Thursday June 13 2019, Weekly News Digest

United States

Amazon launches a credit card for the ‘underbanked’ with bad credit (CNBC), Rated: AAA

The e-commerce giant partnered with publicly traded bank Synchrony Financial to launch “Amazon Credit Builder” — a program that lends to shoppers with no credit history or bad credit, who would otherwise be exempt from Amazon’s loyalty cards.

The card has the same perks, like 5% cash back on purchases, that come with the popular Amazon Store card, which Synchrony also powers.

This new Amazon card could open the door to a huge segment of U.S. buyers. According to a 2018 FICO survey, more than 11% of the population has a credit score below 550. About 4% of the population has a “bad credit score,” which according to FICO Score is between 300 and 499. Meanwhile according to a 2017 survey by the FDIC, 25% of U.S. households are either unbanked or underbanked.

Credit Card Debt Study: Trends & Insights (WalletHub), Rated: AAA

Although we started 2019 owing more than $1 trillion in credit card debt, Americans repaid $38.2 billion in credit card debt during Q1 2019 – the fourth-largest quarterly payoff ever. Rather than a turning point in consumers’ addiction to overspending, however, the Q1 2019 paydown could actually be a sign that even more debt than expected is now in the forecast for the rest of the year. In fact, WalletHub projects a $70 billion net increase in consumer credit card debt for 2019 overall.

Sunbit Announces $ 26M in Funding Round Led by Zeev Ventures (Virtual-Strategy), Rated: A

Sunbit, a financial technology company that effectively transforms the process of financing in-store purchases for consumers across the credit spectrum, today announced a $26 million Series B round of equity funding, led by Zeev Ventures. Zeev Ventures Founding Partner, Oren Zeev, known for investments in Audible, Houzz, Chegg, TripActions, Tipalti and others, led the round, with participation from prior investors Group 11 (formerly SGVC), Chicago Ventures and other existing investors. The investment will be used to accelerate adoption of Sunbit across a wide range of retail markets, such as automotive service drives, dental, eyewear and veterinary services.

Small Business Loan Approvals at Big Banks Stay at Record Post-Recession High (Yahoo! Finance), Rated: A

Approval rates for small business loan applications remained at a record high of 27.5% at big banks ($10 billion+ in assets) in May, while the approval percentage climbed yet again at small banks, which reached 49.9%, according to the Biz2Credit Small Business Lending Index released today.

Small bank approvals of small business loan applications climbed one-tenth of a percent from 49.8% in April to 49.9% in May.

Institutional lenders climbed two-tenths of a percent to a 65.5% approval rate, up from 65.3% in April.

Loan approval rates among alternative lenders dropped one-tenth of a percent to 57.1%in May, down a notch from 57.2% in April.

The Golden Age of Fintech with Ron Suber (rebank), Rated: A

Just Over 42% of Purchase Borrowers Received Mortgage Rates Under 4.25% Last Week (LendingTree), Rated: AAA

Mortgage Rate Distribution

• For 30-year, fixed-rate mortgages, 42.3% of purchase borrowers received offers of 4.25% or less. That is up from 32.6% of borrowers the previous week. A year ago, 0.06% of purchase offers were under 4.25%.
• Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, 4% was the most common interest rate. This rate was offered to almost 13.5% of borrowers.
• Of 30-year, fixed-rate mortgage refinance borrowers, 52% received offers of 4.25% or less, which is down from 42.9% the previous week. A year ago, 0.02% of refinance offers were under 4.25%.
• Across all 30-year, fixed-rate mortgage refinance applications, the most common interest rate was 4.125%, offered to 18.9% of borrowers.

Mortgage Rate Competition Index

• Across all 30-year, fixed-rate mortgage purchase applications on LendingTree, the index was 0.94, up from 0.91 the previous week.
• How big of a deal is it to get a mortgage APR that’s 0.91 percentage points lower than the competition? Over 30 years, that could translate to $44,353 in savings on a $300,000 loan (see Mortgage Savings Tracker graphic below).
• The index was wider in the refinance market at 1.10, up from 1.03 the previous week. Refinance borrowers could have saved $52,504 by shopping for the lowest rate.

Affirm, Lending Tree CEOs tout gains among young borrowers (Bank Innovation), Rated: A

Max Levchin, CEO of point-of-sale lender Affirm, said roughly 67% of his company’s customer base is Generation X and younger. People of younger generations are actively opting out of credit cards because the true price of purchase is hard to estimate and they’re scared of taking on debt, he explained. Meanwhile, credit scoring models used by traditional banks don’t take full advantage of the information available on customers.

