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MonJa's Digital Banking and Lending Monthly Roundup | August

[vc_row][vc_column][vc_column_text]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!

Private equity firm Serent Capital, and owner of loan document generation engine – Docutech, has invested in GDS Link, a credit risk management software company. GDS Link helps lenders implement their credit strategies through its flagship product DataView360®. With over 12 investments in fintech and 4 in lending technology, Serent has built a strong portfolio of Fintech SaaS players.

Salary Finance, the UK based FinTech Platform, recently announced a $20 million Series B funding round led by Blenheim Chalcot and Legal & General. The funding was raised to scale the company’s platform in the United States. It is partnering with Bofl Federal Bank, a $10 billion in assets FDIC insured bank, and United Way, one of the largest privately funded non-profits. Salary Finance focuses on helping employees plan their financial well-being.

A group of investors led by Michael Novogratz’s Galaxy Digital invested $52.5 million in the crypto-backed lending platform, Blockfi. The firm also announced expansion into California and now it’s credit service is available across 44 states. The company basically holds cryptocurrencies like Bitcoin and Ethereum as collateral and dispenses the loan in USD. The borrower has the option to pay back in crypto or fiat.

First Data is a leading provider of ecommerce and payment processing services. It has partnered with Ellie Mae, the mortgage software company processing almost 35% of US mortgage applications. First Data’s Card Connect and Bluepay Gateway system will be integrated with Elllie Mae’s Encompass Consumer Connect lending platform for secured payment of fees and charges.

Deserve, an alternative fintech lender, has raised $17 million in Series C funding led by Sallie Mae as a strategic investor, with participation from Accel, Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group and GDP Venture. Deserve has introduced a mobile app focused on Generation Z and its Deserve cardholders will now be able to manage finances, build credit and earn rewards on a single platform. Generation Z accounts for 25 percent of the US population and is projected to make up 40 percent of consumers by 2020, as indicated by Experian. This means that Deserve’s niche is about to get a whole lot bigger in the coming years.  

Lodex is an Australian marketplace for loans and deposits. It is now partnering a blockchain development company Lakeba Group for creating a blockchain-based peer-to-peer lending platform “BLOCKLOAN”. The vision is to democratize access to credit by removing banks as the middlemen. Venture capital fund Xplora Capital recently purchased $1.35 million in BLOCKLOAN tokens.

According to Experian, first half of 2018 saw $81.9 billion in personal loans to U.S. consumers. This is a solid 13% growth as compared to 2017. The segment that was vacated by banks after the 2008 crisis is now witnessing a turf war with traditional players like Amex and Goldman competing with relative fintech newbies like Lending Club and Social Finance. According to TransUnion, people with FICO less than 601 (considered subprime) received 1.5 million loans in 2017.

Deutsche Bank, the once venerable German banking giant is buying an unspecified stake in Dallas based ModoPayments. This investment would not only boost its presence in digital payment alternatives but also allow it to associate with platforms like Alipay, Tencent Holdings Ltd.’s WeChat, PayPal Holdings Inc. and M-Pesa. Is this a pure payments play or a step towards launching a big bang loan platform like Goldman’s Marcus?

Lending Club founder, Renaud Laplance has proved that Upgrade, his new lending startup is a serious contender by snatching a $62 million Series C round investment. The round was led by CreditEase FinTech Investment Fund and saw participation from other marquee investors like Union Square Ventures.  With a pre-money valuation of $438 million, Upgrade is inching closer to becoming the next unicorn fintech lender. The company has seen impressive numbers with over 100,000 customers and more than $1 billion in loans issued since its formation. The company’s new product “personal credit line” – integrates unsecured personal loan with a credit card and is expected to be a major draw for baby boomers.

Athena is Australia’s first digital home loan platform and has been successful in raising $2 million from non-bank lender Homeloans Ltd. The startup has raised a total of $20 million and this “multi-faceted partnership” can help both parties leverage each other’s specialization. With Australia’s $1.7 trillion home loan market on the line, Athena can be a major force to reckon in the future.

The Trump administration is in the process of permitting online lenders to apply for national banking charters, as indicated by Office of the Comptroller of the Currency. Legitimizing online lenders on a national scale will provide a more efficient, and at least a more standardized, regulatory regime, than the current state-based regime, as discussed by Treasury in its report. It should boost small business lending and have a positive spillover effect on the economy.

Banks are increasingly partnering with fintech startups in their quest to remain relevant. According to KPMG’s Pulse of Fintech report, the sector saw $57.9 billion of global investments by mid-year 2018, a 52% jump from the $38.1 billion in entire of 2017. JP Morgan’s OnDeck partnership for small business lending was the headline but there have been a spate of smaller deals and investments that show bank-fintech partnerships are here to stay.

The U.S. credit card debt crossed $1.027 trillion in March 2018. A Credit Card Payoff product launched by two startups- Happy Money and Arcus will empower borrowers to pay off their multiple credit cards with a single loan. Happy Money is integrating Arcus’ xPay application programming interface into its Payoff Loan and will be disbursing loan proceeds directly to payoff a member’s credit card debt.

