With regulatory changes in China the online lender LexinFintech scaled back their IPO target from $500mn to $120mn; the company is looking to IPO next week and is offering 12 million shares at a price range of $9 to $11; recent IPOs by Chinese fintechs like Qudian have seen a significant drop in value after the regulatory push in China. Source.
Lend Academy shares recent initiatives from Barclays and PNC Financial Services as traditional banks move into the online consumer lending space. Source
Discover Financial Services CEO David Nelms stated, “It really takes a decade of experience going through cycles to understand how to use credit bureau information to have good predictions…The funny thing is they’re not making money, even in a great cycle.”; Nathaniel Hoopes, executive director of the Marketplace Lending Association provided his own comments on the manner and how marketplace lending is putting pressure on credit card issuers and other traditional lenders. Source
SoFi’s lending goal in 2017 was to lend more than they had in the previous 5 years combined; the online lender fell 26 percent short of the goal and instead lent out $12.9bn in 2017; the company had seen their share of issues in the last year with sexual misconduct claims and their CEO being forced out; SoFi spokesman Jim Prosser said the true goal for 2017 was closer to $13bn and the higher amount was a stretch goal. Source.
Online lenders in China have started to self inspect how they run their companies as the government has been a lot more proactive in oversight than in year’s past; the government fears that borrowers are becoming over indebted and are borrowing to pay back other lenders; some of the top lenders fear the government crackdown could cause other panic and trigger outcomes that would be even worse than a few online lenders shutting down; right now it seems as if lenders are in limbo wondering what the future will hold. Source.
While the full English report is still in the works KPMG releases their annual Fintech 50 for China; China has become one of the most important fintech markets in the world as some of the largest companies are from the market; they are also one of the most diversified markets as they have leading companies in insurtech, payments, regtech and online lending. Source.
First proposed in June and recently signed by Governor Cuomo the 7 person task force will be focused on reviewing online lending activities in NY; the task force will be chosen by the governor, president of the senate and speaker of the assembly; they will report their findings on small business and consumer lending back to the governor. Source.
Chinese lenders are moving into Southeast Asian countries to explore new opportunities in lightly regulated countries; according to Global Times, over 50 Chinese lenders have already launched overseas operations in countries like Indonesia and Cambodia; current entrants include well known names like CreditEase, Lufax and jimu.com; some lenders are opening up subsidiaries while others are focusing on partnerships with local companies. Source
The Chinese government has stepped up their monitoring on payments, halted IPO approvals, issued new rules for online lenders and continued their crackdown on cryptocurrencies; China has been seen as an innovation leader, in particular in mobile, but the recent crackdown could set the country back as a leading fintech innovator; as the nation matures in certain fintech areas its regulators need to better handle how they react to the market; Michelle Evans, global head of digital consumer research at Euromonitor International, tells TearSheet, “The next stage of its development will require Chinese regulators to find the right balance that will be provide for consumer protection and fair operations while still enabling fintech the room to innovate.” Source.
UK based Zopa has warned investors that defaults on high risk loans are rising; Zopa increased originations to high risk borrowers in 2016 and introduced their Zopa Core and Zopa Plus Products; the company originally expected default rates for 2016 at 4.14 percent but have revised that number to 4.93 percent; they also raised their estimates for 2017 loans to these borrowers to be 4.86 percent from 4.52 percent. Source.