Speaking in a separate fireside chat at the event, Doug Lebda, CEO of Lending Tree, said his company now has 15 million members on its online lending marketplace. The mortgage business, which was the origin for Lending Tree, now accounts for just 18% of its business, he noted. Since only 5-10% of all loans are done through online services, the company can still grow, even through “a tightened credit box” in any potential downturn, he added.

Home-Flipping Trend Weakens as High-Interest Lenders Jump 40% (Yahoo! Finance), Rated: A

Wall Street giants and individual retirees alike have pumped billions into financing home flips in recent years. Now, a slowdown in the flipping business threatens to rain on the party.

So-called “hard money,” which comes from sources other than banks and which carries higher interest rates, is hard to track because it’s fragmented and littered with thousands of small players doing one or two deals a year. However, a for-profit trade group called the American Association of Private Lenders estimates the number of hard money lenders and related “private money” lenders at 8,300, or up almost 40% since 2016.

ZeroDown is constructing a new path to home ownership (TechCrunch), Rated: A

ZeroDown, as the name suggests, couples technology and a debt-fueled real estate fund to allow home-buyers to forgo the traditional down payment process required to purchase a home. The company, which charges a $10,000 fee per home, is a graduate of the Y Combinator  startup accelerator’s winter cohort. Today, it’s announcing a $30 million round of capital from former YC president Sam Altman and consumer technology venture capital fund Goodwater Capital.

7 Powerful Cash Flow Management Technologies to Keep Your Business Humming (Inc.com), Rated: A

Coinbase Users can Now Earn DAI as Coinbase Adds the Stablecoin to its Earn Program (Altcoin Buzz), Rated: A

Dai is the first stablecoin made available on Coinbase Earn and the second addition to the crypto education initiative this month, following EOS support announcement on June 1.

Transactions involving DAI have continued to increase at an exponential rate, with about 70% of its activity in decentralized crypto exchange and 13% in decentralized crypto lending.

Uber is pivoting to fintech, something Asian startups have been doing for years (Quartz), Rated: A

Uber is looking to hire dozens of staff in New York, drawing from the city’s pool of engineers with experience in financial services, according to CNBC, citing unidentified sources. The team could, over time, expand to more than 100 workers and may focus on payments (reducing transaction costs) and providing financial services for drivers and contractors. Even more radically, the company is debating the feasibility of launching bank accounts, according to the report. Uber already operates the Uber Cash app and launched a branded credit card a few years ago.

Splash Raises $ 4.3M from CMFG Ventures & NM Future Ventures (coverageR), Rated: A

Splash Financial  has announced the close of a $4.3m funding round led by CMFG Ventures, the venture capital entity of CUNA Mutual Group, with participation from Northwestern Mutual Future Ventures, the corporate venture capital arm of Northwestern Mutual.

Blockchain Credit Partners (BCP) Launches World’s First Tokenized High-Yield Private Credit Fund (VentureBeat), Rated: A

Blockchain Credit Partners (BCP), www.BlockchainCreditPartners.com, announced today the launch of the world’s first Tokenized High-Yield Private Credit Fund with a focus on providing consistent high-yield cash flow payments through lending against secured assets. The fund has chosen to use the Securitize platform and protocol for the issuance and lifecycle management of the fund. The Securitize DS Protocol will allow for future compliant trading of the fund on an authorized Alternative Trading System.

Lendio CEO Brock Blake Named EY Entrepreneur Of The Year Finalist (PR Web), Rated: B

EY has chosen Brock Blake of Lendio as a finalist for its Entrepreneur Of The Year 2019 Award in the Utah Region.

CoreLogic Integrates Income Calculation and Property Tax Estimator Services with LendingQB (CoreLogic), Rated: B

CoreLogic, a global property information, analytics and data-enabled services provider, today announced that their FactCheck income calculation and analysis solution and Property Tax Estimator report are now available on the LendingQB Loan Origination System (LOS).

Warren, Jones press regulators on fintech lending discrimination (American Banker), Rated: B

Sens. Elizabeth Warren, D-Mass., and Doug Jones, D-Ala., are calling on regulators to ensure that algorithms used by financial technology platforms don’t result in discriminatory lending.

United Kingdom

Klara Expansion: Announces Second UK Office in Central Manchester (Crowdfund Insider), Rated: AAA

Payment processing brand Klarna announced on Wednesday the expansion of its UK operations with a new office located in Manchester. According to Klarna, the new office will open in Summer 2019 and will be located at the Old Granada Studios, which is a payments and retail tech hub with Adyen, Worldpay, Dotdigital and Space 48 nearby.

