Articles by deBanked Staff
You Can Ask Alexa to Pay Your Credit Card Bill – Will Loans Be Next?
March 11, 2016
Very soon, you will be able to pay your bills just a second after you turn on that thermostat.
Capital One and Amazon want to give Alexa, the “skill” to become your personal teller and allow the home automation device to pay your bills, check balances and review transactions.
Starting next week, Capital One customers will be able to use the app through Alexa and instruct the digital assistant.
“Alexa, ask Capital One for recent transactions on my checking account”
“Alexa, ask Capital One for my Quicksilver Card balance.”
“Alexa, ask Capital One to pay my credit card bill.”
Of course, security concerns will remain key as Internet Of Things slowly finds a way into people’s homes. But for now, Alexa can take care of that outstanding cellphone bill.
If the feature catches on, it will only be a matter of time before loans become a thing you can wish for out loud and have Alexa make a reality.
CFPB Director To Testify Before House Financial Services Committee
March 11, 2016
CFPB director Richard Cordray will appear before the House Financial Commitee to address reports decrying the bureau’s activities.
The committee issued two reports detailing the bureau’s attempt to regulate auto dealers despite being prohibited to do so. The reports also exposed the CFPB’s flawed distribution of a $80 million settlement without doing a due diligence on the claimants leading in alleged racial discrimination. The documents revealed, some white borrowers received settlement checks over Asians, African-Americans and Hispanics.
“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington,” said Chairman of the committee Jeb Hensarling (R-TX). “When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers, the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away.”
Since Cordray’s last appearance before in September 2015, the Bureau has has proposed regulations that compromise on the consumer’s’ right to access small dollar, short-term loans. The Qualified Mortgage rule that addresses few of the actual risks associated with mortgage lending led some community financial institutions to downsize or shut down their mortgage operations.
Prosper Rebrands BillGuard as Prosper Daily
March 10, 2016Marketplace Lender, Prosper Loans relaunched expenses tracking app BillGuard under its own brand as Prosper Daily.
The P2P lender acquired BillGuard, a personal finance management app for $30 million in September 2015. Relaunched as Prosper Daily, the app lets users view financial accounts, budget, spend and monitor credit scores.
Prosper started as a marketplace in 2005 for personal loans ranging from $2,000 to $35,000. This is the San Francisco-based company’s attempt at evolving as a personal finance company. “We’re excited to be the first marketplace lender to offer a financial wellness app to consumers,” said Prosper CEO Aaron Vemut.
If Wall Street Likes Square, Why Is the Stock Falling?
March 10, 2016
Jack Dorsey-led payments company Square released its first earnings as a public company yesterday and although it did not disappoint, it just wasn’t enough to keep its stock from tumbling.
Square’s stock opened 7.86 percent lower today even after its fourth-quarter revenues totaling $374 million beat analysts expectations hovering around $345 million. The San Francisco-based company proved to skeptics that its business is more than just payments with a convincing quarter. The seven year old company that went public in November 2015, originated more than $400 million in merchant cash advances annually and over $150 million in the fourth quarter with an average deal size of $6,000 and its software and data business brought $58 million in annual revenue.
Square also processed $10.2 billion in payments from 2 million merchants in the fourth-quarter, at an annual increase of 47 percent. Square realized that the best way to retain consumers is to sell them more products without losing its core — payments. The company received 350,000 orders for the mobile point of sale chip reader which accepts payments on smartphones. “We want to associate our logo with the ability to pay with your phone,” said Jack Dorsey during the earnings call.
Square is confident that it has built a “cohesive commerce ecosystem” for merchants. Then why is the stock being punished?
Is Online Lending the Cream of the Fintech Crop?
March 10, 2016
American fintech companies raised $7 billion over 351 venture capital-backed deals in 2015 and leading the pack were online lenders like SoFi, Zenefits, Avant and Prosper Loans.
A new report released by CB Insights and KPMG shows a record spike in VC-backed fintech deals, hitting $14 billion globally and making up 73 percent of all VC funding. The purview of fintech included companies in lending, payments, personal finance, bitcoin and equity crowdfunding.
In the U.S., the pack was led by marketplace lender SoFi raising over $1.35 billion, with SoftBank investing a billion in the San Francisco-based startup. Other noteworthy investments included $500 million into payroll service startup Zenefits, online lenders Avant and Affirm, which provide installment loans and credit scoring services.
