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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


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LendIt Fintech USA is Just Two Weeks Away

The biggest fintech event of the year to date will feature the industry's best networking, a cutting edge agenda, a startup contest and more. Save $200 if you register by Friday.

April 12, 2021 By Peter Renton Leave a Comment

Views: 37

The fintech world will be gathering online on April 27-29 for the ninth annual LendIt Fintech USA event. We have upped the ante on last year’s successful online event and will be broadcasting live from the production studio at the Javits Center in New York City. This will be an online event unlike anything you have ever attended.

So, what can you expect at LendIt Fintech USA? Here is a run down of the different components of the show.

Networking

We had multiple people say after our event last year that virtual networking is better and more efficient than in-person networking. The functionality offered by our networking partner, Brella, continues to improve so you can expect an even better experience this year. We always put a huge effort into networking so we have multiple ways for you to connect with your fellow attendees from the comfort of your home or office.

  • One-on-One meetings – Pre-schedule one-on-one meetings and view the complete attendee list using Brella’s world-class networking technology.
  • Networking Roulette – Let our algorithm match you for a series of spontaneous one-on-one meetings each day. These are short six-minute meetings that mimic bumping into people at an in-person event.
  • Women in Fintech Power Hour – Connect with impressive and interesting women during the lunch break on Day One. This is always one of the most anticipated and appreciated networking events of the year.
  • Post Game Show – Join us in the 1 Fintech room on Clubhouse for an audio-only discussion with your peers to close each day.

Solutions Showcase

Find the answers to your latest challenges in our Solutions Showcase featuring almost 100 sponsors and exhibitors with great ideas to propel your business. At each virtual booth you can gather product information, chat with company reps, engage in in-depth discussions, view videos and more.

Content

We are absolutely delighted with the way our agenda has come together this year. Our virtual keynote stage has some of the biggest names in fintech, companies that are rewriting the rules in financial services. In our afternoon breakout tracks we go more in-depth into the most important fintech topics of the day. There is something for everyone here so check out the full agenda here.

Back to the keynotes. While every keynote session I expect to be great here are the five that are most hotly anticipated:

  • Mike Cagney – CEO of Figure
    There is no one in fintech who has the combination of vision, creativity and ability to execute quite like Mike Cagney. He is bringing his unique skills now in tackling the inequality that has been caused by existing financial products. We know new approaches are needed and you will want to hear Mike’s vision for what this future can look like.
  • Nick Molnar – CEO of Afterpay
    Probably the hottest area of fintech this past year has been the buy-now-pay-later space. Part of the reason for its popularity is the shift that is happening as consumers choose debit options over credit. Afterpay CEO sees this as a structural shift that will have a profound impact on economies going forward.
  • Colin Walsh – CEO of Varo Bank
    Varo Bank has broken new ground as they became the first digital retail bank to be approved for a national bank charter. Now, the company is shifting its attention to creating a bank that is fair for all. CEO Colin Walsh has spent his entire career in banking, he knows what is wrong and more importantly how to build a better bank that is more equitable for everyone.
  • Henrique Dubugras – CEO of Brex
    The financial options for businesses have never been better. Part of the reason for this is because of companies like Brex that are creating financial products that are resonating with startups. But there is much more work to be done here and Brex CEO Henrique Dubugras will share what the future of business banking can look like.
  • Jennifer Tescher – CEO of Financial Health Network
    It is no longer good enough to just talk about the importance of financial health. As an industry we need to take action, measurable action. This will be the key going forward. How do we know our products are really benefiting our customers? By measuring their actual impact. Jennifer Tescher will provide us with a framework to do just that.

You can see a trend here just in these five keynotes. Interest in financial equality and using fintech as a force for change has never been stronger. You will see this reflected throughout our agenda during the three days of the event. This is what we, as an industry, need to be working on right now.

PitchIt @ LendIt

Our startup competition is bank with a whole new batch of promising fintech companies. In the morning of day three you will be able to watch pitches from eight finalists in PitchIt @ LendIt. Our panel of venture capital investors will decide who is the most promising fintech company of 2021.

Discounted Pricing Ends Friday

Discounted pricing for LendIt Fintech USA ends at midnight on Friday. At that time the price goes up $200. But don’t forget that Lend Academy readers always get the best deal, so you can use the code LENDACADEMYVIP to receive 15% off the already discounted price. So register now.

See you online

This is an important time for fintech and LendIt Fintech USA is the event for this moment. Never before has finance been through such changes in a 12-month period. But we are just getting started. Come see what the future will look like at the largest fintech event of the year to date.

