Sources report that Chinese online property and casualty insurance company Zhong An is planning for an initial public offering (IPO) in China; the firm was founded by Alibaba's Jack Ma, Tencent's Pony Ma and Ma Mingzhe from Ping An Insurance Group of China; a primary product for the firm is e-commerce shipping insurance which accounts for approximately 50% of the business; currently the firm's major shareholders include Ant Financial with 16% and Tencent Holdings Ltd. with 12%; in 2015 it reported a valuation of $8 billion and it currently plans to raise an additional 2 billion yuan ($290 million) to help it prepare for the IPO. Source
Alternative data scoring considerations are becoming more prevalent in today's credit market; the Consumer Financial Protection Bureau (CFPB) has announced a public comment period seeking feedback on the potential use of alternative credit sources such as mobile phone bills and rent payments in credit approvals; the CFPB is seeking to identify how it might be able to serve consumers with minimal credit history; it says that approximately 26 million Americans have no credit histories and an additional 19 million consumers lack enough credit information to produce a credit score. Source
Eugene Danilkis, CEO & Co-Founder of Mambu shares his perspective on how banks can continue to compete with fintech companies. Source
RateSetter has sold non-performing debt to debt purchaser 1st Credit; source says the sale was for 2.1 million British pounds ($2.6 million) of non-performing loans originated between 2010 and 2015; the sale goes beyond the company's standard plans for default collection and coverage which include support from one of the industry's most well-known provision funds; the RateSetter Provision Fund promises to cover defaults for borrowers and is valued at approximately 22 million British pounds ($27.2 million); with expected losses of approximately 19 million British pounds ($23.5 million) it currently has a coverage ratio of 118%. Source
There was a recent technology debate held at the Connaught Hotel hosted by Mortgage Solutions and Capita Mortgage Software Solutions that focused on some of the newer technology coming to the mortgage market; a key piece of the conversation focused on the use of APIs which would help to connect brokers and lenders and cut down on repetitive work; according to Mortgage Solutions, the individuals at the event thought that some lenders might be close to rolling out an API but large scale adoption was still potentially years away; other technology discussed included chatbots, artificial intelligence to help read through bank statements and how the open banking initiative will affect the industry. Source
Victory Park Capital (VPC) Investments says it is shifting investments from peer-to-peer loans to balance sheet investments after losses in October triggered significant writedowns and caused a revenue return of -1.25%; in October the return was primarily caused by a substantial capital loss of -203 basis points from "certain marketplace loans" which it did not disclose and also from losses in a securitized portfolio of Avant loans; according to Cormac Leech, "the marketplace lending portfolio is not quite seasoned, while the balance sheet side of investments is doing really well"; this performance has caused the change in focus to balance sheet investments. Source
The new partnership aims to increase access to financial services for individuals and small businesses; according to a Chinese press release translated by TechNode, the "credit factory" (in Chinese) model is a business model mainly used for credit certification of small and micro-sized enterprises as well as individuals; loans lent to such groups are small, but are lent at high frequency; the adoption of the "credit factory" mode, thanks to its high efficiency and economies of scale in handling petty loans, can help big financial firms gain some ground lost to the country's mushrooming small loan companies in the microfinance market; an upgrade to the traditional "credit factory", Dianrong-Quark Credit Factory utilizes such fintech means as big data, anti-fraud management systems and decision engine; it can help lenders reduce manual operations, save costs and cut operational risks through its powerful quantitative system when they handle credit certification for individuals or small and micro-sized businesses. Source
Germany's GLS Bank has launched an equity crowdfunding platform through collaboration with CrowdDesk; GLS Bank will do the due diligence for the platform's investments and CrowdDesk will primarily focus on the technical infrastructure and business services; the deal sets a precedent for bank crowdfunding partnerships in the equity crowdfunding space and will provide company financing for up to 2.5 million euros ($2.67 million). Source
The first head of the CFPB has decided to step down at the end of the month without giving a formal reason; the bureau was established in the wake of the financial crisis in 2011; Mr. Cordray sent an email to all CFPB staff saying he thought the agency made a lasting difference to improve people’s lives and that new leadership will preserve what they have done; he is rumored to be interested in running for Governor of Ohio in 2018. Source.
Legislators have reintroduced a bill that would enable alternative credit scoring to be used by Fannie and Freddie for evaluation of mortgage loans; these government sponsored enterprises currently use a FICO credit scoring model which legislators believe is outdated; legislators have now proposed the Credit Score Competition Act which would allow for use of alternative credit scoring models that also take into consideration a broader range of factors. Source