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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!
1). 09/26/2019 Peloton IPO Disappoints, But Fintech Lender Oportun Gains 8% In Nasdaq Debut (Forbes)
Oportun Financial, a fintech company offering low-cost loans to the “credit invisible”, offered 23% of its outstanding shares to the public in its IPO and raised $94 million. The company debuted on NASDAQ under the ticker OPRT and sold its 6.25 million shares valued at $15. The share prices closed at $16.17 by the end of the day. Founded in 2005, the company serves the underbanked Hispansic community and has disbursed greater than $7.3 billion loans that ranged from $300 to $9,000 to approximately 1.5 million customers amongst whom almost 50% didn’t have a FICO score at that point of time.
2). 09/24/2019 Digital upstarts muscle in on US core banking services (Financial Times)
The big names of the banking industry are noticing upstarts capturing significant shares where once only Wall Street ruled. The top three US lenders— Wells Fargo, JPMorgan, and Bank of America — have witnessed a massive drop in their home loan origination share to 19% in the first half of 2019, from a 49% peak in 2010. Also, a fintech company, Quicken Loans shifted from being a traditional home loan lender in late 1990s to an online-only lender, and has become the largest mortgage originator of 2018. The company recorded a whopping $32 billion of loans originated in Q2 2019. The market is flooded with the online lenders and fintechs, with biggies like Apple, Facebook, T-Mobile joining in the digital banking landscape with their respective projects.
3). 09/19/2019 Could Peer-to-Peer Lending Be Resurrected By Falling Interest Rates? At Least For Now? (deBanked)
P2P lending sector witnessed a slowdown when Fed started hiking interest rates and the effective yields for P2P lenders plummeted. Lending Club, the leading platform for p2p investors, saw its share drop to 5% of total online platform loan originations ($155 million in absolute terms) in the most recent quarter, from 19% ($308 million) in Q1 2015. With Fed cutting interest rates, investors could again be attracted to P2P lending for juicing their returns.
4). 09/19/2019 CircleUp Raises $200 Million To Woo Consumer Retail Startups With A VC Alternative: Loans (Forbes)
CircleUp, a San Francisco based fintech company, reported that it secured more than $200 million for its credit division. These funds will be used to provide financing options to startups. This shall boost the company’s loans business that has already generated more than $300 million loans since its launch in 2017. The investors included Michigan’s state pension fund and Pacific Life among others. The company also has an equity division that directly invests in startups (instead of lending).
5). 09/10/2019 Payments giant Stripe debuts a credit card in its latest step into the financing fray (TechCrunch)
Recently, Stripe stepped into the world of money lending through the launch of Stripe Capital. Alongside, it was speculated that the company shall also come up with a credit card. Now, the company is doubling down on financing with the launch of corporate cards for business customers. The Stripe Corporate Card shall be a Visa and open to US companies. The users need to pay the balance in full every month, as Stripe does not charge any interest or fee to use the cards. The revenue for Stripe would be the interchange fee that comes with every transaction via the card.
6). 09/10/2019 College Ave Student Loans Completes $300 Million Securitization of Private Student Loans (CrowdFund Insider)
College Ave Students Loan, a student loan marketplace, concluded securitization of $300 million worth of private student loans. This was the company’s 3rd securitization and largest to date. The company reported the transaction was oversubscribed and attracted interest from a broad and diverse group of repeat investors and new participants. The big names – Barclays and Goldman Sachs were the joint lead underwriters on the transaction, where Barclays served as the sole book runner and structuring agent. The company reported that it has $660 million in securitized loans and has secured over $2 billion of committed loan purchasing power from multiple sources.
7). 09/05/2019 How millennials are changing banking (Policy Genius)
Companies are trying to evolve to meet the expectations of the millennial generation. The banking sector has had to encounter multiple challenges, as millennials tend to be less trusting of financial institutions and more likely to choose alternatives to traditional banks, and are more demanding in terms of technology and service. The banks are thus responding to these demands by focusing more on the digital experience of their services. Case in point: Various major U.S. banks are offering P2P payments through Zelle ( a popular p2p payment solution) integration that allows customers to directly make payments from their bank’s mobile app. The banks are also focusing on customer acquisition and retention especially for lending segment as it is under direct attack from a bevy of online lending startups.
8). 09/04/2019 How Does Alternative Lending Work? (U.S. News)
Alternative lending refers typically to consumer and small business loans that are powered by online onboarding of applicants (people and businesses) that various traditional banks might usually turn away due to low credit score or a thin credit file. Alternative lenders tend to belong to two categories: Direct lenders, that are usually lending via their own balance sheet and P2P (Market Place) Lenders, where the borrowers connect directly with investors who typically fund small portions of a diverse loan portfolio. The article focuses on how these innovations are a boon for small businesses and startups.
9). 09/03/2019 P2P Lending Platform Set to Launch Brand Targeted at Millennial Investors (LearnBonds)
The House Crowd (a p2p platform that allows investors to fund bridging and property development loans) is launching a millennial focused brand, Money Mog. It aims to simplify property investments while also making property investment accessible to every individual. Earlier, you could start with an investment of £1,000 and investment transactions come in increments of £1,000. But with Money Mog, interested millennials can invest in a property-backed ISA with a minimum of just £50.
10). 09/03/2019 P2P lending hits a speed bump (MoneyWeek)
While the P2P lending sector is still a hit among fundraisers, the sector is facing a slowdown in its growth. In Britain, the gross new lending reached a whopping £6 billion for the first time in 2018, representing a 20% growth from the previous year’s £5 billion. This marks the UK as Europe’s biggest online lending market. But the point of concern is the rate of growth that went south from 405 in previous year to 20%. As per Brismo, a specialist data provider, another year of 20% growth in loan originations for 2019 is forecasted, lifting the new annual figure to £7.27 billion. But does this mark the maturing of the industry or that it has captured the relevant market share and is now fast reaching a saturation point?
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