Sichuan Xinwang Bank and Jilin Yilian Bank have received licensing to provide internet banking services in China; the two banks will bring the total number of digital only banks in China to four; Xiaomi is a leading Chinese shareholder in Sichuan Bank with a 29.5% stake and Meituan is a leading shareholder in Jilin Yilian Bank with a 28.5% stake; the other two digital banks in the Chinese market include Ant Financial's MyBank and Tencent's WeBank. 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
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 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:
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
Securitization has become increasingly utilized by marketplace lending platforms and in 2016 a record number of deals were done; Lend Academy provides details on securitization structuring, Lending Club's recent securitization and the importance of transparency in their article; in Lending Club's December securitization the total amount of loans in the portfolio was approximately $131.3 million and the portfolio was rated by Kroll Bond Rating Agency. 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
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.
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
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