Weekly industry news roundup – June 26, 2017

News from around the world

American Banker published a piece warning that marketplace lenders should refrain from attempting to replicate the practices of traditional banks. The author suggests that when marketplace lenders become more like a bank they give up some of their competitive edge and characteristics that make them so appealing to investors.

***

Lend Academy took an interesting look at the state of marketplace lending in Japan. While this market has been lagging in Japan compared to the U.S. and UK it has seen explosive growth in recent years. In fact, the marketplace lending industry has been doubling in size in recent years in Japan. Incredibly, “There has been almost no loss of principal for three years across all crowdfunding platforms,” according to the author.

***

INC. took a look at Amazon’s growing presence in the marketplace lending world. The monolithic company started lending in 2011 and “has surpassed $3 billion in loans to small businesses.” However, today the loans are exclusively small business offerings to their marketplace lenders. The author warns that banks could see further loss of business as a result of this growing venture.

***

Nasdaq reviewed which loans can help expand a small business. The piece touches on online lenders explaining that “online lenders often have a faster approval process than banks originating SBA loans.” The article is a good introductory guide to what a small business will need in preparing to apply for a loan.

***

The Huffington Post explained that “American entrepreneurs raised $34.5 billion online 2016.” Moreover, they announced that “P2P lending, and balance sheet lending , grew by 22% in the United States in 2016.” The article splits apart different sectors of the market and examines how each has grown in recent years.

Bondora mentions

In German: Deutsche Handwerks Zeitung cited Bondora among other alternative financial services which allow you to borrow or lend money without turning to banks.

Weekly industry news roundup – June 19, 2017

News from around the world

Politico reported on the Marketplace Lending Association’s first ever meeting with lawmakers and regulators in the U.S. The goal of the initiative is to bring these politicians up to speed on the developing relationship between traditional banks and P2P firms. This event is another step towards the legitimization of the industry.

***

The Economic Times published a piece looking at how the rise of P2P lending doesn’t necessarily portend doom for banks. Rather, the two entities can form a partnership. Banks often have stricter lending parameters that keep many customers from acquiring loans. However, a partnership with a marketplace lender could open up more opportunities.

***

The Los Angeles Times warned that “Online lenders are a growing economic and political force. Big banks worldwide could lose 24% of their revenue over the next few years to fintech firms offering personal and commercial loans.” The author also looks at why some of the rules for marketplace lending might develop independently of banks.

***

Peer 2 Peer Finance News offered a quick guide from small and medium sized enterprises seeking capital through P2P lending options. The author explores how the low overhead of P2P lending can benefit small companies that might otherwise be turned away from everyday banks.

***

Forbes released an article looking at the personal finance habits of millennials. It cites studies revealing that “The Millennials are the biggest generation in history.” This size gives them substantial sway over financial markets. This phenomenon will have major ramifications as they turn to more empowering options like marketplace lending.

Weekly industry news roundup – June 12, 2017

News from around the world

National Real Estate Investor posted an article asking if marketplace lending lending is safer than the stock market. The authors cites the inherent volatility of the stock market while highlighting the “consistent returns with lower volatility.” The author explains that this is “due to the fact that many marketplace lending platforms have transparency in the risk for their lenders.”

***

SeekingAlpha offered an insightful look into the explosive growth behind marketplace lending. The author offers suggestions on how to approach marketplace lending in an effort to capitalize on a disruptive industry.

***

Peer-to-Peer Finance News discussed recent moves from Basset & Gold to offer investors a four-year marketplace lending bond. The author explains that the investment is designed to generate an annualized rate of return totaling 7.72%.

***

Bloomberg Markets looked at a Quebec hedge fund which is aiming to outperform passive investing by seeking more aggressive returns in the market. One way to accomplish this, according to the fund advisors, is with marketplace lending offering outsized returns.

***

Business Insider offered analytics examining the growth of alternative lending from 2014 to 2016. In those three short years the industry grew from $7.6 billion to $21.1 billion. Moreover, the cite that “Marketplace, or peer-to-peer (P2P), consumer lending still holds the most market share (61%) with origination volumes hitting $21.1 billion in 2016, up 17% from $18 billion in 2015.” This dominance is relative to balance sheet consumer lending, balance sheet business lending and P2P business lending.

Weekly industry news roundup – June 5, 2017

News from around the world

The New York Times wrote a piece on Orchard Platform, the analytics site for measuring the performance of various P2P operations. As the author explains, “Orchard began by offering institutional investors an automated service to analyze the loans and buy them from different online lenders.” however, progress has been slow. The article serves as a reminder of the competition and elusiveness of success in the fintech space.

***

Sat PR News released a study by Allied Market Research showing that “the peer to peer (P2P) lending market was valued at $26,064 million in 2015 and is projected to reach $460,312 million by 2022, growing at a CAGR of 51.5% from 2016 to 2022.” The research reflects the continued ascent of marketplace lending as a viable option for borrowers and lenders.

