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!
27/02/2019 HSBC Taps Alt Lender To Strengthen Middle-Market Footprint (PYMNTS)
HSBC partners with Neptune financial (NepFin) to extend its business in alternative finance sector. The Middle Market companies that use NepFin can now access the financial services offered by HSBC through this alliance. The link up will support mid markets geographically where the bank is not present. “This partnership will enable HSBC to extend its global capabilities and international network to benefit more U.S. businesses,” said HSBC Head of Digital Banking, EJ Achtner. Middle market firms are the biggest contributor to the economic growth in The United States providing $7.3 trillion turnover and employing over 20 million professionals, adds Achtner.
26/02/2019 AI Foundry and Ellie Mae use AI for speedy lending (Banking Tech)
AI Foundry- a provider of Artificial Intelligence solutions for businesses and Ellie Mae – the digital mortgage software provider partner up to make lending easier. This association between the two parties provides AI Foundry with a reach of more lenders and Ellie Mae will benefit from hassle free and less time consuming process of automated documentation. This cooperation will help their customers to get mortgage application approval in hours, rather than weeks. Ellie Mae processes 35% of US mortgage applications, this partnership can have a massive positive effect on the US mortgage industry.
26/02/2019 Provident Bank Launches Digital Lending Capability for Small Business Customers Powered by Fundation (Business Wire)
Provident bank, a New Jersey based bank and Fundation announced a new digital lending solution that will empower small businesses with instant capital solutions. This digital program will enable small businesses to apply for term loans ranging from $15,000 to $250,000 and lines of credit from $20000 to $150000 through a simple application and the applicant will receive the funds within a business day.
22/02/2019 Securitisation forecast to fuel growth of peer-to-peer lending (P2P Finance News)
According to a report- ‘Marketplace Lending- A Growing and Dynamic Global market’, Securitization will play a key role in peer to peer lending and overall growth of the marketplace. The report states that ‘the growth rate remains high’ (for p2p lending) in the UK and Europe and securitization will help in fueling this growth. However, DBRS (a global credit rating agency) cautions the investors to balance their opposing goals of growing the business while “retaining skin in the game”.
21/02/2019 More People Are Taking Out Personal Loans as the Fintech Industry Grows (Fortune)
2018 was a bumper year for the personal loan industry. The personal loan market experienced a surge of 17% and reached $138 Billion, according to TransUnion data reported by CNBC. Fintech lending was 38% of all personal lending, up from just 5% in the year 2013 and experienced an all-time high last year. More than 3300 fintechs were launched between 2010 and 2018 as per a July report by U.S. Department of Treasury.
21/02/2019 Banks fall further behind fintechs in personal lending (American banker)
The banks have also benefited out of the growth in personal lending but it has been at a slower pace and they have been ceding ground to fintech lenders. The bank’s proportion of the market dropped from 30% in 2017 to 28% in 2018. Several banks are working or have already established digital services to target online personal lending but still have not been able to compensate for the rise of the startup online lenders.
20/02/2019 Atlantic Capital Bank Launches Fintech Partnership with Self Lender (Nasdaq)
In another news of a bank fintech partnership, Atlantic Capital Bank is partnering with Self Lender, a fintech that offers its clients a way to build credit while also saving money. This partnership will help in delivering the credit builder accounts to thousands of people all over USA. Doug Williams, CEO of Atlantic Capital commented, “We have been extremely impressed with the Self Lender team and their commitment to help consumers across the United States improve their financial wellness. Self Lender is changing the way consumers gain control of their credit profile and Atlantic Capital’s goal is to be the banking partner of choice for innovative companies like Self Lender.” Atlantic Capital, with assets of $2.9 billion, is a banking partner to fintechs looking to scale up nationally.
19/02/2019 SMB Lender iwoca Raises $194M (PYMNTS)
Iwoca, a UK based alternative small businesses lender announced a massive fundraise of $194 Million. Augmentum Fintech led the Series D funding for the company, which turned its first profit last year. It has provided finding to over 25,000 small businesses. The business aims at funding 100,000 small businesses five years down the line and helping one million businesses succeed by providing access to finance. Christoph Rieche, CEO and Co-founder of Iwoca Stated that the investment will help the company in serving small businesses in UK, Germany and Poland.
19/02/2019 US$588 billion loans to find homes in alternative lending market (Fintech Innovation)
As per Juniper’s research, the alternative lending industry will continue to rise due to approachability, shorter approval period and lower rates. The P2P/marketplace business lending origination value will reach US$116 billion and marketplace lending will reach US $137 billion by 2023 from US$30 billion last year, indicating a growth of 400%. The loan origination value via these platforms will account for 41% of global SME financing by 2023.
19/02/2019 The challenger banks catering to gig-economy workers (American Banker)
Startups like Qwil, Oxygen, Cogni and Joust have emerged to serve the freelancing niche which has not been captured by their alternate online lending peers. The founders of the company were usually freelancers themselves who felt the pinch when the bank/ online lender did not see merit in their gig income. In an era, where 35% Americans are freelancers or sole proprietors working from a coffee shop or home offices, it is difficult to comprehend that no major player has gone after their banking and credit needs. This provides an opportunity to these upstarts to capture this fast growing market. The modus operandi is usually to partner with payment companies or marketplaces to verify their incomes and performance.
