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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!
SoFi recently closed a $500 million funding round which was led by Qatar Investment Authority, pushing the company’s valuation to a whopping $4.3 billion. The company plans to channel this funding for expansion and strengthening its $2.3 billion balance sheet. Founded in 2011 with a focus on student loan-refinancing, the company is now on a product launching spree and recently announced cryptocurrency trading by partnering with Coinbase. It is also rumored that it soon going to launch its own credit card.
5/29/2019 PayPal Crosses $10 Billion In Small Business Loans (LendAcademy)
PayPal, the online payments giant has crossed $10 billion in funding to small businesses. It is originating a humongous $1 billion a quarter and has funded 225,000 businesses till date. Its USP is that it is able to offer a massive loan amount range, from $1000 to $500,000. It has dethroned OnDeck to be the largest small business loan originator in the US. Its existing client base will ensure that its cost of acquisition per borrower will be a fraction of pure lenders like OnDeck. It is also active in the UK, Australia and Germany.
5/28/2019 The P2P Platform Lending Tree Shares Are Shining Amid Revenue Growth Prospects (Learn Bonds)
Lending Tree, a P2P online lending marketplace that connects customers to a broad range of lenders, has shown a robust outlook for 2019 generating revenues of $262.4 million for Q1. Analyst’s anticipation of revenues for the year 2019 stood at $1.06-$1.09 billion compared to the previous estimation of $1.01-$1.05 billion. Tremendous performance of insurance and credit card divisions and stable lending is driving the 45% Y/Y revenue growth. Currently, its shares are trading at a value of $370 on NYSE with a market cap of almost $5 billion.
5/24/2019 Multibillion-Dollar B2B FinTech Firms Emerge From Investors’ Pockets (PYMNTS)
The B2B Fintech market is now in the spotlight with various multi-billion dollar firms like Lumi, LendingCrowd, etc emerging from the sector. Fintech lending firms in particular have taken a lead in producing new unicorns. Globally, the alternative small business lending sector has been a firm favorite among investors. Companies like LendingCrowd raised a $24 million funding from the Scottish Investment Bank and NIBC to finance loans on their platform.
5/24/2019 Visa’s chief economist: Banks disintermediated by ‘massive increase in alternative lending’ (PaymentsSource)
Fintechs offering installment loans are posing strong competition to traditional credit card lending. In the US, the share of unsecured installment debt skyrocketed to 40% in 2019, from being close to 1% in 2010. Not only the millennials, but people across all risk bands and all ages are participating, according to Wayne Best, the Chief Economist at Visa. As per the chief economist, there has been a massive growth in the alternative lending sector due to the ease that the sector provides to move loan balances by partnering with retailers or through mobile applications.
5/22/2019 Small and midsize banks can’t shy away from AI (American Banker)
AI allows greater accuracy and automation in the banking sector. Many big and small banks are using the technology to decrease loss rates, increase the approval rates for loans, monitor the transactions and catch fraud, prevent money laundering etc. AI will also help in improving the customer experience by powering chatbots and offering 24-hours support. AI can process huge numbers of signals from the credit report and alternative lending data; this can help in reducing the risk, expanding access to credit and lowering the overall interest rate that someone pays on a loan.
5/22/2019 Are Digital Banks Struggling to Get Traction? (Lend Academy)
Though people are opening accounts in digital banks but there’s still a long way to go. A survey highlighted that only 3% of millennials have their primary checking account at a digital bank and only 7 million deposit accounts have been opened at a digital bank, highlighting that digital banks are still in their infancy. “Finn” by JP Morgan Chase is not getting much traction and has only 47,000 accounts. But it is also estimated that the tide will turn and digital banks will have a real long-term impact on the banking economy.
5/19/2019 Mode to launch its first lending solution for companies holding crypto (Yahoo Finance)
Mode Digital Bank, a subsidiary of R8 limited has announced its initial offering- a “crypto backed lending solution” targeting firms dealing in Bitcoin and Ethereum. The Company will offer loans initiating from £1000 in both pounds (£) and euros (€) backed by cryptocurrency for a term of 90 days to be repaid at any time during the loan term. Loan to collateral value will be 60% for Bitcoin and 50% for Ethereum. Mode aims to be a digital bank by combining benefits of traditional and modern finance.
5/15/2019 Goldman Invests in Berlin Fintech with 200-Year-Old Bank Clients (Bloomberg)
Elinvar, a Berlin-based fintech firm saw Goldman Sachs Group investing in its digital lending platform in a recent funding round, which also saw participation by its existing shareholders- Ampega Asset Management and Finleap. Elinvar has prestigious German banks, M.M Warburg & Co., Donner & Reuschel AG and Fuerstlich Castell’sche Bank as clients. This is a classic case of fintech startups helping traditional banks enter the digital age. After the recent financing round, Elinvar’s total funding capital stood at €20 million ($22 million) with Goldman Sachs holding (13.9%) and Ampega Asset Management and Finleap (32.8%) each.
5/01/2019 A Busy month for fintech funding (American Banker)
Fintech startups are raising the bar with millions of dollar of funding at initial stages. Online lending startups like Built Technologies and Upstart have secured funding of $55 million and $50 million in series B & D respectively from big investors like Goldman Sachs and Regions Financial. Unqork and Extend, just two years old, count Goldman Sachs as its initial investor. Novo, a digital banking company and MotoRefi, a fintech connecting lenders with auto refinancing customers also raised seed capital of around $5 million each.
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