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!
- 02/1/2019 Banks need to think outside the app (American Banker)
Mobile apps are the go-to digital initiative for any banker looking to launch a “digital bank” and transform the traditional branch-banking model. But apps are the first step in a world where being digital-first is not an option anymore. The ability to check your bank balance on the go or even making payments is passé. The “whole bank in the mobile” model is something to aspire towards, where the customer can enjoy majority of the services (and especially borrowing) without having to step foot in any branch.
- 28/12/2018 AltFin’s Bumpy Ride Into An Uncertain 2019 (PYMNTS)
2018 has been a bumper year for alt-lending with record originations. The US economy has been a major tailwind with decades-low unemployment rates and economic growth chugging along just fine. But all good things come to an end and economic growth seems to be on its last two legs with a recession expected in the coming two years. What will happen then? Will consumers be able to refinance all that new debt? What will happen to the new trend of older millennials’ buying new homes? Will they feel so confident buying real estate once the recession hits?
- 27/12/2018 Massachusetts lender sets lofty goal: Double in size in five years (American Banker)
HarborOne Bancorp started out as a credit union but has metamorphosed into a pseudo commercial bank. It converted into a mutual savings bank in 2013 and then a shareholder owned company after a few years. Now it looks set for a new innings as it goes onto hire commercial lenders and recently bought a bank.
- 21/12/2018 Canada’s alternative finance market boomed in 2017 (Alt Fi)
According to the University of Cambridge Judge Business School’s latest Alternative Finance report, Canada’s growth rate of 159% significantly pushed America’s alternative finance market to grow by 26% in 2017, in which the US accounted for 97% of the region’s alternative finance market growth ($42.8 billion), and the remaining 3% accounted by Canada ($868 million), Latin America and the Caribbean ($663 million).
- 20/12/2018 OnDeck set to offer equipment finance loans in 2019(Alt Fi)
The Company will offer equipment finance loans to US-based businesses in 2019 as a part of its ongoing pilot referral program that was launched in the summer of 2018. The loans shall range from $5,000 to $100,000 with terms of 24 months to 60 months.
- 20/12/2018 Peer-to-Peer Lending: The Good, the Bad and the Unknown (Entrepreneur)
The article explains why entrepreneurs are increasingly looking at p2p lending for their capital needs. Banks are unwilling to lend without collateral and VCs only want to invest in high tech ideas which can give them a billion dollar exit. In such a case, entrepreneurs looking to build a local business are left to fend for themselves. Alt-lending provides the solution with the ability to analyze multiple parameters wrt a business and the entrepreneur as compared to the traditional lenders’ obsession with FICO. On the other hand, the charges and interest rates are relatively higher than a traditional bank.
- 19/12/2018 Fifth Third offers customers student loan refinancing with CommonBond (Tear Sheet)
The Fifth Third Bank has introduced its new product – student loan refinancing, after analyzing the student loan debt situation in the market. The Bank has collaborated with CommonBond, a lender that has originated refinancing of approx $2.5 billion student loans. Fifth Third has invested in the company’s equity round in 2018 and is now working on the partnership to offer its customers an innovative student loan solution.
- 18/12/2018 Fintechs Step Into Payday Alternatives Where Banks Fear to Tread (Bloomberg)
Banks do not seem to be interested in the payday space despite the prodding from regulators. Fintechs are now partnering with employers to tackle the billion-dollar opportunity in payday lending. United Way has partnered with Salary Finance for the same. It is a win-win with employee satisfaction increasing due to the hassle free lower interest loans and the alt-lender finding a captive audience for its offerings.
- 17/12/2018 P2P property lending platform completes £10m investment round (Alt Fi)
BLEND Network completed a £10 million late seed round. Launching early in the year, the Company intends to provide lenders access to property-secured loans. The late seed round had investors like Cyrus Ardalan, Chairman of OakNorth Bank and Citigroup Global Markets as well as Jean-PhillippeBlochet, co-founder of leading macro hedge-fund Brevan Howard participating. The funding shall be used for product development.