Watchdog announces new rules on ‘buy now, pay later’ products (This is Money), Rated: A

‘Buy now, pay later’ firms will be banned from charging backdated interest on already repaid amounts from November, under new rules announced by the financial regulator.

In its announcement, the FCA claimed the new rules will save consumers ‘around £40-60million a year’, with the proposals on greater disclosure coming into force slightly earlier, on 12 September.

LendInvest completes first £259m securitisation as it looks to further take market share from big banks (AltFi), Rated: AAA

Property-focused fintech lending platform LendInvest has securitised £259m of UK prime Buy-to-Let mortgage loans.

Will new institutional products drive out the retail investor? (P2P Finance News), Rated: A

A NUMBER of purely institutional products have been unveiled recently in the peer-to-peer lending sector. Is this to the benefit or detriment of the retail investor?

In April, Funding Circle announced that it was winding down its dedicated investment trust and would be launching two new institutional products in the UK: a UK private direct lending fund and a UK bond product.

The platform is hoping to bring in over £200m from institutional investors over the next few years.

Giles Andrews, Fintech Pioneer (Lend Academy), Rated: A

Before there was such a thing as fintech, before peer to peer lending was invented, a group of young executives had the crazy idea to start an eBay for money in the UK. Originally named Rialto (a bridge linking two market squares in Venice) the company that would become Zopa needed to raise some money in early 2004.

Starling and Monzo growth surges outside metropolitan elite (AltFi), Rated: A

A spokesman for Monzo, which hit 2 million customers last month, told AltFi that more than two-thirds of its last million customer sign-ups, which occurred within just eight months, came from outside of London.

Starling’s customer base jumped from 50,000 to over 400,000 last year. Numbers currently stand at 650,000 with Boden expecting 1 million customers in 2019.

P2P industry yet to see wave of consolidation (P2P Finance News), Rated: A

THE WAVE of M&A activity that was expected to engulf the peer-to-peer lending sector has yet to materialise.

Industries which have a proliferation of smaller players fighting to grow market share are typically prime candidates for takeovers and mergers, so why hasn’t it happened in P2P? And can all the small P2P platforms survive and thrive, or will many fall by the wayside?

Orca CEO: New FCA Rules for P2P Lending May Stifle Innovation, Shift Industry to Institutional Investors (Crowdfund Insider), Rated: A

Last week, the UK Financial Conduct Authority (FCA) updated the regulatory regime managing the peer to peer lending industry.

“It changes the ethos of P2P lending, which was to lend to consumers directly through online platforms,” said Niblock  “Now that has morphed to institutional investors agreeing to fund large amounts of loans on lending platforms. P2P is still a small, but rapidly growing market so it feels too early to overly regulate. Overregulation at this stage will stifle innovation.”

Augmentum Fintech to double in size as it seeks £150m fundraise (Fintech Futures), Rated: A

London-listed fund, Augmentum Fintech, is courting a £150 million capital raise, which would more than double the size of the company, as reported by CityAM.

The fintech-focused firm said in a filing it intends to create up to 150 million new shares, valued at a total of £ 150 million, subject to shareholder approval.

Exploiting the fintech investment opportunity (Investors Chronicle), Rated: A

Augmentum Fintech(AUGM:111p), a venture capital investment group that became the first London Stock Exchange listed fintech fund when it raised £94m, at 100p a share in March 2018, has more than justified its inclusion in my 2019 Bargain Shares Portfolio.

Fintech looks to grab £60m share of Scots SME lending (Scotsman), Rated: A

Finance provider Growth Street is targeting a £60 million share of the SME lending market in Scotland after its move north of the Border.

The London-based peer-to-peer lending platform estimates that there is an £800 million funding shortfall faced by small and medium-sized firms in Scotland that it aims to help bridge.

CrowdProperty homes reach £100m milestone (P2P Finance News), Rated: A

PEER-TO-PEER property lender CrowdProperty has funded its 600th property development, bringing the total value of its UK-wide property portfolio to £100m.

The milestones were reached following the completion of the 92nd project on the CrowdProperty platform. The company has now lent almost £40m to property developments in the UK, with more than £13m returned to investors to date, and no losses.

Smartlands Claims to be First UK Real Estate Crowdfunding Platform to Tokenize Property (Crowdfund Insider), Rated: A

Blockchain-based Smartlands is claiming to be the first crowdfunding platform in the UK to tokenize property investments. Based in London, Smartlands describes itself as a “worldwide security token issuance platform.” Smartlands is regulated by the UK Financial Conduct Authority (FCA).

