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MonJa’s Digital Banking and Lending Monthly Roundup – Why Subscribe?
Digital banking and lending is evolving rapidly. Recent fintech-banking partnerships and innovation in technology with the introduction of AI, ML and blockchain herald a new era in lending. Fintech’s are changing the competitive ecosystem, empowering lenders to process loans faster and smarter. In a world full of noise, understanding how the technologies and developments may impact your financial institution’s credit decisions and credit portfolio is of critical importance. With MonJa’s Digital Banking and Lending Monthly Roundup, it’s easy to stay up to date on what’s happening in the space. Get the latest updates, analysis and commentary on digital banking and lending segment!
4/25/2019 LendingClub shuts down SME lending arm (Banking Tech)
LendingClub has shut down its in-house lending operations for small businesses and has partnered with Opportunity Funds and Funding Circle to enable borrowing for small businesses via its platform. At rates as low as 5%, small businesses will be able to borrow up to $300,000. Lending Club’s CEO believes that the three firms together will now be able to serve a broader number of applicants with distinct requirements. Thought the move creates a new revenue stream for the company (and without the attendant credit risk), this also means it is curtains for LendingClub evolving into a cross-segment mega online lender.
4/25/2019 U.S. firm Genesis says it loaned more than $1.5 billion in cryptocurrency (Reuters)
Genesis Global Trading is one of the largest OTC cryptocurrency brokerage firms with $183 Million in active loans denominated in Bitcoin, Ether, XRP, Bitcoin cash and other coins at the end of the first quarter. Genesis’ total loans originated reached $425 million in the first quarter, up 15 per cent from the end of 2018, the company said. Bitcoin dominated Genesis’s loan book with a total share of 68%. The company reported that since the product’s launch in March 2018, it has loaned digital assets worth $1.53 billion to institutional borrowers. This highlights digital assets entry into the financial mainstream. Also, a host of financial services are now being built to specifically serve the industry.
4/25/2019 Fintech overtakes HSBC and Santander as banks pull back from business lending (Yahoo Finance)
Iwoca, a London-based fintech startup offers loans and overdrafts up to £200,000 to small businesses. Industry body UK Finance’s data show that Iwoca had a share of 12% of new small overdraft facilities in the last quarter of 2018 as compared to HSBC and Santander’s 11% and 9% respectively. RBS tops the charts with 30% share in the segment. Christoph Rieche, the CEO and co-founder of Iwoca, said in a statement: “The fact that we have grown so rapidly and overtaken two of the high street banks so quickly shows how badly small businesses have been served.” The numbers prove that nimble flexible lenders are capturing market share from more established traditional banks.
4/24/2019 Fintech Unicorn SoFi Attempts To Raise $500M While Leaving Troubles Behind (Crunchbase)
SoFi, a lending startup with a valuation of $4.3 billion, is reportedly in talks to raise $500 million from Qatar Investment Authority. With troubles like executive turnover, layoffs in the first half of 2018, misrepresented student loan offerings, sexual harassment etc., SoFi has had to douse a lot of fires in 2018. By looking to raise $500 million, SoFi is changing the narrative and refocusing the organization and the overall market to its well-capitalized business operations.
4/23/2019 Direct Lenders See Profits in Hemp Where Big Banks Fear to Tread (Bloomberg)
CBD is on track to reach a market size of $22 billion by 2022. But many banks are still reluctant to lend to CBD/ hemp sector for fear of regulators; direct lenders are now plugging this gap. MGG Investment group, a New York-based lender provided a term loan of $65 million to Mile High Labs- the largest extractor of cannabidiol in the world. The loan was priced at Libor + Single Digits (that is less than 10%). The CBD market is booming and traditional banks that can walk the fine line between the regulator and evaluating new age CBD businesses are looking at a massive untapped lending opportunity.
4/23/2019 These are the top 10 hottest fintech startups and companies in the world (Business Insider)
Fintech hit new funding highs with $32.6 billion by the end of Q3. Business Insider came out with a list of top 10 hottest fintech startups to highlight the growth of the fintech industry. It had the usual heavyweights like SoFi but also pushes some smaller fintechs into limelight. Sample Brex, a startup launched by two 21-year olds that has morphed into a unicorn in less than 2 years. It has launched a revolutionary credit card which requires no personal guarantees and is geared towards tech companies and startups.
4/18/2019 Bank of America Is All In With Fintech As Mobile Banking Customers Increase (Forbes)
Bank of America has been extremely aggressive in its push for digital banking. With 27 million mobile banking customers in the March19 quarter, the $3 billion per year investment in tech initiatives seems prudent. It also reported that over 77% of deposit transactions are now executed digitally. And though FIS reported that only 35% of customers in 18-26 age group used a bank branch in the previous month, Bank Of America believes that a combination of branches and tech is the way to go forward. According to the management, this will allow them to tap the needs of both tech savvy customers and clients that need hand holding or complicated financial products.
4/15/2019 Worried a recession is coming, U.S. online lenders reduce risk (Reuters)
Economist polled by Reuters in March indicated a 25% probability of a recession in the next 12 months in the US. The financial bodies fear credit losses, liquidity crunch, and higher funding costs in the times to come. Because of these ominous signals, online lenders like LendingClub, Kabbage and Avant have turned cautious while lending. “This is very top of mind for us,” LendingClub Chief Executive Officer Scott Sanborn said in an interview, referring to the possibility of a recession. “It’s not a question of ‘if,’ it’s ‘when,’ and it’s not five years away.”
4/11/2019 How Fintech Is Changing The Small Business Game (Forbes)
The role of the fintech lending industry has amplified in the small business segment due to banks’ large-scale migration towards “safer shores” after the 2008-09 recession. With almost 30 million small businesses in the United States, fintechs can drive down the cost of making small dollar loans to credit worthy businesses. This success will be possible due to leveraging of artificial intelligence, machine learning, and big data to reinvent the credit decisioning and customer application process.
4/8/2019 Fintech start-up Branch raises funding for EM lending push (Financial Times)
Branch International, a Silicon Valley based startup raised $170 million in new financing to target emerging frontier markets like Africa, South Asia and Latin America with prepaid debit cards and other lending products. It aims to lend funds to the classes neglected by traditional banks. The total origination for the year is expected to touch $350 million and the average loan amount is expected to range between $20-$40. Its expansion is reliant on low-cost mobile payment systems, availability of smartphones and government biometric databases.
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