Friday January 19 2018, Daily News Digest

United States

SoFi’s Professional Loan Program at $ 720 Million for First Offering (LendEDU), Rated: AAA

Social Finance’s Professional Loan Program 2018-A has reached $720.1 million, which is just a bit lower than the final deal it had in 2017.

In this latest program, three portions of senior Class A notes worth $677.3 million will be issued. Of that figure, one $55 million Class A-1 portion is mostly secured by floating-rate loans, and it has a variable-rate interest rate, which will be calculated based on one-month Intercontinental Exchange London Interbank Offered Rate (LIBOR).

Fixed-rate student loans will mostly back the $358.5 million in Class A-2A notes, as well as the $236.8 million in Class A-2 notes.

Why open banking and cybersecurity need each other (Tearsheet), Rated: AAA

The industry’s desire for greater security and protection of customer data seems at odds with its desire for more open banking; by definition, open banking requires banks to share data with third party service providers.

In the U.S. banks are striving to get ahead of their own regulators by creating data exchange standards. API-based data sharing agreements like the deals Fincity signed with Wells Fargo and Chase last year are evidence of those efforts. But banks need to move beyond those one-on-one agreements if they’re going to create a full suite of financial services to offer customers through a true open banking platform.

PeerIQ CEO Ram Ahluwalia: 2017 Saw a Resurgence of Growth in Online Lending (Crowdfund Insider), Rated: AAA

Ahluwalia told me;

“2017 has seen a resurgence in investor growth and confidence in online lending. ABS issuance is up about 83%.  Execution spreads have tightened substantially. This performance is all on the ABS loan side but has not translated yet into the equity valuations. “

He added that he expects to see continued attention on credit performance in 2018 as they are still seeing normalization of credit performance.

He expects 30% growth in ABS issuance for next year while adding that PeerIQ underestimated the growth for 2017.

LendingTree Ranks Most Competitive Homebuyer Markets (PR Newswire), Rated: AAA

LendingTree, the nation’s leading online loan marketplace, has released the findings of its study on where homebuyers will face the fiercest competition to achieve their dream of homeownership in 2018.

LendingTree looked at 1.5 million purchase mortgage loan requests that came through the LendingTree marketplace in the 100 largest cities in 2017. The study ranks cities using three criteria:

• The share of buyers shopping for a mortgage before identifying the house they want. Buyers with financing in place are more appealing to sellers and can compete with cash buyers.
• Average down payment percentage. Having a higher amount of money saved for a down payment can enable you to borrow more money or be offered a lower interest rate, allowing you to make a stronger offer.
• Percentage of buyers who have prime credit (above 680). Borrowers with higher scores have more financing options to make more competitive offers. The cities/markets below are ranked for 2018 using the criteria noted above, including the relative data used to determine the ranking along with the market’s overall rank from the prior year.

California markets dominate the top 10.

Six of the top 10 most competitive housing markets are in California. San Francisco and San Jose lead the rankings in 2018, with a vast number of credit-worthy and well-heeled borrowers making it one of the most challenging markets for prospective home shoppers.

Real Estate Marketplace Roofstock Hits $ 1 Billion in Transactions (Crowdfund Insider), Rated: AAA

On Thursday, real estate marketplace Roofstock announced it has surpassed $1 billion in property transactions since the launching of its marketplace in 2016.

Roofstock Announces $ 7 Million In Additional Funding (Benzinga), Rated: A

Roofstock announced Thursday that the venture capital arm of Silicon Valley Bank had joined its latest funding round, bringing the property investing startup’s funding total to $42 million.

Gary Beasley, CEO: Roofstock is the first online marketplace created exclusively for buyers and sellers of cash-flowing, single-family rental homes that already have tenants.

Who are your investors, if any?

Roofstock has raised $68,250,000 to date, with a recent $35M Series C investment led by Canvas Ventures in October 2017. Other investors since Roofstock’s launch include Lightspeed Ventures, Bain Capital Ventures, Khosla Ventures, Hone Capital, QED Investors, Nyca Partners, and several angel investors.

