LQD Business Finance is an alternative lender in small business lending; 2016 was the company's first year in business; it reported closed loans of $33 million and also closed its Series A round; CEO George Souri expects growing its origination run rate to $80 million by the end of 2017 and to $200 million over the next 24 months. Source
News Roundup
This page contains an archive of the Global Newsletter summaries and the weekly fintech news roundups.
Every day the Fintech Nexus news team scours the globe for the most important stories of the day to include in our daily newsletter.
Then every Saturday we bring you our weekly news roundup of the top 10 fintech stories of the week with commentary from Peter Renton.
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Canada reported significant growth in online and marketplace lending in 2016; fintech growth in the country was also substantial with Canada reporting a 74% increase in fintech investment; a blog post from Aspire gives a roundup of online and marketplace lending activity in 2016 which included many partnerships and equity rounds; also provides predictions for the market in 2017; among its seven predictions are more bank partnerships and increased institutional investment. Source
New insurtech platform Ladder has launched, offering digital life insurance; the platform's life insurance product will be available to consumers in California; the company is marketing a faster, more efficient process for life insurance applications and coverage; its platform can approve customers in minutes for life insurance policies up to $8 million; it charges no annual policy fees and its policies are reinsured by Hannover Re US. Source
AutoGravity has added First Investors Financial Services to its car loan financing network; AutoGravity has developed an app that allows car buyers to choose a car online and receive four financing offers; the addition of First Investors Financial Services will broaden the available financing options for users. Source
Morgan Stanley has partnered with Addepar to provide investment management platform services for its private wealth management group; Addepar is a growing investment management platform that provides solutions for aggregating and managing the wealth of private high net worth clients; Addepar is supported by Peter Thiel; prior to the partnership with Morgan Stanley its clients primarily included registered investment advisors; it is now seeking to expand to a broader range of large private wealth banking clients. Source
The securitization market for marketplace loans has been increasing in recent years, in reviewing the State of the Securitization panel from LendIt USA 2016 we hear about the deals getting done, new risk retention requirements and what issues crop up when selling to investors.
Panelists covered the increase in rated securitizations from Moody's, Fitch and Kroll, noting the overall market is still small compared to auto or credit cards however it continues growing.
The new risk retention requirements will force sponsors to hold a residual of equity interests when in the past some were able to sell off 100%, though it would depend on the sponsor and the deal.
Common issues when selling deals
- Investors want to know how loans are underwritten, serviced and what does loan performance look like
- Length of performance history is a common theme, investors want to know how the asset performs as compared to credit card deals or auto securitizations
- Selling the deal in comparison to a similar asset helps to mitigate questions and analyze loss scenarios
- Investors want to see platforms retain risk
- True lender, Madden v. Midland, they want to avoid a deal that ends up being dragged through court, like many subprime mortgage securitizations
- Servicing needs to have capacity to make calls and get payments in, whether the servicing is in house or outsourced
To hear more about risk retention, please signup for our LendIt Forum scheduled for today at 2:00 PM EST. You can register here.
Check out the full video interview here:
LendIt will be hosting a forum today on risk retention in securitization at 2:00 PM EST; the forum will be held in conjunction with Cadwalader and Lending Times; speakers will provide insight on key factors to consider in choosing the optimal risk retention structure, commercial considerations related to sponsors including brand and investor relationships, requirements necessary to establish a majority owned-affiliate including the amount of equity that must be retained by the sponsor versus an investor and other related topics; register here and join the webinar today.
A blog post from deBanked provides insight on the use of data scientists in marketplace lending; while these platforms are built on data programming and analytics, Justin Dickerson of Crossfold Analytics implies that the industry could be inefficiently utilizing data scientists resulting in lower returns and income losses broadly across the industry; Dickerson provides recommendations for data science groups specifically noting the importance of building a strong data science infrastructure with less focus on a massive data science team. Source
The FactSet Global FinTech Index has been launched by FactSet; it includes 88 companies involved in financial technology globally; Nikko Asset Management has licensed the Index for its Global Fintech Equity Fund; US credit providers in the Index include PayPal and Square. Source
R3 has reported that it is leading a $150 million funding round for a blockchain investment which is expected to close in the first quarter of 2017; the funding will be the largest investment in the blockchain industry; R3 is a blockchain banking consortium with over 100 employees in nine countries; it now has 77 members and will be involved as an adviser on the Depository Trust and Clearing Corporation's integration of a new blockchain solution. Source