November, compared with just $790bn across all European-listed ETFs, according to ETFGI.
There are four big things for 2018 from a FinTech viewpoint that are obvious to me however, which are:
Getting down to business with Artificial Intelligence (AI)
Rationalising and cleansing core data structures
Continuing the digital drive
Distributed Ledger Technology (DLT) continues to rise
Therefore, rather than me making predictions, I thought it interesting to review the views of other commentators.
Jim also wrote another piece that nicely summarises Forrester's predictions for 2018 which include:
Banks not embracing Open Banking, but increasing partnerships with start-ups;
Faster moves to embrace Digital Banking whilst losing focus on face-to-face communications; and
Focus on back office transformation.
Saxo Bank's Payments business sent me a press release with their top three predictions, which are:
The demise of traditional, slow, expensive cross border payments
Payment Service Providers (PSPs) will help merchants to expand internationally
Tech giants move into banking
The total market capitalization of all the cryptocurrencies hit the $600 bln mark in December.
Source: Coin Telegraph
Coinbase is one of the top digital currency wallet and platform for exchange. Market capitalization: $2 bln (GDAX)
Ripple is a real-time gross settlement and currency exchange. Its main goal is to make an entire system devoted to money transferring. Market capitalization: $30 bln
Peer-to-peer lending (P2P) platforms have seen a rise in traffic as well as investor interest after registering themselves with the RBI. But they argue the Rs 1-million limit placed on lenders across all platforms is restrictive.
"With time, these limits are going to be relaxed by the RBI. These have been imposed in order to avoid rapid growth that could lead to systemic risk," said Ekmeet Singh, CEO, Lendbox.
Industry players want the RBI to raise the limit for individual borrowers and remove the limit for institutional lenders.
While Spice Digital is investing up to $3.9 million in AnyTimeLoan, prop-tech startup Foyr has raised $3.8 million from JLL and others. Also, Wipro has put in an additional $2 million in US-based tech firm Imanis.
Crowdo, a South East Asian online marketplace for P2P lending and crowdfunding, posted an infographic citing its 2017 milestones.
Collins: I left the railway, cashed out my pension and started my own lending company; Great North Capital Inc. We have successfully funded approximately 100 loans; primarily focusing on high risk clients. Based on my accumulative knowledge and experience in both banking and running Great North Capital, I started to develop the idea for a peer-to-peer lending solution where there is very limited risk to the investors (lenders) while making loans liquid. Also by having our own credit system for borrowers, they have the opportunity to improve their credit rating on the platform by making timely payments and having no delinquencies. At the same time, I was learning more about cryptocurrencies and blockchain technology. I quickly realized the huge potential of the blockchain and how it can solve the liquidity problem as well as securing an investor's principal capital; which are the main issues of current peer-to-peer lending platforms. I got in touch with Jean Pierre Rukebesha who immediately liked the idea and decided to come on board as co-founder and CFO. Hence GN Compass (Great North Compass) was born.
Between last year's official release of Android Pay, the increasing ubiquity of artificial intelligence (AI)-powered support platforms such as Sun Life's Ella, and the ongoing digital transformation of Canada's banks, Canadians have more opportunities than ever to integrate fintech into their lives – but according to financial comparison platform developer Ratehub.ca, the eldest among us aren't taking advantage.
According to the company's 2017 Digital Money Trends Report, released last month, fewer than half of baby boomers reported trusting robo-advisors, mobile payments, marketplace and peer-to-peer lenders, and rate comparison website, while in many cases millennials and generation X-ers were nearly twice as likely to do so.
Other findings from the report include:
Nearly twice as many millennials (44 per cent) and generation X-ers (42 per cent) reported trusting robo-advisors compared to boomers (23 per cent).
Nearly twice as many millennials (71 per cent) said they trust mobile payments compared to boomers (38 per cent). (62 per cent of generation X-ers said they trust mobile payments.)
Twice as many millennials (47 per cent) and generation X-ers (48 per cent) trust marketplace lenders compared to boomers (23 per cent).
58 per cent of millennials and 53 per cent of generation X-ers trust peer-to-peer lenders, versus only 32 per cent of boomers.
63 per cent of millennials and 60 per cent of generation X-ers trust rate comparison websites, versus 42 per cent of boomers.
Internet browser company Opera has picked Eddie Ndichu to drive its Fintech strategy in Africa even as it prepares to set up an office in Nairobi.
Opera has said that it is investing Sh10.3 billion ($100 million) in Africa's digital economy over the next two years and OPay is part of those investments.
In a statement Tuesday, Opera said that it had appointed Mr Ndichu as the managing director and vice president for Fintech in Africa.