Vanguard vs. Fundrise: Which is the Better Investment Option? (Fundrise), Rated: AAA

We often get the question, “What makes a Fundrise eREIT worth investing in over the Vanguard REIT ETF?” It’s a fair question that we expected when we created the eREIT. The short answer is that Fundrise eREIT investments are lower in cost for investors than those of the Vanguard REIT ETF and also come with the potential for better returns — how our costs are lower than Vanguard requires a longer answer.

Some of the largest REITs in which the Vanguard REIT ETF owns shares are Simon Property Group(shopping malls, worth approximately $50 billion), Equinix (office buildings, worth approximately $34 billion), and AvalonBay Communities (apartment buildings, worth $25 billion).

Vanguard charges no brokerage commissions and carries only a low investment advisory fee of 0.30%, which it reports to be lower than the industry standard of 1.02%. In addition to the advisory fee, Vanguard charges its REIT ETF investors an asset management fee of 0.11% as well as reimbursement of “expenses.”

The Fundrise Approach

Where public market investments rely on several financial organizations to perform various services from acquisition and development to offering diversified portfolios of REITs, Fundrise uses technology to consolidate these functions and reduce the number of intermediaries in the value chain.

The real estate investment trust designation of the eREIT does not equate the services or value creation offered by the eREIT with that of a public REIT — it simply allows Fundrise to pass at least 90% of the eREIT’s earned income to investors without paying taxes at the corporate level.

Fundrise investors can invest directly into an eREIT and only pay an 0.85% asset management fee at the eREIT level. Investors who want to diversify across multiple Fundrise investments, including eFunds, can do so through one of the investment portfolios. For example, rather than choosing one eREIT or more, investors can invest in the Starter Portfolio with a minimum investment of $500. For this service, investors are charged an investment advisory fee.

Chase joins AutoFi platform (Asset Finance International), Rated: A

Chase, the US consumer and commercial banking business of JPMorgan Chase & Co, has become the first US national bank to partner with fintech company AutoFi to help customers select and finance vehicles through dealers’ websites.

The move comes after the bank’s research showed that nearly half of consumers would purchase and finance vehicles online if they had the opportunity.

ForUsAll Reaches $ 500m in Assets and Raises $ 21m in Venture Capital (Business Insider), Rated: A

ForUsAll, the technology-driven 401(k) advisor to small and mid-sized businesses, today announced it has reached $500m in retirement assets under management and secured $21 million in second round financing led by Ribbit Capital, a leading global investor in financial technology. Existing investor Foundation Capital joined the round, bringing the company’s total funding to $34 million. ForUsAll will use the funds to grow the company’s customer base, accelerate technology development and hire additional staff.

CFPB Signals Shift by Dropping Payday Lender Lawsuit (Bloomberg), Rated: A

The Consumer Financial Protection Bureau is dropping a lawsuit against a group of payday lenders associated with an American Indian tribe in a sign the regulator is changing direction under Mick Mulvaney, the acting director appointed by the Trump administration.

The agency had accused the lenders of deceiving consumers and failing to disclose the true cost of the loans, which carried interest rates as high as 950 percent a year. The agency asked for the case in federal court in Kansas to be dismissed in a court filing on Thursday, giving no details about its reasoning.

The CFPB lawsuit had targeted four companies owned by the Habematolel Pomo of Upper Lake tribe.

Foreign and Domestic Condo Buyers Tap $ 300 Million Fund To Close On New Condo Purchases (PRWeb), Rated: A

Three leading South Florida real estate-related companies with robust real estate experience, deep capital markets relationships, and a proven track record of originating and servicing end-user loans have joined forces to provide senior mortgage loans to non-traditional real estate buyers. The joint venture, named Pebb Yale Truss Lending, (“PYT Lending”) is comprised of Pebb Capital, GPC Truss, and Yale Mortgage. Already the enterprise has commenced loan closings for approximately 20% of the units at Echo Brickell, a luxury condominium development by Property Markets Group (“PMG”) in Miami, FL.

