The trend of partnering with banks is an increasing one for online lenders, there are many different forms of partnerships for many different reasons and the panel at LendIt USA 2016 gives a good overview of why these partnerships keep happening. Online lenders have structured their partnerships in so many different ways including: white labeling their technology to the bank, setting up an origination engine and loan servicing, using the partnership to improve efficiency for the customer and using banks to buy up loans with their excess capital. Panelists break down how their partnerships with banks came about and how long the process took for the partnership to complete. In most cases the banks and online lenders were in discussions for almost a year. The complexities to these partnerships were brought to light during the panel. It gives a good understanding of how detailed and thorough each party needs to be to ensure compliance and regulatory needs are met. Additionally the panel discussed how online lenders have matured over the last few years and are now in a better position to choose a bank partner. Online lenders are no longer viewed through a certain lens. They are viewed as collaborators and competitors who serve a customer that is very similar to the banks but serve them in a more efficient manner. 2017 looks to be the year of the bank partnership as there is now a track record of partnerships to rely upon for banks and online lenders alike. Check out the full video interview here:
Flender, a marketplace lending platform in the UK, is seeking to raise 500,009 british pounds from an equity crowdfunding campaign on Seedrs; the company offers P2P loans through a mobile application; the firm's business model seeks to connect borrowers with lenders in their social network helping to facilitate social network lending. Source
Scott Sanborn discussed the current market environment for online lending in his speech at LendIt USA comparing the industry to the growth of online retail and using Amazon as an example for how businesses can dramatically change and adapt to provide the best services for market needs; online lenders will have to be strategic in identifying market opportunities, building on their proprietary systems and partnering with other companies; Ash Gupta from American Express also noted at the conference the challenges and opportunities presented to online lending through the use of big data; the growing amount of data sourced by the industry has the potential to improve credit models and fraud prevention while also providing broader capabilities through machine learning technology. Source
New York-based hedge fund Marathon Partners Equity Management LLC is actively pushing OnDeck Capital to reduce costs and reach profitability more aggressively than it has already outlined; the firm owns approximately 1.75% of the company's outstanding shares; Mario Cibelli is the primary spokesperson for Marathon Partners and says he contacted members of the board in March to urge for deeper cost reductions and analysis on a potential sale; it is likely that Marathon Partners could gain a board nomination from the discussions; OnDeck Capital could also see more involvement from hedge fund shareholder EJF Capital LLC which has said in public filings that it may also reach out to the company to discuss its future strategy. Source
China-based, QuantGroup, has raised $73 million in a Series C funding round led by Sunshine Insurance Group Corporation, Fosun Capital, Guosen Hongsheng Investment Co., Ltd. and other undisclosed investors; QuantGroup is an online financial services platform offering credit products; it evolved from the Microsoft Ventures Accelerator and is led by Zhou Hao with experience at Morgan Stanley, Capital One and Barclays. Source
P2P loan originations for Chinese online lender Dianrong more than doubled from 2015 to 2016; the platform reported 2016 originations of 16.2 billion yuan ($2.3 billion) and the firm plans to continue growing its market share as regulations help the success of established P2P lending firms in China; Dianrong's co-founder and co-CEO, Kevin Guo, talked with Reuters about the firm's growth and China's evolving market; says smaller firms will have difficulty staying in business and that Dianrong plans to grow significantly in the near-term with a new funding round and the goal to grow loan originations by 50% annually over the next three to five years. Source
CredEX has created an intermediary peer-to-peer lending technology solution which allows banks to facilitate peer-to-peer loans; the company participated in a roundtable forum at LendIt USA 2017 with Peter Renton, founder of LendIt and Jo Ann Barefoot, former deputy comptroller of the currency and Harvard professor; in comments regarding CredEX, Peter says: "Their instant credit decisions and the robust underwriting platform they have built has allowed them to become a leading fintech company in China in a very short time. Unlike most fintech companies they are 100% app-based, they are funded by banks and they are doing more than US$1 billion in loans annually. They represent the future of lending." Source
Lend Academy provides a resource for new investors in Lending Club and Prosper; their article includes five basic principles for investing in the platforms; the five key elements for investing include: 1) diversify investments 2) expect defaults 3) keep cash balances low 4) automate investing and 5) avoid taxes by investing through an IRA. Source
Pepper Hamilton provides details on their recent podcast and webinar in their featured blog post; the firm's January 5 podcast provided insight on what the Donald Trump presidency means for the financial services industry; on January 24 the firm provided a webinar on factors for considering the Office of the Comptroller of the Currency's new fintech charter. Sponsored Blog Post
Cross River Bank has added David Cotney to its board of directors; David Cotney brings in-depth experience in banking regulation and specifically bank chartering to the firm's board of directors; Cotney previously served as commissioner of banks for the Massachusetts Division of Banks where he was responsible for licensing and supervision of state-chartered financial entities; his industry experience also includes roles as chairman of the State Liaison Committee of the Federal Financial Institutions Examination Council and chairman of the Board of Directors of the Conference of State Bank Supervisors. Source