I look forward to seeing you online at the end of this month.

Filed Under: Fintech Tagged With: Conference, LendIt Fintech USA, virtual event

Views: 37

Top 10 Fintech News Stories for the Week Ending April 10, 2021

April 10, 2021 By Peter Renton Leave a Comment

Views: 258

Some big fintech funding rounds, of course, the stunning Q1 metrics from Coinbase,  Jamie Dimon continues to be concerned with fintech and we now know what Walmart’s fintech initiative will be called. Here are what I consider to be the top 10 most important fintech news stories of the past week.

Plaid raises $425M Series D from Altimeter as it charts a post-Visa future from TechCrunch – Breaking up with Visa is the best to happen to Plaid shareholders as the company is now worth $13.4 billion after their Series D raise.

SoftBank to Invest $500 Million in Mortgage Startup Better from The Wall Street Journal – Upping the ante on Plaid is mortgage platform Better with the biggest round of the week, a $500m round led by SoftBank, that values the company at around $6 billion.

Riding Bitcoin Surge, Coinbase Active Users Grew by 117% in Q1 2021; Revenue Tops $1.8B from Coindesk – The numbers Coinbase released this week for Q1 were insane reflecting the huge growth in the popularity of crypto. Probably the most impressive stat of all: profit for the quarter was between $730m and $800m. Get ready for a huge IPO this coming week.

JPMorgan Chase CEO Jamie Dimon: Fintech is an ‘enormous competitive’ threat to banks from CNBC – In 2015 in his annual letter to shareholders Jamie Dimon said that “Silicon Valley is coming” and in 2021 he now says that fintech is an “enormous competitive threat” to banks.

Walmart Files for Trademark for Fintech Unit: ‘Hazel by Walmart’ from Bloomberg – We now know the name of Walmart’s new fintech initiative, it will be called Hazel by Walmart as someone keeping a close eye on trademark filings discovered this week.

These 12 New Billionaires Are Riding Fintech’s Rising Tide from Forbes – Fintech has minted a dozen new billionaires recently, this is an impressive list led by David Velez, the co-founder of NuBank with a reported $5.2 billion net worth.

China Creates Its Own Digital Currency, a First for Major Economy from The Wall Street Journal – This is going to be the most important trend of the decade, the launch of sovereign digital currencies, and China has an impressive head start.

PayPal is building a ‘super app.’ Should banks be worried? from American Banker – Great in-depth piece by Kevin Wack on the fintech behemoth that PayPal has become with a vast array of banking services.

Afterpay, Adyen Team On Installment Payments from PYMNTS.com – Global payments platform Adyen has team up the Afterpay to offer their four installment payment option in the U.S., U.K, Canada, Australia and New Zealand.

Avant completes acquisition of Zero Financial from FinLedger – Avant is boosting their digital banking offerings with the acquisition of Zero Financial and their Level banking app.

Filed Under: Fintech

Views: 258

Caring Consumer Collections Policies Gain Traction

Economic woes tied to pandemic, brutal weather events shift thinking to model advocated two decades ago

April 6, 2021 By admin Leave a Comment

Views: 34

[Editor’s note: This is a guest post from Shaun O’Neill, President of Concord Servicing Corporation. Founded in 1988, Concord is a world-class financial technology company, delivering innovative, flexible, and scalable portfolio servicing solutions to meet the demands of loan originators and capital providers (and their customers) in multiple asset classes.]

A recommendation that collections and customer service “should be two sides of the same coin” is currently gaining momentum in the pandemic era. But this approach was advocated fully two decades ago by none other than LendIt’s own Peter Renton.

In a previous life he owned a printing company that sold products to credit departments and he had long advocated the need for consummate customer service. His key recommendations tied to bill-collection policies appeared in a January 2001 article in the prestigious Editor & Publisher magazine.

In part, his bylined article states: “In this dark morass actually lies a wonderful opportunity to turn debt collection into a customer-relationship-building program…this opens up the potential to generate some unexpected goodwill.”

The article continues: “…there’s a big payoff, literally and figuratively, for debt collectors who view themselves as customer-service representatives…Instead of a typical collection call, take the initiative to be empathic.”

To drive home the point about win-win, Renton suggests a discussion that asks the question: “What can we come up with together that will satisfy both of our cash-flow concerns? While you have the customer’s attention, attempt to extract a commitment from the customer to a mutually agreeable future payment framework.”

In a nutshell, this is how debt collection strategies are evolving now. Renton’s advice 20 years ago is spot on, and more important than ever.