- 17/12/2018 How regulators besides the OCC can help fintechs (American Banker)
The OCC has been a great friend to the alt-lending industry. Its national banking charters and fintech charters have the ability to transform the space and make it easier for fintech lenders to operate. But there are still massive regulatory hurdles and FDIC and the Fed need to step in to ensure that alt-lenders can get a level playing field against traditional lenders.
- 14/12/2018 Nonbanks need to get serious about self-regulation (American Banker)
Non-bank lenders have managed to become an important capital source for SMEs and other borrowers that contribute to the American Economy. As per figures, an approx $380.6 billion was the total alternative lending volume to SMEs and individual borrowers in 2017, up from $263.9 billion in 2016. With this pace, the volumes may nearly double to $750 billion by 2020.Regulation is coming for this emerging trillion-dollar segment of the finance industry. Lenders would be well served if they can get their house in order and create a strict ecosystem of self-regulation.
- 14/12/2018 The growing trend of purchase financing (Tear Sheet)
The consumer lending space has witnessed strong growth in the past decade; new alt-lending players with innovative business models are aiding this growth. Purchase financing supports customers to borrow money for any expenditure (small or large) for the short-term. At $1.7 Trillion, the potential credit market is massive. The millennials have cut down on credit cards and are more moving towards personal loans for even everyday purposes. This is the main target segment for the purchase financing players.
- 13/12/2018 Revolut is Granted European Banking License, Plans US Expansion in 2019 (Crowd Fund Insider)
Revolut, a digital only bank has received European banking license that it applied for in November 2017 via the Lithuanian central bank. It has raised almost $340 million in venture capital. It has been operating in Europe without a banking license and has been successful in attracting 3 million customers. The “New” Bank wants to accelerate global expansion in 2019 and is looking at Canada, Singapore, Japan, Australia, and New Zealand with the US topping the list.
- 10/12/2018 SME direct lender ThinCats secures £200m funding deal (Alt Fi)
ThinCat, a P2P firm, announced a funding program with BAE Systems Pensions (one of the UK’s largest pension schemes), worth £200million that brings ThinCats’ capital under management to £800 million. As per figures on Brismo, it has lent a little under £300 million to date. The Company sources loans ranging from £100,000 to £15 million. The partnership will help the fund to invest in an asset class that offers better risk-return profile and a chance to diversify from the traditional investment offerings.
- 7/12/2018 New institutional investor to fund £1bn of UK loans through Funding Circle (Alt Fi)
Waterfall Asset Management, an institutional investor based in the US and focused on structured credit, has entered into a strategic partnership with Funding Circle. Waterfall Asset Management shall invest an approx £1 billion in loans originated through Funding Circle’s UK platform in the coming two years. The investment will be partially financed by Deutsche Bank.
- 06/12/2018 CUNA Mutual Group acquires digital lending platform Mirador (Ibs intelligence)
CUNA Mutual Group has acquired Mirador. The terms are undisclosed, with Mirador expected to retain its brand within CUNA Mutual Group.The target company is an Oregon based small business digital lending platform provider that helps users (banks, credit unions etc.) to make lending decisions within a period of 24 hours or less. The acquisition aims to enable credit unions grow small business loans and serve a smooth lending experience to the members. Since August 2017, through its venture capital vertical – CMFG Ventures, the acquirer has been a minority investor in Mirador.
- 06/12/2018 S. Fintech Cross River Secures $100 Million Through Latest Funding Round Led By KKR(Crowdfund insider)
Cross River has secured $100 million funding in its latest round. Led by KKR, the participants included CreditEase, Lion Tree Partners, Battery Ventures, Andreessen Horowitz and Ribbit Capital. The funding follows the $28 million secured in venture capital, in late 2016 from Battery Ventures, Andreessen Horowitz and Ribbit Capital.
- 5/12/2018 Digital lenders can help unlock full financial inclusion (Accion)
IFC believes that SMEs in developing countries are facing a $5 trillion funding gap. New alt-lending players are emerging with scalable tech that allows them to offer small loans and an ability to use alternative data points for evaluating credit worthiness. The article profiles players like Konifo in Mexico and PEG in Ghana.
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