The Securities and Exchange Commission's 2016 Annual Report on Nationally Recognized Statistical Rating Organizations (NRSROs) notes increased rating activity for marketplace lending; says smaller NRSROs have increased market share by rating marketplace lending securitizations; rating agencies issuing ratings for marketplace lending transactions included KBRA, Fitch, S&P, Moody's and DBRS; of the 28 rated marketplace lending transactions in 2016, DBRS rated 28.6%, KBRA rated 25.0%, Moody's rated 25.0%, Fitch rated 7.1% and S&P rated 3.6%. Source
The Securities Exchange Board of India (SEBI) has announced the formation of an advisory committee focused on fintech; development of the advisory committee follows the demonetization of the country's currency and lack of regulation instituted by federal government officials in regards to the P2P lending industry and fintech in general; the advisory committee will include representatives from across the entire fintech sector; a key initiative for the committee will be to mobilize household savings from India's consumers through new risk capital and debt investments. Source
The Fund is increasing its dividend for the first time in eighteen months; dividend will increase to 1.7 pence per share after five consecutive quarters at 1.5 pence per share; the Fund currently has GBP343 million ($447.12 million) in assets and has been increasing its allocation to balance sheet investments. Source
Kabbage is reportedly considering an acquisition of small business online lender OnDeck; S&P Global analyzes a potential merger between the two firms which has high value deal prospects including combined 2016 SME loan originations of $3.82 billion, costs savings from similar balance sheet and securitization funding sources, and similar success in technology licensing partnerships, overall resulting in increased margins, earnings and more competitive terms to borrowers; the valuation metrics and negotiation factors are the main constraints to a potential deal; the minimum enterprise value reported by S&P Global is $291.7 million which is below its current market cap of $372.4 million and far below its original IPO valuation of $1.3 billion; key factors to watch for 2017 will be OnDeck's forecasted EBITDA and fundraising obtained by Kabbage. Source
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.
LendIt provides details on LendIt USA 2017 training sessions in their blog post; the training sessions will be focused on sales and marketing, and technology and operations; the two sessions will be held on March 6 and will include interactive discussion; the sales and marketing training session will be in the morning and will include discussion on digital marketing channels, and lead generation, retention and engagement; the technology and operations session will be in the afternoon and will include discussion on artificial intelligence and the importance of mobile. Source
Merger will result in the largest robo-advisor in marketplace lending; the companies will operate separately for now but the company aims to take the best of both platforms; the funds offered will be streamlined with the LendingRobot Series fund being the focus going forward; Bo Brustkern, co-founder and CEO of NSR Invest, will be leading the new entity with Emmanuel Marot, co-founder and CEO of LendingRobot, acting as a special advisor; the new entity will have $150 million in assets under management with over 8,000 clients. Source
According to American Banker, CAN Capital has laid off employees; this is following the news earlier this month of the company putting the chief executive officer and other executives on leave; according to an email from the company, "While this is a difficult decision, we believe it is necessary to position ourselves for long-term success."; documents from state officials in Georgia showed 136 layoffs in the Kennesaw, Georgia office while a source stated layoffs totaled 250 people, including all staff in Costa Rica; according to the source, layoffs were at least half of the company's total workforce. Source
The underserved or underbanked have always had a problem getting access to credit that is affordable. The panel at LendIt USA 2016 entitled, "Providing Access to Credit in Underserved Markets" explored the different types of thin file borrowers around the world.
Lenders first need to understand who they are looking to serve and be sure to define their market. Understanding the type of borrower you are looking to serve will allow you to better evaluate the limitations of the data you will receive from this borrower.
How do lenders look to serve borrowers with a thin file, no file or limited data set from the traditional credit bureaus? They look to compile alternative data to help them evaluate the different borrowers.
These non-traditional lenders will pull some traditional data, as well as alternative credit bureau data and proprietary data such as questionnaires they ask to these borrowers. Alternative data can be phone payment records, bank transaction analysis and social data.
These newer lenders are no longer constrained by technology; banks used to have about thirty variables to analyze a borrower, now companies can look at two or three times that amount and are no longer limited by legacy technology.
LendUp, ZestFinance, China Rapid Finance and Oportun all serve a different type of borrower, but they all extend credit to the non-prime, non-traditional borrower. Serving these types of borrowers has additional impacts as well, the more people that are able to access affordable credit the better it is for broader communities.
To learn more about the latest trends and technology in credit and underwriting please join us at LendIt USA 2017, where we will have a dedicated track covering the market.
Lending Club and Prosper allow for tax efficient investing on their platforms through an IRA; Lend Academy provides details on opening an IRA with Lending Club or Prosper and explains why investing in P2P lending is best done through an IRA. Source