***

The Fifth Estate released an article exploring the emergence of “green” marketplace lending options. The concept is identical to the P2P model however, investors are funding loans going to “fund energy efficiency, renewable energy and low-emissions technologies.” This characteristic of the investment may resonate with the younger millennial generation in the years to come.

***

Crowdfund Insider discussed moves within Singapore to help create accessible funding to underbanked regions through the help of marketplace lending. The discussion, , co-hosted by the Monetary Authority of Singapore, is another example of leveraging technology to empower ignored regions.

***

Bridging & Commercial how P2P has grown as an asset class. Within the UK the author writes that “recent figures show that from 2014 to 2016, lending grew from £1.25 billion to £3.2bn. In the spring of 2017, the year-to-date number was already £1.94bn.” The market is growing and on pace to continue its expansion.

Weekly industry news roundup – May 29, 2017

News from around the world

Evening Standard reported on recent moves by the regulatory body known as The Financial Conduct Authority which “agreed to grant full authorisation to most of the leading lights of the peer-to-peer lending industry.” This decision allows P2P firms to lend retail funds without the burden of capital requirements seen at traditional banks.

***

MondoVisione discussed a recent move from Orca a leading research and data analyst covering the UK P2P market. The company will be releasing a rating system which will help users determine the best marketplace lenders in the business. These ratings are based on performance, liquidity, operator health and security.

***

Crowdfund Insider shared research from three entities which together reported that the alternative finance market volume rose to $35.2 billion total across the U.S., Canada, Latin America and the Caribbean, an increase of 23% over the previous year. Meanwhile, “The US, Marketplace/P2P Consumer Lending continued to account for the largest share of market volume with $21 billion recorded in the US in 2016 (up 17%).”

***

Bankless Times explained that some industry insiders believe the P2P lending world requires more maturation to truly find its footing. Some experts consulted have expressed an interest in seeing major marketplace lenders invest in technology to improve the user experience across platforms. In the end, this kind of reinvestments will help build long-term relationships with customers.

***

PYMNTS looked at millennials and how they’ve embraced technology to help secure their personal financial profile. This desire is in contrast to previous generations that are now exiting the workforce and interested in maintaining their lifestyle. “Two in five Americans say they make and manage their investments through an online or mobile portal,” explains the author.

Weekly industry news roundup – May 22, 2017

News from around the world

The Economic Times weighed the pros and cons of making investments in bitcoins and P2P lending. The author cites the benefits of marketplace lending like easy credit and a higher annual return compared to other asset classes (e.g. equities, bonds, etc.). However, defaults remain a risk and investors need to research the platform before starting. Some also warn that economic downturns can impede returns, however, this is true of nearly all investments.

***

BW Disrupt offered five considerations to keep in mind when exploring P2P investing. The author discusses the importance of diversification, choosing many small loans, reinvestment of earnings, long-term planning and historical performance. Many of these critical strategies are applicable to other investment products because they manage risk and capitalize on compounding.

***

The Investment Observer discussed the rise of P2P in countries like Poland, Greece and Ireland. Based on research these countries have a significant credit gap. Capital needs among households and corporations aren’t being satisfied with conventional lending. Therefore, marketplace lending can offer much-needed support. However, one researcher warned, “As it becomes more unified across Europe, the need for a supervising body and regulation will become more pressing.”

***

The Week analyzed “How To Tell if Someone Will Repay Their Loan.” The article reviewed several characteristics indicating the responsibility of a borrower. In many cases, lower credit utilization means a greater chance of repayment. The author explains that “people with scores between 751 and 800 were using on average 12 percent of their available credit. By contrast, people with scores under 650 had utilization rates of 63 percent or more.”

***

Crowdfund Insider reviewed the development of the Alternative Lending Index which calculates the P2P potential across 23 European countries. The data provides a useful overview of which countries could benefit most from marketplace lending. The research offers opportunities for investors interested in getting in early in emerging markets.

Bondora mentions

Crowdfund Insider credited Bondora in their recent review of cross-border marketplace lending in Europe. They write, “The first platform to tackle cross-border lending was Estonian pioneer Bondora in 2009.”

Weekly industry news roundup – May 15, 2017

News from around the world

PR Newswire reported that P2P reporting and analytics platform dv01 has bolstered its efforts to bring transparency to the market with a new partnership with Sofi. Institutional investors using dv01 services will now have access to detailed Sofi lending data including student and personal loans. Since their inception dv01 has provided data on $55 billion in marketplace loans.

***

Forbes looked at the future of P2P lending in China. The CEO of Creditease, a major marketplace lender in China remarked “The bigger picture is that P2P and fintech help the financial system to become more comprehensive. Eleven years ago we made financing available to students, and today we reach micro businesses, entrepreneurs. These businesses are not traditionally covered by the financial system.”

