AltFi reports on recent developments affecting the marketplace lending industry; discusses challenges at RateSetter and platform changes at Zopa and Funding Circle; also notes that UK regulators may be seeking increased transparency through new regulations; argues against criticism that platforms are struggling for borrowers and shows origination volume growth since 2005. Source
Recent news on consumer lending players IEG Holdings Corporation, OneMain Holdings, Lending Club, Ally Financial and TransUnion is outlined in a press release; of interest is IEG's announcement and offer to purchase all outstanding shares of OneMain and Ally's recent agreement to support contracts from Carvana, an online auto retailer that also operates vehicle vending machines; according to the press release, "Ally will make up to $600 million available to Carvana over the next 12 months through financing and bulk purchases of contracts." Source
Wealth managers are beginning to look toward marketplace lending as an asset class; at LendIt USA 2017 we hosted a panel focused on wealth managers with Three Bridge Wealth Advisors, Lending Club and Glide Capital; the panel focused on making wealth managers look toward marketplace lending as a fixed income alternative and removing the fear factor since it is not as well known an asset class; clients of wealth managers are beginning to see this as a high yielding, short duration and low volatility play; thus far originators have not done a great job at providing exposure and understanding to wealth managers, this is beginning to improve; ultimately the asset class is very simple and easy to understand, showing wealth managers this is the key so they can then get clients on board. Source
As of December 2016, shadow loans in China reported an annual increase of approximately 15% to 14.1 trillion yuan ($2.3 trillion); a study by UBS reports that as the market grows one area adding increased risk is regional banks, specifically banks located in China's Rust Belt region, which have been integrating the shadow loans into various methods for diversifying their balance sheet risk as the steel and metal-producing provinces struggle to remain profitable in the changing economy; the UBS report says alternative financial statement accounting regarding the loans could lead to a number of issues including overstated capital adequacy ratios, understated nonperforming loans and reduced provision charges. Source
Cloud Lending Solutions provides digital technology platform services for origination, underwriting, servicing and collections; in their featured blog post they provide insights on the use of regtech for online lending platforms; utilizing regtech solutions can significantly help internal controls, business processes and cost structures for online lenders while also helping to improve the overall borrower experience. Sponsored Blog Post
New regulations in China tightening controls on P2P lenders will now require P2P lenders to partner with a custodian bank; Chinese banks are not eagerly partnering with the alternative lenders as fraud has been rampant in the industry; less than 5% of the country's 2,534 P2P lenders currently have a partnership with a custodian; custodians will add another layer of authentication for the P2P lending industry since they have high standards for money transfer and safekeeping; currently none of China's big four banks have partnered with P2P lenders for custodian services; smaller banks are getting involved and bank to platform relationships are taking on various forms. Source
Regulators are inspecting Chinese P2P lenders for compliance with new rules issued last year; specifically lenders must partner with a custodian and limit loans to RMB 1 million ($144,200) for individuals and RMB 5 million ($721,001) for companies; they are also not permitted to guarantee principal or interest; the country currently has more than 2,400 P2P lenders; experts expect the new rules will likely change the nation's P2P lending landscape significantly; Roger Ying, founder and chief executive of P2P lender Pandai stated: "[There] will be shakeouts, though good for those which are compliant. It will take time for P2Ps to move to custodian banks. Presumably the most risk for investors is with P2Ps who do not have escrow [or] custodian bank accounts as retail investor sentiment is low." Source
An investigation regarding fraudulent fundraising from Chinese peer-to-peer lender, Ezubao, has been underway since February 2016; regulators have reported all of the fundraising projects on the site were fraudulent and that the firm collected $7.6 billion from approximately 900,000 investors; Chinese regulators have recovered $1.5 billion in assets which include real estate, jewelry, stocks, cars and helicopters bought for company executives of the parent company Yucheng Group. Source
P2P commercial real estate lender Relendex has received authorization from the Financial Conduct Authority; the platform provides secured commercial property loans through its P2P marketplace lending platform and now plans to seek the offering of innovative finance individual savings accounts for its investors; in comments regarding the authorization, Michael Lynn, the firm's founder and chief executive officer said, "FCA full authorization marks a fantastic start to 2017 for the Relendex team and platform which will further encourage and facilitate investment in commercial property from both our UK and foreign investors." Source
Lending technology provider ReliaMax has announced $275 million in loan servicing on its platform; the firm's loan servicing level has increased 670% from the close of 2015; the platform's services are focused on the private student loan business and its Private Student Loan Platform-as-a-Service solution has supported lending for over 500 banks, credit unions, alternative lenders and investors. Source