The First Blockchain ETFs Launched on Nasdaq, NYSE Today (coindesk), Rated: A

Reality Shares Advisors and Amplify Trust ETF launched the first blockchain-based exchange-traded funds (ETFs) on Nasdaq and the New York Stock Exchange Arca today.

Both funds went live on their respective exchanges at 9:30 a.m. EST. Reality Shares’ Nasdaq NextGen Economy ETF (BLCN) opened at $24.20, while Amplify’s Transformational Data Sharing ETF (BLOK) started closer to $20.

What are some of the crowdfunding basics you need to know about? (Born2Invest), Rated: A

Crowdfunding is the opposite approach to business finance.

Crowdfunding is defined as a way of raising capital with the collective effort of friends, family, customers, and individual investors.

While crowdfunding is the umbrella term for this new way of investing and doing business, there are several types of crowdfunding.

• Reward-based crowdfunding
• Peer-to-peer lending – People who are risking to lend out money to strangers can create loan portfolios.
• Donation-based crowdfunding
• Equity crowdfunding – Equity crowdfunding has the most room for change in terms of how people invest their money.
• Real estate crowdfunding
• Human capital – If investors want to put in money on top athletes, there are crowdfunding available for this purpose. For instance, Fantex said it would offer an IPO on investments that track the brand value of top sports stars. Another crowdfunding site named Upstart provides money for college without piling on debt.

AI, blockchain, enhanced encryption: The fintech trends Chicago’s top techies are watching (Built in Chicago), Rated: A

Here’s what Chicago’s fintech leaders are watching in 2018.

Morningstar

Which emerging technologies will have the biggest impact on the industry in 2018?

Security technologies around encryption and voice will start to take shape. Investor and consumer trust in the markets, credit and technology suggest people aren’t satisfied with the norm. There aren’t enough heuristics used to encrypt data at rest and in transit, and the emergence of unique voice pattern activation — led by Amazon and Google — will start to drive changes in the industry.

Enova

Which emerging technologies will have the biggest impact on the industry in 2018?

AI and machine learning continue to grab headlines, and for good reason: they have the potential to improve every aspect of business.

PEAK6 Investments

Which emerging technologies will have the biggest impact on the industry in 2018?

Luke Peeler, software engineer: Blockchain technology.

The Future of Financial Services for the Underbanked: Tradition, Innovation, Regulation (LendIt), Rated: B

Traditional services used by the underbanked include check cashing, cash advance loans, and money transfers. Many view these services as overly expensive and behind the times, and an emerging ecosystem is leveraging fintech innovation to provide improved offerings. However, there’s a strong case made by industry researchers that the traditional, non-bank financial providers remain attractive to their customers, especially compared to the costs of a using a bank account.

• Joe Coleman, CEO of RiteCheck
• Rishi Kumar, Founder of Kashable
• Cathy Mahon, President & CEO of the National Federation of Community Development Credit Unions
• Lisa Servon, Professor of City Planning at the University of Pennsylvania

Guidewire Partners With Plug and Play to Foster Innovation in P&C Insurance (Business Insider), Rated: B

Guidewire Software, Inc. (NYSE: GWRE), a provider of software products to Property and Casualty (P&C) insurers, today announced it has joined Plug and Play’s ecosystem to advance P&C insurance innovation and collaboration. Plug and Play is a global startup ecosystem and venture fund specializing in the development of early-to-growth stage technology startups in 12 verticals. Guidewire joins as a Corporate Partner focused on the Insurance vertical.

VPC recruits Kushman as principal and capital markets head (PE Hub Network), Rated: B

Victory Park Capital (VPC), an investment firm focused on middle-market debt and equity investments, announced today that Todd Kushman joins as a principal and head of capital markets. Kushman is based in New York.

Kushman will lead the firm’s capital markets initiatives, which includes optimizing and identifying new alternative investment product offerings.