Author Allen TaylorPosted on January 3, 2018 Categories affirm, Africa, alternative investments, alternative lending, AnyTimeLoans, Banking, Banks, Blockchain, CFPB, Coinbase, Credit Unions, Crowdo, cryptocurrency, Daily News Digest, ETF, Europe fintech, Events, Featured, fintech, Foyr, Funding Circle, GN Compass, GreenSky, ICO, identity verification, IFA, Imanis, IPO, Lend Academy, lendingclub, marketplace lending, Mifid II, mobile wallets, Moneywise, ondeck, Online Lending, OPay, p2p Canada, p2p India, p2p lending, Proplend, prosper, RIAs, Ripple, robo-advice, SoFi, Urban Jungle
In a Real-Time Lending Marketplace, Identity Data Enables Faster and Less Risky Transactions
When it comes to satisfying the consumer need for instant gratification, the internet has disrupted a number of industries. Take, for instance, online lending. RocketLoans, a subsidiary of Rocket Holdings (the parent of Quicken Loans), offers loan approvals in as little as 10 minutes with funding in under 24 hours. That might sound remarkable, but […]
When it comes to satisfying the consumer need for instant gratification, the internet has disrupted a number of industries. Take, for instance, online lending. RocketLoans, a subsidiary of Rocket Holdings (the parent of Quicken Loans), offers loan approvals in as little as 10 minutes with funding in under 24 hours. That might sound remarkable, but it's the new normal. Several other companies offer a similarly rapid approval process.
What's perhaps even more remarkable is that these online lenders aren't just targeting traditionally "safe" borrowers, those with long established credit histories and good credit scores. They're also promising the same speedy approval process to the more than 64 million "thin file" customers in the U.S., people who have little or no credit history and often aren't served by traditional banks and lenders. It's a huge potential opportunity in a market that's projected to reach $350 billion by 2020, but one that brings additional risk of fraud.
For online lenders, managing that risk is a challenge in what has become, essentially, a real-time marketplace. While they might want to take more time to review an application and verify the identity of the person behind it, lenders don't have that luxury. A survey by PwC, found that one in three borrowers not only place an emphasis on the speed of the application and approval process when choosing a lender but that they value it even more than a lower interest APR. The takeaway for lenders competing for their business is that borrowers have choices and they're not afraid to take their business elsewhere if they can get money faster.
But how can lenders meet the demand for rapid approvals without shortchanging the identity verification process? First, it's important to understand how online lenders come by their customers. While some capture leads directly through their own online storefronts or portals, many others purchase leads from online lending marketplaces (sometimes called ping tree marketplaces). The ping tree provides a centralized marketplace for multiple companies ranging from lead generators and wholesalers to retail recipients, matching providers and buyers based on transaction type, field requirements, and pricing – all within milliseconds.
When they evaluate leads for purchase, most lenders perform a few basic checks. Is the borrower from a geography where the lender is authorized to do business? Has the borrower been applying for multiple loans simultaneously or in quick succession (a fraud tactic known as loan stacking)? Is the borrower on any lists of known bad actors? Lenders also check with alternative credit bureaus that can see whether a borrower has a history of staying current with bills from cell phone companies, utilities and other service providers. While not a credit history per se, on time bill payment can be indicative of whether a borrower is likely to pay back a loan.
While these simple checks are important, they are essentially binary. They can't really provide context about the borrower's true identity or a meaningful indication of the quality of the lead. Without evaluating the veracity of the metadata provided by the applicant, it's hard for lenders to know whether there's a real, contactable customer behind the transaction.
It's here, at the top of the funnel, where non-personally identifiable information (non-PII) data can make a difference. Non-PII data (and the linkages between data elements) gives lenders a much more powerful indicator of the quality of leads. Comparing the non-PII signals from prospective borrowers to those of their best performing customers can give lenders a more informed perspective on the quality of leads they acquire. Good leads can be fast tracked for approval while more questionable leads can be flagged and either rejected outright or sent for further review.
Positive signals include things like:
email address age (more than 720 days is good)
IP address proximity to physical address (within 10 miles is good)
phone and address match
email and name match
phone and name match
address and name match
Some risk signals include:
linked email, phone or address details that don't match
an email address that is less than 90 days old
a non-fixed VoIP or toll-free phone number
the phone country code and physical address don't match
phone, email or address are invalid
Strong positive non-PII data signals are a good indicator that a borrower is a real person, and not a manufactured identity. Because fraudsters are continuously evolving their tactics and coming up with new exploits like synthetic identity theft (combining real and fake identity details to fool fraud systems), lenders need to rely more on data that is continuously updated and analyzed.
For lenders, being able to quickly distinguish between a real customer and a fraudster not only speeds up the transaction, but also reduces the chance that a good customer is made to wait or, worse, has their transaction rejected (also known as customer insult). Customer insult is no small problem; not only is there an immediate loss of revenue, but a rejected customer is unlikely to return in the future. On the flip side, customers that enjoy a speedy transaction are much more likely to recommend an institution to friends and family.
Non-PII data (and the linkages between data elements) applied at the top of the funnel ensures that only the best leads make it into the funnel. It can also help at the bottom of the funnel. With better qualified leads, lenders can see better take rates on loan offers. And with the reduced risk of fraud comes lower First Payment Default rates.
Of course, none of the potential benefits of non-PII data would matter if using it slowed down the transaction process. Fortunately, the data can be integrated into most fraud management systems without introducing noticeable lag. That means lenders can continue to offer speed while improving identity verification.
Author Allen TaylorPosted on December 1, 2017 Categories Analysis, Banks, credit scores, data verification, Featured, fraud risk, identity verification, marketplace lending, online lenders, PwC, risk assessment, RocketLoans, Whitepages Pro