A combination of economic woes triggered by the pandemic, and exacerbated by weather-related catastrophes, makes kinder, gentler, more understanding collection policies good for portfolio performance. They’re likely to generate more revenue than a hardline approach, plus there’s the benefit of building longevity and loyalty with customers who like, trust and respect their “bill collectors” instead of abhorring them.

[Read more…]

Filed Under: Fintech Tagged With: collections, credit, Loan Servicing

Views: 34

Top 10 Fintech News Stories for the Week Ending April 3, 2021

April 3, 2021 By Peter Renton Leave a Comment

Views: 233

We lead the news this week with announcements from both PayPal and Visa which will bring crypto closer to becoming a real payments tool. There are more digital banks launching, Plaid is close to a new round of financing and Affirm is getting into vacation financing. Here are what I consider to be the top 10 most important fintech news stories of the past week.

PayPal launches crypto checkout service from CNBC – The big knock on bitcoin has been that it never caught on as a form of payment. Now, PayPal is allowing its millions of U.S. consumers to use their crypto holdings to pay at any merchant that accepts PayPal.

Visa moves to allow payment settlements using cryptocurrency from Reuters – More good news for crypto enthusiasts as Visa said it will allow the use of cryptocurrency stable coin USD Coin to settle transactions on its network.

Where Goldman, Citi, JPMorgan are putting fintech investment dollars from American Banker – Interesting analysis from Penny Crosman that shows where the big banks are focusing their fintech equity investments.

Plaid Is Said Close to Financing at About $13 Billion Valuation from Bloomberg – We have heard this funding round was coming but there are more details on it now. It will be led by Altimeter Capital and will value Plaid at around $13 billion.

Walgreens to launch digital bank accounts this year from Banking Dive – Another big retailer is getting into digital banking with Walgreens announcing this week they will be launching bank accounts that will be available both online and in store through a partnership with MetaBank.

Laurel Road launches digital bank for doctors from Finextra – Laurel Road, now part of KeyBank, have launched a digital bank targeted at doctors as the verticalization of digital banking continues.

Fintech Uprising Will Define Post-Covid Banking from Bloomberg – The big fintech companies have been growing rapidly during the pandemic with quality mobile-first user experiences leaving banks in catch up mode.

Affirm Teams With Vacation Platform Vrbo from PYMNTS.com – Affirm is bringing its popular buy-now-pay-later model to vacations with a zero-interest financing offer valid for travel plans booked through April 11.

CFPB poised to reinstate tough stance on payday lenders from American Banker – We knew this was coming but even before a new CFPB chief is confirmed we see the acting Director saying they want to revert to the 2017 “ability to repay” rule for small dollar lenders.

2021 Google Search Trends in Digital Banking, Payments & Fintech from The Financial Brand – Fascinating research on trends in Google search. While it is no surprise that the term fintech is growing dramatically as a search term it was interesting that SoFi is the most searched for digital bank (ahead of Chime and Varo).

 

Filed Under: Fintech

Views: 233

The Impact of NFTs on Fintech

We delve into the mysterious world of NFTs, how they work, their relationship with DeFi and what they could mean for fintech

March 29, 2021 By Devin Partida Leave a Comment

Views: 1,135

[Editor’s Note: This is an article by Devin Partida, the Editor-in-Chief of ReHack.com. Devin is a Fintech and crypto writer whose work has been featured on industry publications such as FinTech News, Due, the Swissborg blog and FinTech Insight.]

Non-fungible tokens (NFTs) are units of data associated with unique digital files, most commonly cryptographic assets on a blockchain. These files can be anything, but they’re often pieces of art, music or recordings of live performances.

These NFTs are traded on what are effectively online digital art markets, with records of ownership, bidding, and transfers stored on the blockchain. Blockchain is the digital ledger technology that supports cryptocurrencies, smart contracts, and other cutting-edge applications.

What has made these NFTs notable recently is the high values that some early tokens have sold for. In March, a digital trading card of Tom Brady sold for more than $1.3 million in Ethereum. Famous auction house Christie’s sold an NFT of a digital painting for more than $69.3 million.

Unlike tokens and coins, which are fungible, NFTs can’t be exchanged for one another. They all have their own values and code that makes them unique from each other and identifiable.

These NFTs have already had a major impact on the crypto space. Soon, they’re likely to have an impact on fintech (financial technology), both inside and outside crypto. But the transformative potential of the tech may be overshadowed by concerns about the security of crypto assets, and the impact that NFTs may have on the environment.