As per the list of 37th Annual Inc. 5000, OppLoans (a Chicago based online lender) was ranked 340th on the list of fastest growing private companies. The company disclosed that it has witnessed approximately 1,464.6 percent growth in the past 3 years. It has not been growing indiscriminately, with both customers and employees loving the young company. It has an average customer rating of 4.9/5 stars on Google and a 95-percent approval rate on LendingTree.

The U.S. Treasury Department released a 222-page report that recommended changes to the outdated financial regulatory framework so that FinTech firms can execute innovative business models and that all can feel the benefit of credit growth. The report may also signal upcoming action on the growing clamor to federally regulate online lenders as compared to young startups being forced to apply on a state-by-state basis.  

According to a Report in WSJ, Fair Square and LendUp among others are aggressively targeting sub prime borrowers. According to a research firm, more than 35 million credit card offers were mailed in H1 2018 as compared to just 7 million in H1 2017. Is this a new normal or are we reaching a peak?

Goldman Sachs started Marcus, an online lending platform that offers unsecured consumer loans, in 2016. They are offering loans up to $40,000 with interest rates ranging from 6.99% to 24.99% as of August 2018. Marcus had disbursed more than $4 billion in total loans since its inception and it had a customer base of 1.5 million.

Weidai, which means micro-lending in Chinese, is a Hangzhou based p2p lending platform looking to go for a bumper $100 million American IPO. This is a continuing trend where strong Chinese fintech players look at American exchanges for a prestige listing and deeper investor base. Its 2017 revenue topped $500 million and profitability stood at over $77 million.

Noah Breslow, CEO of OnDeck Capital Inc tells Proactive Investors that their company has provided loans over US$9 billion to small businesses. He also says that online lending is the future for consumers and small businesses. Breslow also shared that investors were delighted with the growth in profitability and revenue numbers.  

44% of employees say they are being paid late due to issues arising from payroll processing (manual) and other flaws. In the recent Disbursements Tracker, PYMNTS explores how digital disbursement tools are putting a new (fast and daily) spin on the payroll. Also, Travis Holoway, CEO of SoLo Funds, describes how disbursements, along with P2P lending, are evolving as an alternative to payday loans.

The U.S. is lagging behind other leading developed countries in offering fintech firms a legal framework which protects consumers and supports innovation. Nick Bourke, Consumer Finance Director, The Pew Charitable Trusts, said the U.S. lacks a coherent approach. A financial innovation program needs clear goals, strong consumer protection and coordination among regulators he said. The Treasury Department has initiated looking at innovation and the role of regulation but is far behind financial centers like US, Singapore and Hong Kong.

Bipartisan Policy Center suggested various reforms that would help in improving the ability of small businesses (SMBs) to get financing in the U.S. The Center’s Task Force on Main Street Finance urged the federal government to enact changes that would help in improving the ecosystem and regulations powering small business financing and crowdfunding.

Gusto, a U.S. payroll startup, announced $140 million in Series C funding raised through late-stage investors. It provides small and mid-sized businesses with payroll and human resources technology. Recently, Gusto announced a partnership with Xero, small business accounting firm, enabling it to provide payroll throughout all 50 states in the U.S. Also, Judo Capital, an Australian challenger bank, announced its funding round. The company successfully raised around $104 million from Abu Dhabi Capital Group, the Ontario Pension Trust, Myer Family Investments and Credit Suisse Asset Management.

Digital disbursement tools might offer a speedier solution to employees having easy access to their wages. Companies like Gusto, Paycor, Earnie and Zenefits, offer solutions that aim to remove the flaws that come with paying employees and eliminate late wage payments.  These tools are changing the way consumers file their health insurance claims, and how they make and receive their insurance payments. Also, they are shifting the ways that consumers and companies do business and complete transactions.

A U.S. bank regulator, OCC, said it would soon start accepting applications for national charter from fintech companies. For the first time, it will give these companies a path to federal oversight. This move will open the door for online and P2P lenders to operate countrywide under a single licensing and regulatory authority instead of various state licenses. The decision will be a relief to some online lenders, who have long complained regarding the burdensome procedure for applying for licenses on a state-by-state basis.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/2″][vc_custom_heading text=”Interested to find out if MonJa’s lending automation platform is a fit for your organization? ” font_container=”tag:h4|font_size:23|text_align:left|color:%23000000″ google_fonts=”font_family:Raleway%3A100%2C200%2C300%2Cregular%2C500%2C600%2C700%2C800%2C900|font_style:700%20bold%20regular%3A700%3Anormal”][vc_custom_heading text=”Request Free Demo Today!” font_container=”tag:p|font_size:24|text_align:left|color:%23000000″ google_fonts=”font_family:Raleway%3A100%2C200%2C300%2Cregular%2C500%2C600%2C700%2C800%2C900|font_style:700%20bold%20regular%3A700%3Anormal”][/vc_column][vc_column width=”1/2″][vc_column_text][yikes-mailchimp form=”10″ submit=”Schedule a Demo Today”][/vc_column_text][/vc_column][/vc_row]

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