BB&T creates $ 50m fintech investment fund (Retail Banker), Rated: B

BB&T, a US-based bank holding company, has decided to set aside $50m to invest in or buy emerging digital technology firms as part of its strategy to boost its competitive profile and trim operational expenses.

United Kingdom

ZOPA LENDING QUEUE: WHEN WILL ZOPA RE-OPEN TO NEW INVESTORS? (Orca), Rated: AAA

There was extensive media coverage in October of last year surrounding Zopa, the largest consumer-focused peer to peer lender in the UK, and when it will re-open its doors to new investors who have been waiting in the Zopa lending queue – some since early 2017. It’s the turn of 2018, and some members in the queue may be seeing signs of promise.

There are 26,000 people in the Zopa “wait list” (as of 9^th January). With approximately 60,000 active customers, this influx will represent a 43% increase in lenders at the platform; impressive, given the time it’s taken the platform which was founded in 2005 to acquire its existing customer-base.

U.K. Fintech Nuvo Launches Facebook Chatbot For Financial Advice on Mortgages (Bank Innovation), Rated: A

AI-powered fintech Nuvo today launched a Facebook chatbot that helps people find the best mortgage deal.

Network ROI completes employee buy-out thanks to ThinCats £1m funding (Insider.co.uk), Rated: A

A Midlothian-based IT firm has completed an employee buy-out after receiving £1m in funding from alternative finance specialist ThinCats.

Founded in 2003 by Sean Elliot, Network ROI employs 32 people providing managed IT and connectivity services to organisations throughout the UK.

Fintech to help first-time buyers with Rent Recognition Challenge for startups (City A.M.), Rated: A

A new competition has been launched to get innovative startups using technology to help renters use this payments history as a record of credit worthiness. The idea is that a tool or service can be used by lenders and credit reference agencies as part of an assessment for a mortgage.

First announced in the Autumn Budget, the Rent Recognition Challenge is now open for entries, with a potential prize of £2m for fintechs working on this idea.

Six proposals will get £100,000 each to get started on a prototype between March and October, after which that will be narrowed down to three by a panel of judges with more cash up for grabs.

IFA launches investment service for dormant clients (FT Adviser), Rated: A

IFA firm Symphony is offering a white-label version of provider FinchTech’s non-advised robo-service to allow its clients to invest through its website without having to pay for advice.

For a platform fee of 0.25 per cent, investors are given access to four mainstream investment portfolios and four socially responsible investment portfolios via FinchTech, with equity/non-equity weightings ranging from a ‘cautious’ 35/65 split to the ‘adventurous’ 85/15.

BUSINESS SHOWCASE : IGNITION WEALTH IRELAND (Irish Tech News), Rated: B

Ignition Wealth Ireland is the European subsidiary of Australia’s leading digital financial advice provider Ignition Wealth. We assist large financial institutions integrating new technology into their current processes and systems  and we help them to reimagine how their customers navigate the financial advice experience.

China

PPDai to invest in research institute (Shanghai Daily), Rated: AAA

PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said yesterday that it will invest 1 billion yuan (US$156 million) within three years to set up a new research institute.

The money invested in the new PPDai Smart Finance Institute will be used to fund artificial intelligence, blockchain, finance cloud and Big Data sectors, said Zhang Jun, co-founder and chief executive of Shanghai-based PPDai.

European Union

Linked Finance eyes profitability as revenue and lending levels jump (The Irish Times), Rated: AAA

Linked Finance, the peer-to-peer (P2P) lending platform which has signed over 1,200 loans for Irish businesses, has said it is on track to be profitable this year.

The company, which is seeking to become the biggest non-bank lender to SMEs in Ireland, recorded a €1.1 million net loss in the 12 months to the end of April 2017, compared to a €1.2 million loss in the previous year.

Shareholders’ deficit amounted to €2.7 million at the end of the reporting period, as against €1.7 million a year earlier as accumulated losses increased from €2.2 million to €3.3 million.

