Lending Club released its fourth quarter and full year earnings results on Tuesday, February 14; Lend Academy provides details of the earnings release in their article; the lender originated $8.6 billion in loans for 2016; net operating revenue for the year was $495.5 million, up from $426.7 million in 2015; net income fell to -$146 million from -$5 million in 2015; banks increasingly returned to the platform in the fourth quarter of 2016 funding 31% of loans, an increase from 18% in the third quarter. Source
In an article from American Banker, the pros and cons of AI-based credit scores are outlined; pros include more precise scores through more nuanced evaluations of data and the ability to consider consumers that linear models would reject; the cons are the risk that regulators will consider an AI-based score a "black box" and being able to provide one clear reason for credit denial; perspectives from Elevate, ID Analytics, Experian and FICO on AI credit scoring are presented in the article. Source
Zest Finance has developed a new credit scoring platform called ZAML that provides a technology solution for alternative credit underwriting; similar to other emerging alternative credit models, the technology uses machine learning software to analyze alternative credit reporting information and arrive at a lending decision; the firm has worked with Baidu to test its credit underwriting, which helped the firm approve 150% more borrowers with no increased losses. Source
Mosaic has announced the closing of its Mosaic Solar Loans 2017-1 securitization portfolio which resulted in proceeds of $138.95 million; Guggenheim Securities and BNP Paribas were the lead arrangers on the deal; Mosaic specializes in solar loans with over $1 billion originated on the platform since its launch. Source
Investment funding deals for fintech businesses were lower in 2016, according to data from CB Insights; the firm reports that the number of deals remained steady with a 1% decrease to 836 however the total amount funded decreased by 13% to $12.7 billion in 2016; global instability and industry challenges in P2P lending were among the factors contributing to the lower investment. Source
Online mortgage lending has helped to revive the market for mortgage loan securitizations; new online mortgage lenders are providing a new wave of mortgage loan securitizations for the market specifically with fix and flips; these loans are attractive to investors because of the high yields and offer investors shorter duration investments because of the fix and flip focus; despite defaults and structuring inefficiencies created from the 2008 financial crisis, institutional investors are placing confidence in these investments; LendingHome has been leading the market with steady issuance of fix and flip loan securitizations and the products have been performing successfully for investors indicating the niche investments could begin to scale more broadly. Source
OnDeck released its fourth quarter and full year earnings before the market's open on Thursday; the firm reported a net loss of $67.0 million for 2016 compared to a net profit of $10.3 million in 2015; originations were $2.4 billion in 2016 compared to $1.9 billion in 2015; revenue for the year increased to $264.8 million from $195.1 million; loan loss provisions were a factor contributing to the net loss with provisions increasing to $149.96 million in 2016 from $74.86 million in 2015. Sources
The Royal Bank of Scotland's NatWest Brand has announced the launch of direct lending platform Esme; the platform will offer loans up to £150,000 ($187,257) for small and medium-sized businesses with approvals in one hour; NatWest developed the Esme platform internally through an innovation lab; the platform was developed to provide a more competitive loan offering and will also support initiatives for cost reduction. Source
Hexindai sees credit market opportunity in China worth 10 trillion RMB ($1.46 trillion); provides insight on the market in their featured blog post; with high net worth clients primarily served by traditional channels the firm is targeting the country's underserved population; says new and evolving technologies will be a factor helping emerging service platforms like P2P online lending gain market share. Sponsored Blog Post
In January, Prosper began using its new PMI7 credit underwriting model; Prosper expects PMI7 to help improve returns and credit scoring metrics; the estimated return on loans issued for January is 7.86%; post-charge off recoveries have been higher than estimated which is expected to increase IRR calculations; delinquencies and pre-payments are also improving; the average coupon increased 300 bps in January to 15.99% as PMI7 caused an increase in higher risk loans. Source