NFTs May Drive DeFi Innovations

[Read more…]

Filed Under: Fintech Tagged With: Blockchain, DeFi, digital assets, NFTs

Views: 1,135

Application Deadline for the PitchIt Fintech Startup Competition is Next week

The deadline for startups to apply to PitchIt is March 31, don’t miss your final shot at entering the competition.

March 25, 2021 By Todd Anderson Leave a Comment

Views: 102

PitchIt @ LendIt Winner from 2019 – Possible Finance

PitchIt at LendIt Fintech has been the premier fintech startup competition since 2015 with past winners amassing more than $140mn in equity capital and $210mn in debt capital. This year’s winner will receive the PitchIt trophy, capital intros to potential investors and an interview on PitchIt: the fintech startups podcast with LendIt’s Chief Product Officer.

Apply Now

Startups not only pitch for their chance to win, but they are also mentored by leading investors, accelerators and companies on how to improve pitches, refine market fit and better prepare for meetings with prospective partners. All semi-finalists get a free ticket to LendIt Fintech USA 2021.

2021’s collection of mentors and judges:

PitchIt Sponsor

  • Zendesk – a service-first CRM company that builds software designed to improve customer relationships. The software is powerful and flexible, and scales to meet the needs of any business.

PitchIt Partners

  • Mastercard – a global pioneer in payment innovation and technology connecting billions of consumers, issuers, merchants, governments & businesses worldwide.
  • FinTech Innovation Lab – a premier global accelerator program that helps cutting-edge fintech startups scale their businesses in the world’s most competitive markets.
  • Redpoint Ventures – VC firm with a track record of backing great entrepreneurs like NuBank, Stripe and BitGo
  • SixThirty – a venture fund that invests in early-stage enterprise technology companies and connects them with corporate incumbents through its Go-To-Market Program, including Future Fuel, CNote and FinLocker
  • HallVP – was established to address the growing demand by investors for curated opportunities in early growth technology companies, partners are responsible for over $6B in transactions, across multiple portfolios and sectors, with some of the leading Family Offices and Institutions.
  • Gopher Asset Management – asset management firm that focuses on asset allocation and pursues absolute returns, fintech investments include Figure, Varo, Blend, Upgrade and LendingHome.

If the last year has taught us anything it is that innovation in fintech has only just begun. We challenge you early stage founders to take a chance and compete in PitchIt.

Application Requirements & Timeline

  • Fintech focused product or service
  • Raised no more than $20mn in equity capital
  • Founded no earlier than 2017
  • Application Deadline – March 31
  • Sweet Sixteen Semifinal Pitches – April 12-23
  • Championship Pitches at LendIt Fintech USA – April 27 – 29

Filed Under: Fintech Tagged With: FinTech Innovation Lab, Gopher Asset Management, HallVP, Mastercard, PitchIt, Redpoint Ventures, SixThirty, Startups, Zendesk

Views: 102

Bill Payment Is Changing Fast – Stay Current on These Three Trends

COVID-19 has transformed all areas of fintech, including bill payment. Here is how lenders can meet the moment.

March 22, 2021 By Peter Renton Leave a Comment

Views: 163

[Editor’s note: This is a guest post from Steve Kramer, the Vice President, Product at PayNearMe. With more than 25 years of payments and product experience, Steve ensures PayNearMe’s solutions lead the market by reducing consumer friction and offering the widest range of payment options and channels, all while staying focused on security and reliability, to ensure clients collect every payment, every time.]

During the pandemic as consumers have grown more accustomed to shopping, meeting and interacting remotely, their expectations as to how they manage their personal finances have changed as well.

At PayNearMe, we keep a close eye on emerging fintech trends to understand how they will affect client needs and consumer preferences. Even in a year of seemingly endless change, we’ve seen three distinct trends that should make lenders sit up and take notice.

1. Digital payments and disbursements are boosting speed and convenience

As customers grow increasingly comfortable with peer-to-peer payment apps, like PayPal and Venmo, they want that same fast and fluid experience with their other financial interactions, including bill payment and disbursement. A Visa study found that 76 percent of North American consumers prefer direct deposit of disbursements to any other payment method.

Now technology has enabled similar fluidity in everyday bill payment. For instance, customers can use a debit card, ACH, Apple Pay, Google Pay or even cash to make a payment from any electronic device and at any convenient time, day or night. On the biller side, push payments make digital disbursements possible by using similar systems in reverse. The funds go straight from the lender’s bank to the customer’s bank within minutes.

