The construction sector accounts for approximately 16% of invoices financed on the MarketInvoice platform and issues from construction company Elimco UK have uncovered some new potential risks for the sector; Elimco UK has stopped making payments to the platform; in most cases MarketInvoice as the lender would receive preferred rights to the company's payments however in the construction sector set off rights give the customer preference of payment which has caused the construction company to default with MarketInvoice; the total amount of losses reported for MarketInvoice has not been disclosed; the company says its overall loss rate is 2.4% after recoveries; the firm also says it does not have plans for data filtering by industry category since it would lead to cherry picking loans. Source
News Roundup
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Lending Club's fourth quarter earnings release showed a decrease in investment from retail investors; the decrease follows an increased focus from the company on banks and institutional investors as the company seeks to regain credibility following issues in 2016; while originations have remained fairly steady over the past three quarters, the percentage of investment from institutional investors increased to 74% in the fourth quarter. Source
Funding Circle has reported cumulative originations of over 2 billion British pounds in P2P loans since its launch in 2010; it is the largest online marketplace for small business loans and has been originating approximately 100 million British pounds a month since November; its cumulative loan originations are currently just slightly less than Zopa which surpassed 2 billion British pounds in January and was the industry's first platform to launch in 2005. Source
Beepi is closing after failed attempts to merge with Fair.com and DGDG; the firm is now working with Sherwood Partners to sell its assets through an assignment for the benefit of creditors process; Beepi provided an innovative online solution for used car sales; sources say the firm was paying exorbitant salaries and benefits for its employees; Sherwood Partners has not provided any details on buyers of the firm's assets however it is reported that Fair.com may be involved. Source
Online marketplaces specializing in lead generation services play an important role in marketing lending products; ThinkWallet, a lead gen platform, provides insight on how lead gen companies are serving online lenders in the current market environment; some of their benefits include lower marketing costs, a wider pool of prospects and better quality leads; a formalized compliance process used by third party lead generation providers is also becoming a greater benefit to lenders as regulatory oversight increases specifically from the FTC and CFPB. Sponsored Blog Post
Orchard's weekly snapshot highlights some new securitization activity in the online lending market; SoFi has filed for its third securitization of 2017 (SCLP 2017-2); Kabbage has filed for their first securitization of the year; in its fourth quarter 2016 earnings report, Lending Club also reported a new securitization program with quarterly issuance of up to $100 million. Source
New Zealand-based marketplace lender Harmoney has announced the launch of its services in Australia; the firm has opened an office in Brisbane and plans to begin with $200 million in capital to lend; the firm has also signed agreements for institutional funding for the next three years; rates will start at 8.99% and the firm will offer loans from $5,000 (USD$3,829) to $35,000 (USD$26,801). Source
Nuoyuan Technology is optimistic about financial innovation in China and globally; the firm is growing its business in China and through its subordinate business, Nuoyuan Online Platform, offers a service that connects borrowers with lenders; Nuoyuan Online has now helped to finance over 5 billion RMB and has over 600,000 users; in their featured blog post they discuss the global market for fintech innovation and their expectations for the future. Sponsored Blog Post
According to a report from Banking Technology, Amazon could potentially be acquiring Capital One; Capital One uses Amazon's AWS cloud services; its credit card business could complement Amazon's current offerings for payment processing and credit cards while also expanding its services for Amazon's merchant network; according to Neil O'Brien, former director of digital banking at Santander US, "There has been speculation for a long time about a tech giant (GAFA – Google, Apple, Facebook, Amazon) buying a bank in the US, but the general sentiment was that banks were an undesirable target because of low margins and more importantly, high regulation."; the potential for a bank acquisition is now likely to increase given recent regulatory developments in the financial services industry. Source