19/02/2019 How a $1.3 Billion Institution Launched Its Own Digital Bank (The Financial Brand)
IncredibleBank, is the online unit of a Wisconsin-based community bank, River Valley Bank. With only $1.3 billion in assets, it was the top 10 online bank as rated by GoBankingRates.com. Another feather to its cap is its innovative digital lending product, loans for luxury RVs; a first for the American market. The digital bank was launched not for lending but for raising deposits. When it was wildly successful in increasing the deposit base, the bank decided to pivot and make it a revenue generating entity by offering loans.
18/02/2019 The U.K.’s Peer-To-Peer Lending Sector Is Facing Its Biggest Test To Date (Forbes)
The actual effects of Brexit are slowly becoming visible. A recent study shows that the UK GDP growth in this quarter was the lowest since 2012, Personal insolvencies rose by 16.2% and the number of bankrupt businesses increased to 16,090 in 2018. With the worsening of economic conditions like fall in wage rates and increase in unemployment, the p2p industry is facing a trial by fire. It is always easy to lend when the economy is steadily growing. Only during a recession do you get to know which lender had the discipline to allocate credit properly.
14/02/2019 Arena Investors Wins Alt Credit “Direct Lending Fund” Award (Business wire)
The ‘Direct lending Fund’ award was won by Arena investors at ‘2019 Alt Credit US Performance Awards’ held in New York, USA on February 12, 2019. The award ceremony recognized competitors under the categories like hedge funds, funds of hedge funds and alternative credit firms that outperformed their peers in the past 12 months. The performances were adjudged by the top investors and investment consultants and the honors were announced by The Westaim Corporation, a Canadian investment company. Arena describes itself as a global chaser of illiquidity.
14/02/2019 CommonBond gets $750 million in lending funds from top banks (American Banker)
Top banks like Barclays, BMO, Citibank, Goldman Sachs and ING are providing CommonBond with a $750 million lending capacity. CommonBond has raised $4 billion in lending capacity till date and has loaned over $1 Billion in 2018. It also acquired an AI-powered platform, NextgenVest known to help high school and college students with hybrid advisory services.
13/02/2019 Small Businesses Harmed By Fintech Lenders, Entrepreneur Advocates Warn Congress (Forbes)
Main Street Alliance which has a network of 30,000 small business owners, warned the Congress that small business owners and budding entrepreneurs are being taken advantage of by fintech lenders. The expansion in small business lending has a great future, provided the lending practices are transparent and do not exploit small business owners.
13/02/2019 Banks Set To Invest In Legacy Systems To Combat Challenger Bank Threat (Fintech Finance)
Challenger Banks are filling the gaps left by established commercial banks with the help of innovative technology. As the threat of Challenger Banks persists, 46% bankers believe that their organization must invest in updating legacy systems while the other 26% believe that it must invest in innovative technology. As per the survey conducted by fintech provider Fraedom, the disruptive influences in banking industry in 2019 will be digitalization (36%) and consumerisation of technology (36%). Over 53% of the bankers believe that AI and machine learning will be the finest technologies to influence Banking Industry in 2019.
11/02/2019 FinTech Credit: Not So Clear And Present Danger? (PYMNTS)
With no defined regulations and huge potential, the future of Fintech firms is blurry. ‘Description of Fintech credit business models vary significantly across jurisdictions’ stated Forbes. For example some fintech firms may deal with peer to peer lending or the others with Marketplace lending or both, which makes the regulatory work challenging. The collection of data becomes difficult with no specific definition. The Consumer Financial Protection Bureau (CFPB) is currently specifically targeting regulations focused towards Payday lending.
7/02/2019 New Payday Lending Rules Present An Opportunity For Fintechs (Forbes)
Payday lending market is a popular (and sometimes only) choice for people in need of quick cash. Fintech firms have a huge opportunity in this sector. While announcing the roll back of the rule that mandated payday lenders to determine if the borrower can payback or not, the CFPB stated that its action will increase the access of consumers to credit.
4/02/2019 London-based alternative credit scoring startup Aire raises €9.6 million in Series B funding (Eu- Startups)
Aire is focused on bridging the fairness gap for consumers and value gap for lenders. Its API integrates with existing platforms to draw “personalized credit scores” which take into account not only the financial history but also career, lifestyle and financial maturity. The company has scored over $10 billion in credit and has raised the funding from Crane Ventures, Experian Ventures and Orange Digital Ventures.
4/02/2019 The Future Of Lending: Fintech 50 2019 (Forbes)
The article lists the top fintech lending companies that make up its Fintech 50 for 2019.
Affirm, a San Francisco based point of sale lender, has raised $450 million and is currently valued at $1.8 billion.
Kabbage, a small business loan provider, has raised $489 billion and is currently valued at $1.2 billion. It has made over $6 billion in loans to 150,000 businesses.
Nova Credit is focused on immigrant borrowers and leverages information from credit bureaus of India, Mexico, UK, Canada and other foreign countries. It helps lenders and landlords take a qualitative decision on borrower/renter requests. It has raised $20 million in funding.
Tala, based out of Santa Monica, specializes in micro loans of $10 to$500. It uses smartphone data of the borrower to provide loans in developing countries. It has raised over $105 million in funding.
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