Other Highlights
- Major corporations participated in one of every four fintech deals
- Investment in bitcoin and blockchain was up 76 percent annually
- 14 of the 19 fintech ‘unicorns’ (startups with a billion dollar valuation) were in lending and payments
- Citigroup (13 deals) and Goldman Sachs (10 deals) led investing in VC-backed fintech startups in the past four years.
- Top fintech companies of the year were Lending Club, Square and OnDeck Capital.
EX-ECB Official To Join Funding Circle Board
March 9, 2016
How does a company get street cred in the corporate hood? By hiring some big guys.
Today, Lending marketplace Funding Circle announced that it hired former Executive Board Member of the European Central Bank (ECB), Jörg Asmussen, to join the Funding Circle board.
This is latest of key hires made by alternative lending companies recently. Last month, stealth P2P insurance startup Lemonade hired famous behavioral economist, Dan Ariely, and ex-Deutsche Bank head Anshu Jain joined the SoFi board. And yesterday, deBanked wrote about lending platform LendKey hiring ex-treasury official Salil Mehta.
Asmussen is a German economist and policymaker and has held numerous high-profile positions within the public sector. From 2012 to 2013 he served as Executive Board Member of the European Central Bank (ECB), and from 2008 to 2012 he was State Secretary at the German Ministry of Finance, responsible for European Affairs and Financial Markets. Most recently, he was State Secretary for the German Ministry of Labour and Social Affairs.
Last year, Funding Circle acquired German lender Zencap, gaining a foothold in Europe, in countries like Germany, Spain and the Netherlands, along with its operations in the UK and US. In the four years of its existence, more than $2 billion has been lent on the Funding Circle marketplace to more than 15,000 businesses.
“Jörg is one of Germany’s most respected economists and has spent a lifetime shaping government and central banking,” said Matthias Knecht, co-founder and Managing Director of Funding Circle Continental Europe, “As we accelerate our growth across Europe, his experience in European regulation and unique insights into the challenges faced by small businesses will be an invaluable asset.”
CB Insights and KPMG estimated the global investment in fintech companies to total US $19.1 billion in 2015, with US$13.8 billion invested into VC-backed fintech companies, a 106 percent jump compared to 2014. Backed by marquee investors, companies like SoFi and Lemonade have the muscle to make key hires.
MFS Global Co-founder Launches Own Brokerage
March 9, 2016
Co-founder and COO of MFS Global, Robert Abramov launched his own ISO brokerage called Flow Rich Capital and departed from his role at MFS.
The new company based in Las Vegas has already signed on partners like CAN Capital. Abramov wants to keep the business small and minimal, with not more than five lenders. While he will exit from MFS Global’s day-to-day business, he will continue to hold equity and be part-owner in the company.
“He is pretty much transitioned out but he is still an active member of the executive staff,” said Tom Abramov, founder and CEO of MFS Global. “I am sure he is going to knock it out of the park and I hope he sends us deals.”
Tom added that as an older brother, he is happy that his brother is pursuing his dreams. “I know that Robert wanted to do this for long. He wanted to pursue his passion and we are wholeheartedly behind him,” he added.
For Abramov, experience working with merchants coupled with marketing experience gave him the confidence to start his own shop. “I have fun working with merchants and clients and have been running an ISO shop for five years now,” he added.
Flow Rich is in the process of setting up a team and and building a lender database.
As the industry expands and catches the eye of the big banks, competition will continue to breed. “While competition is on the rise, it will finally weed out the smaller guys tarnishing the image of the industry with little experience,” Abramov said.
Is now a good time as any to enter the business?
Herio Capital Breaks $20 Million in Funded Deals
March 9, 2016
It might feel like 1997, but in early 2016 Herio Capital has surpassed $20 million in funding since inception. Co-founded by Sherif Hassan, the company’s chief executive, Herio launched only one year ago. Hassan was one of OnDeck’s first employees who stayed with the company all the way up until just before they went public.
Today, Hassan does not appear to be regretting that choice. “We have lots to be grateful for and even more to be excited about in 2016,” he said.
The company’s chief product officer and co-founder, Patrick Janson, summed up their vision like this, “When we started Herio, we saw a huge opportunity to improve upon the software that currently supports the marketplace lending industry.”
The Herio team will be attending the LendIt Conference in San Francisco next month.
“Reaching the $20 million funding milestone is a testament to the execution, creativity, and diligence of everyone at Herio. We are grateful to our team and our loyal industry partners. We are excited about the advancements our industry will make in the next period as we continue to design the future of credit,” concluded Hassan.