What is P2P investing, and is it viable alternative investment in the market? (Business Matters), Rated: A

The reason for the popularity of P2P is down to the security of the investment and also the healthy returns. You invest in bricks and mortar and benefit from the security that this asset class has offered for decades. With ROI of between 7 – 12%, there are modest returns to be had also.

For the past decade, buy-to-let has been the investment of choice. However, the 3% additional stamp duty surcharge has made the investment considerably more expensive. When combined with tighter lending restrictions brought in at the start of 2017, buy-to-let volumes have decreased – an 80% fall in new lending over two years from £25bn to just £5bn.

Finacity Corporation Joins Greensill (Yahoo! Finance), Rated: B

Greensill is pleased to announce that Finacity Corporation (“Finacity”) will become a fully owned subsidiary of Greensill. The partnership adds Finacity’s receivables securitisation capabilities to Greensill’s financing capabilities for all aspects of working capital finance.

China

American Cars Lose Shine in China as Trade Tensions Simmer (Bloomberg), Rated: AAA

European Union

Coinbase launches its cryptocurrency debit card in six more countries in Europe (CNBC), Rated: AAA

Digital currency exchange Coinbase announced Wednesday its Visa debit card is to launch in six more European countries after debuting in the U.K. in April.

As of Wednesday, the “Coinbase Card” will be available in Spain, Germany, France, Italy, Ireland and the Netherlands. Feroz said the card has seen “extremely strong take-up” since it launched in the U.K. in mid-April. He did not disclose specific figures but said the company “blew past” the initial 1,000 cards it offered users for free.

International

Mary Meeker just published her highly anticipated internet trends report (CNBC), Rated: AAA

Here are some of the highlights from this year’s report:

• More than half of the human population is online, Meeker said on stage at Recode.
• Public and private investments into tech companies is at at a two-decade high, nearing $200 billion last year.
• Wearable technology is booming, and users have doubled in the past four years.
• E-commerce and ride-share driven digital payments are rising.
• Image-based communication like Instagram, is on the rise. YouTube and Instagram are gaining the most for time spent on online platforms.
• Interactive games like Fortnite are gaining ground. Total players have accelerated at 2.4 billion, up 6% this year.
• “Privacy concerns are high but they’re moderating,” Meeker said on stage at Recode.
• Media time spent on mobile hit “equilibrium.”
• China makes up 21% of total global internet users vs. 8% in the United States.

See the full report here.

International P2P Lending Volumes May 2019 (P2P-Banking), Rated: AAA

The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 607 million Euro.

Milestones achieved this month (total volume since launch):

• Twino crossed 500M EUR
• Linked Finance reached 100M EUR

Top Fintech Companies Awarded by Growjo (Yahoo! Finance), Rated: A

Growjo announced the 500 fastest growing companies in the Fintech Industry.

Some of the top Fintech companies represented include: Brex, BlueVine, Robinhood, Root Insurance, Plaid, Chainalysis, ScaleFactor, OnDeck, t0.com and YieldStreet.

See the full list here.

IMF head Christine Lagarde warns of the dangers of big tech’s push into finance (Business Insider), Rated: A

The head of the International Monetary Fund (IMF), Christine Lagarde, has warned of adverse challenges resulting from fintech developments, reports Reuters.

The Top 7 Metrics Every Fintech Company Should Monitor (Benzinga), Rated: A

In an incredibly competitive sector, fintech companies collecting big data streams should ask themselves:

• How do I make sure I’m poised to take advantage of market opportunities the moment they emerge?
• How do I diagnose and fix incidents before they have time to impact my business?
• How do I monitor the information I need to stay ahead? Am I monitoring the right data?

Whitepages Pro Spins Off and Becomes Ekata (GlobeNewswire), Rated: B

Whitepages Pro, the leader in global digital identity verification data, today announced that it is spinning off its B2B business from the US-focused direct-to-consumer operations of Whitepages.com. Whitepages Pro will change its name to Ekata to better differentiate the company’s global B2B APIs and SaaS tool that serve the growing worldwide need for identity verification, a market projected by McKinsey to reach $20 billion in 2022. To further these efforts, the business opened a new HQ for European operations earlier this year in Amsterdam, Netherlands. This second EU office will support sales, account management and marketing efforts in EMEA.

Australia

Fast-growing fintech Revolut expands beyond Europe with Australia launch (CNBC), Rated: AAA

Fintech start-up Revolut launched its app in Australia on Thursday, marking its first expansion outside of Europe.