This fintech trend benefits families and businesses alike. Borrowers can time their payments to accurately match the ebb and flow of their available funds. That means they are much less likely to incur late fees or failed payments.

Lenders gain better management of cash flow, fewer NSFs and improved customer satisfaction. They also enjoy all the protections of digital transfer, like fraud detection and anti-money-laundering programs, and mitigate compliance scope because only the customer handles his or her bank information.

2. Mobile methods of bill payment are gaining traction

Burgeoning adoption of mobile payments in the retail sector is taking bill payment along for the ride. Just two years ago, the United States ranked sixth in the world with 29 percent use of mobile payments.

Compare that to April 2020, with 51 percent of Americans using some form of contactless payment, including mobile wallets and tap-and-go credit cards, according to a Mastercard poll.

That growing comfort with mobile payments for goods and services is certain to push boundaries on bill payment as well. Millennials and Gen Z consumers, who make up 50 percent of the population and the largest demographic of smartphone users, have shown double-digit increases in mortgage, auto and personal loan holdings over the past several years.

To satisfy those customers, companies must incorporate smart fintech solutions into their loan payment options now. A bill payment platform that enables multiple mobile options for payment – from card or ACH to mobile wallet and pay-by-text – will ensure you cover all your bases.

3. New payment technology is enhancing customer engagement

Bill payment may not strike you as the most obvious place to engage with customers; but when you consider that most lenders rarely see their customers after the initial loan application process, bill payment becomes the most reliable, long-term interaction you have. It pays to leverage that opportunity to provide your customers with helpful information or reminders, save them time or effort, or help them independently find answers to pressing questions.

Luckily bill payment technology has made enormous strides in developing customized communications that help inform and motivate your customers. A few examples:

  • Push notifications or text messages – Very popular for applications like social media and news, these tools can easily translate to bill payment. Use them to communicate important announcements, remind customers to pay and even send a customized link that takes them directly into the payment flow without the need to remember or input complicated login information. One definite plus: you can easily segment these messages by audience. For example, send earlier and more frequent notifications to those with a history of delinquency; specific payment links to those who use digital wallets to pay; or messages in Spanish to those who indicate that preference.
  • Chatbots – This emerging technology is perfect for helping borrowers independently accomplish simple payment tasks or get answers to FAQs, like checking account balances or help accessing their account. Customers want to avoid calling customer service for help — something younger customers, in particular, dislike – and fewer calls enables lenders to reserve live agents for more urgent or complicated interactions.
  • QR Codes and IVR – With consumers gravitating toward self-service options, QR codes and interactive voice response technology are experiencing a resurgence. These tools make everything from shopping to dining to bill pay touchless and easy. Customers who prefer paying or seeking information over the phone can do so independently, 24/7, by following IVR voice prompts. Or they can scan a unique QR code on their bill to go directly to their payment screen. Billers benefit by preventing customer service overload and helping maintain PCI compliance since customers handle their own card information throughout the payment. Consumers benefit from a fast, frictionless digital experience.

Mobilizing these types of communications and options keeps borrowers informed and empowers them to stay on top of their payments. They can pick messaging and payment options that sync with their preferences, technical ability and everyday routines. Lenders, in turn, build a more engaged, loyal, and equipped customer base.

Experience Required

Of course, all these trends require companies to invest in engineering talent and development resources; or, alternatively, partner with a third-party bill payment platform built specifically for the task. Lenders with limited tech manpower, especially, prefer accessing ready-made, plug-and-play solutions that integrate smoothly with existing software and systems and can be quickly customized for their industry, customer base and billing functions.

Selecting a bill pay platform known for innovation is another smart move since technology and customer demand is changing rapidly. Your customers, especially digital natives, will expect your bill payment offerings to stay in step with their day-to-day practices.

Fintech has enabled financial organizations of all types to adjust to COVID-19 demands by allowing their customers around the globe to function remotely and electronically. Don’t overlook the importance of enabling customers to self-service and pay bills remotely. With bill payment platforms ready to provide convenient, quick and customized engagement and payment options, you’ll be able to provide the service your customers have come to expect, and now demand, when it comes to their personal finances.