***

The Economic Times explored the idea that the millennial generation is a major driver for the growth and legitimization of the marketplace lending industry. Younger people are looking to the aggressive returns of P2P investment to help growth their wealth at levels necessary to achieve their goals. A large component of borrowers are also young according to some case studies.

***

RadioTimes looked at how interest rate cuts by The Bank of England are driving more investors to embrace peer-to-peer lending. As the rate of return on conventional instruments drops more people are accepting the idea of marketplace lending. This movement comes after eight years of already low rates.

***

New York Magazine revealed interesting research from U.S. academics analyzing default rates among borrowers. Academics from the University of Delaware and Columbia learned that the use of certain keywords in a loan application signal a greater likelihood of default. Their research showed that the use of words like “God,” and “hospital” negatively correlated to repayment while “debt-free,” and “graduate” positively correlated to repayment.

Weekly industry news roundup – May 8, 2017

News from around the world

American Banker examined the trend of small banks seeking P2P solutions for their SBA expansion. The Small Business Administration helps companies secure financing for working capital, equipment, real estate and inventory purchases. Smaller, local banks act as intermediaries in these transactions. By partnering with marketplace lenders they can amplify their business offering.

***

Tech Crunch reported on a $3 million startup which uses the basic marketplace lending approach to help homebuyers get a mortgage. Users can shop for the best loan using the new interface which now has 10 different lenders. As the business grows the intention is to grow the lender base and promote competition to help the borrower.

***

Business Insider published an article exploring the state of marketplace lending today. The author suggests that to move forward P2P firms must “adopt effective risk control infrastructure for investors to bring certainty to this asset class and therefore attract new capital.” Many believe that with increased transparency comes legitimacy.

***

The Economist looked at the development of fintech (financial technology) and its evolution. The author explains how much of the development today is becoming one of cooperation. That is, traditional banks and P2P lenders are finding value in teaming up rather than competing.

***

Crowdfund Insider discussed the idea that marketplace lending might actually mature in 2017. A CEO of a UK-based P2P firm explained his belief that “2017 will be the year that the P2P lending sector finally matures and grasps the opportunity to take on more traditional lenders.” Credit checks and individual due diligence are all aspects that will help marketplace firms propel this maturity.

Bondora mentions

Peer2Peer Finance News cited Bondora as one of the top P2P platforms offering “detailed aggregated statistics.” and transparency.

Weekly industry news roundup – May 2, 2017

News from around the world

Politico reported on the advocacy group CGCN and their decision to sign the Marketplace Lending Association which is a trade group representing various P2P firms. The move is aimed towards building a robust regulatory framework around the new marketplace lending industry.

***

Tech Crunch discussed an emerging proposal from the Comptroller of the Currency which would permit certain fintechs to exist as special purpose national banks. The move is designed to help separate legitimate fintech establishments from those like payday lenders that engage in predatory behavior.

***

Forbes reviewed findings in a recent report from G.P. Bullhound. The investment banking firm explains that they expect 2017 year to be strong for the fintech industry. “We expect 2017 to be another year of resilience for fintech funding in Europe,” explains the report. The analysis continued to explain that “Global marketplace lending is expected to increase 2.4x from 2016 to 2020.”

***

FT Adviser published a helpful article covering six things to consider when exploring marketplace lending as an investment. The author suggests looking at a platform’s default rates, net returns, total amount lent and diversification.

***

DS News reviewed recent remarks from Thomas Curry, the Federal Comptroller of the Currency. Speaking at Northwestern’s Kellogg School of Management he discussed how responsible innovation, “must fit within the company’s business plan, the risks must be understood and managed, and consumers must be treated fairly.

Weekly industry news roundup – April 24, 2017

Around the world

Huffington Post published an article looking at the innovation that will propel the marketplace lending world forward. Some P2P firms are enabling mortgage seekers. Meanwhile, loans targeting the military, veterans and government contractors are entering the field. However, regulations are moving at a slower pace.

***

Crowdfund Insider discussed the role of good data in the world of fintech. As the scale of P2P lending increases there is more data than ever. The best fintech companies will put this information to use by verifying its accuracy and distilling where the value resides within the analytics.

***

Forbes reported on a recent survey citing that “Nine in 10 financial firms expect to lose revenue to fintechs with expected losses around 24%.” Pressure is mounting among traditional banks as fintechs like marketplace lenders start to engage a wider customer base seeking speed and affordability.

***

The Economic Times explored how marketplace lending is enabling the phenomenon of “digital inclusion” which occurs when P2P lenders generate loans for people commonly ignored by larger banks. This effect is empowering people regardless of their age, education, or social strata.

***

Financial Times Advisor discussed why financial advisors should consider P2P investments. The author argues that the higher rate of return for investors and fixed payment structure offers more stability than what many see in the equities market. Additionally, they argue that “each individual loan is direct and remains enforceable even if the platform fails.”

Bondora mentions

Roklen24 mentioned Bondora in a recent post explaining that “FinTech has the strongest position in the Baltic States’ technology sector.”