The online banking platform said it would gradually sign up 20,000 Australians already on a waiting list, while new customers will have to wait a little longer.

Credit card debt falls to 11-year low (Mortgage Business), Rated: A

According to the Reserve Bank of Australia’s latest credit card statistics, released on Wednesday (12 June), debt accruing interest on personal credit cards has decreased by 4.9 per cent year-on-year to $29.5 billion in April, its lowest figure since December 2007.

There were also less credit card accounts in April, declining by 470,088 accounts, or 3.1 per cent year-on-year, to 14,595,936 accounts. This also represents the lowest figure since December 2014.

Loans.com.au offering its lowest ever car loan interest rate (Savings.com.au), Rated: A

Following the Reserve Bank’s cash rate cut last week, online lender loans.com.au has lowered car loan interest rates by 40 basis points, taking one of its car loans down to its lowest ever rate.

The veteran fintech’s Green Car Loan now offers a fixed rate of only 4.29% (4.83% comparison rate*) while its New or Used Car Loan now has a fixed rate of 4.99% (5.54% comparison rate*).

Carsales puts up ‘for sale’ sign on struggling Stratton Finance (The Sydney Morning Herald), Rated: A

Carsales bought a controlling 50.1 per cent stake in Stratton, the vehicle finance broking business, for $60.1 million in 2014.

In the fallout from the banking royal commission, Carsales was forced to write down almost $50 million from Stratton, after regulatory changes tightened the credit market.

India

Finding The Way (Business Today), Rated: AAA

Amit Kumar, Co-founder, GalaxyCard, a digital credit card start-up, had just gone live with a non-banking finance company (NBFC) when the IL&FS default crisis erupted in September 2018. The NBFC, which had started discussions with GalaxyCard in January 2018, had big plans but changed its mind.

Akshay Mehrotra, Co-founder and CEO, EarlySalary, sees a huge untapped market in consumers with credit scores of less than 750 and loan size below Rs 1 lakh for less than one year tenure.

How can millennials reduce lifestyle borrowing and create wealth? (India Times), Rated: A

A recent research report shows that there is a 55 % surge in personal loans for travel purposes with 85% of the borrowers being millennials. It will be interesting to find out the driving force for this trend.

Fintech platform GroMo raises ₹4 crore in seed funding (livemint), Rated: A

Fintech platform ‘GroMo’ has raised ₹4 crore in seed funding, led by Ramakant Sharma, co-founder of Livspace, and Utsav Somani of AngelList India, besides other angel investors.

How India Can Boost Fintech Growth (Business Today), Rated: A

The regulatory bodies have frequently come up with draft regulations to support these government initiatives. Over the last three years, the RBI has drafted regulations around payment banks, mobile money, NBFC-AA and P2P lending, all of which support financial inclusion. The central bank has also adopted an inclusive approach while doing this – it issues discussion papers on proposed policy changes and takes feedback from stakeholders.

IIT team hopes to impress Elon Musk at SpaceX competition with pod design (livemint), Rated: A

Avishkar Hyperloop, the team from Indian Institute of Technology-Madras (IIT-M), is all set to participate in the final round of the SpaceX Hyperloop Pod competition 2019 in Los Angeles (California) this year.

The team of 25 students, the only one from Asia which qualified in the final round along with 19 teams, will present its pod design to SpaceX founder Elon Musk.

The project, which cost the team nearly ₹1 crore to complete (to design and build the pod), also has P2P (peer-to-peer) lending firm RupeeCircle as a financial partner.

Southeast Asia

Korean lending startup secures $ 35m in debt, equity financing (Tech in Asia), Rated: AAA

South Korea-based peer-to-peer lending startup PeopleFund secured US$35 million as an extension to its series B financing round. The influx was led by Lending Ark Asia Secured Private Debt Fund, a secured private credit strategy of Hong Kong’s CLSA Capital Partners.

Delinquency ratio of South Korea’s P2P lending firms hits record high (Asia-First), Rated: A

Data showed that the average delinquency ratio of 45 local P2P lending companies stood at 8.5% as of the end of April, rising from 1.77% in April 2018 and 0.89% in the same month of 2017, the highest since the association started gathering data in June 2016. About half of the total P2P lending firms posted zero delinquency ratios, while eight posted a ratio of over 20% as they focused on property development project lending.

South America

SoftBank confirms $ 200m investment in Creditas (Fintech Futures), Rated: AAA

The Japanese tech giant, SoftBank, has confirmed it plans to invest $200 million in the Brazilian fintech start-up, Creditas, setting the company’s valuation at $700 million after the acquisition.

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