FinTech, Robo Advisers, and the Soul of Swiss Banking (Mises Institute), Rated: AAA

As one Swiss economics journal put it, the most contentious conflicts (and partnerships) will be between “startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations and total disruption of established technology & processes”. That is to say:

• Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks will always retain the cachet of security and stability. Online-only banks, however, are asserting themselves more aggressively in claiming to offer the same services with higher rates and lower fees.
• Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
• Traditional Asset Managers vs. Robo-Advisors: Companies like Betterment feature robo-advisors offer lower fees and lower minimums; meanwhile, the larger traditional asset managers are creating their own robo-products while providing the kind of personalized attention for which high net worth clients are willing to pay quite generously.
• Traditional Wealth Management vs. Automated Advice: a plethora of new software platforms and apps feature digital options, including mobile telephone payment services, automated wealth management advice, price comparison apps, tailored social media groups and crowdfunding systems. On the other side, the exclusivity of one-on-one attention is forever and very possibly will take on even more cachet as the somewhat sterile egalitarianism of digital banking erodes the cultural hierarchy of status.
• Traditional Clearing Systems vs. Blockchain. This latter can store and distribute crypto-currencies (such as Bitcoin) and digital contracts (such as land deeds) without the need for banks or formal clearing systems. Proponents of Blockchain maintain that it promises “to reduce fees, improve security and bypass the volatility of central bank controlled fiat currencies”. Major technology firms such as Google, Amazon and Alibaba are also joining this trend.

CoinLoan ICO Reaches Major Milestones as it Launches MVP and Enables Direct Fiat Investment (Coin Telegraph), Rated: A

Peer to peer fintech startup, CoinLoan, recently rolled out the first version of their peer-to-peer lending platform. Investors were thrilled with the results (try it for yourself here, and are eagerly awaiting the end of the ICO and listing on exchanges soon after.

CoinLoan has also recently enabled direct fiat investment in their ICO. This unique option enables investments of $5,000 or more in USD or EUR in exchange for CLT tokens.

CoinLoan has created a system of secured peer-to-peer lending, where borrowers deposit various crypto assets for a loan in their preferred fiat currency.

International

Revolut launches geolocation-powered travel insurance (TechCrunch), Rated: AAA

Fintech startup Revolut is launching international medical and dental insurance. You can subscribe using the company’s app for £1 per day or more depending on the options.

By default, insurance coverage costs £1 per day for medical and dental insurance. You can add an option for winter sports and you can also cover your friends and family.

Australia/New Zealand

AI helps Harmoney improve ability to assess credit risk (CIO), Rated: AAA

Harmoney is working with DataRobot to improve the performance of its credit risk assessment process.

“With our deployment of DataRobot, we’re now using artificial intelligence to reduce risk for our lenders,” says Brad Hagstrom, joint-CEO of Harmoney.

Nine launches financial advice website 9Saver.com.au (Mumbrella), Rated: A

9Saver.com.au will aggregate the cost of living and shopping segments run across Nine News, Today, Today Extra, A Current Affair and 60 Minutes every week.

India

Startup eco-system looks forward to the budget for addressing tax dilemma (ET Rise), Rated: A

The Indian startup eco-system is looking forward to the union budget eagerly for addressing the tax dilemma. With high-quality entrepreneurs, good ideas and the very important funding ecosystem, startups have become an integral part of the India’s economic growth and job creation.

Asia

Banks, regulators lack skills to cope with pace of fintech innovation (Nikkei Asian Review), Rated: AAA

Both regulators and industry officials lack the right analytical and data skills to cope with the wave of disruption washing over the financial industry, according to the technology officers at leading financial companies at Thursday’s Nikkei Asia300 Summit in Singapore.

Jonathan Larsen, chief innovation officer of Ping An Insurance (Group) Company of China, said there are “definitely no” people with up-to-date skills among the regulators, which is slowing down the pace of change for traditional institutions.

Authors:

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