Filed Under: Fintech Tagged With: bill payment, payments, PayNearMe

Views: 163

Upstart Posts Strong Results in First Earnings Call and Announces Acquisition

Upstart blows away analyst expectations in their first earnings call and announces the acquisition of auto software company Prodigy Software

March 17, 2021 By Peter Renton 1 Comment

Views: 2,469

Today, Upstart released their first quarterly earnings since their IPO in December. And it was a very strong quarter indeed. Analysts were expecting $73.5 million in revenue for the quarter but Upstart delivered $86.7 million. What was particularly impressive is that this was also up significantly from the Q4 2019. It seems that the pandemic has been little more than a speed bump for the company, unlike many other online lenders.

The above graphic shows some of the highlights from their Q4 2020 number and below are highlights from the 2020 calendar year:

  • Revenue. Fiscal year 2020 total revenue was $233.4 million, an increase of 42% year-over-year. Total fee revenue was $228.6 million, an increase of 43% year-over-year.
  • Lending Volume and Conversion Rate. Bank partners originated 300,379 loans across our platform in 2020, up 40% year-over-year. Conversion on rate requests was 15.2% in 2020, up from 13.1% in the prior year.
  • Income from Operations. Fiscal year 2020 income from operations was $11.8 million, an increase of 357% year-over-year.
  • Net Income and EPS. For the fiscal year 2020, GAAP net income was $6.0 million and adjusted net income was $17.5 million. Accordingly, GAAP diluted net income per share was $0.00, and diluted adjusted net income per share was $0.23 based on the weighted-average common shares outstanding during the period. In the fiscal year 2019, GAAP net loss was $0.5 million and adjusted net income was $3.3 million.
  • Contribution Profit. Fiscal year 2020 contribution profit totaled $105.1 million, or 46% contribution margin, compared to $48.9 million, or 31% contribution margin in fiscal year 2019. Contribution profit grew 115% year-over-year.
  • Adjusted EBITDA. Fiscal year 2020 adjusted EBITDA totaled $31.5 million, which represents a 463% year-over-year increase compared to a fiscal year 2019 adjusted EBITDA of $5.6 million. The fiscal year 2020 adjusted EBITDA margin was 13% of total revenue, and the adjusted EBITDA margin was 3% in the fiscal year 2019.

[Read more…]

Filed Under: Fintech Tagged With: acquisition, Earnings, Upstart

Views: 2,469

LendingClub Reports Q4 Earnings, Updates on Their New Marketplace Bank

LendingClub reported results for Q4 and the full year of 2020 but focused much of their attention on LendingClub Bank

March 10, 2021 By Peter Renton Leave a Comment

Views: 490

LendingClub reported Q4 earnings today and their recovery from the depths of the pandemic continues. Loan originations were up 56% from the previous quarter although still down dramatically from Q4 2019. They also provided an update on their new marketplace bank. In fact, they had separate investor presentations, one for financial results and one focused on LendingClub Bank.

Here are some of the highlights from the earnings report:

  • Loan Originations – Loan originations in the fourth quarter of 2020 were $912.0 million, down 70% compared to the same quarter last year and improving 56% sequentially.
  • Net Revenue – Net Revenue in the fourth quarter of 2020 was $75.9 million, down 60% compared to the same quarter last year and improving 2% sequentially.
  • GAAP Consolidated Net Income (Loss) – GAAP Consolidated Net Loss was $(26.7) million for the fourth quarter of 2020, compared to GAAP Consolidated Net Income of $0.2 million in the same quarter last year and $(34.3) million in the third quarter of 2020.
  • Adjusted EBITDA – Adjusted EBITDA was $3.9 million in the fourth quarter of 2020, compared to $39.0 million in the same quarter last year and $4.3 million in the third quarter of 2020.
  • Adjusted Net Income (Loss) – Adjusted Net Loss was $(22.1) million in the fourth quarter of 2020, compared to Adjusted Net Income of $7.0 million in the same quarter last year and Adjusted Net Loss of $(23.1) million in the third quarter of 2020.
  • Contribution – Contribution was $47.2 million in the fourth quarter of 2020, compared to $101.3 million in the same quarter last year and $53.4 million in the third quarter of 2020, with Contribution Margin of 62.1% compared to 53.7% in the same quarter last year and 71.5 % in the third quarter of 2020.
  • Earnings Per Share (EPS) – Basic and diluted EPS attributable to common stockholders was $(0.29) in the fourth quarter of 2020, compared to basic and diluted EPS attributable to common stockholders of $0.00 in the same quarter last year and $(0.38) in the third quarter of 2020.
  • Adjusted EPS – Adjusted EPS was $(0.24) in the fourth quarter of 2020, compared to Adjusted EPS of $0.08 in the same quarter last year and $(0.25) in the third quarter of 2020.
  • Cash and cash equivalents – As of December 31, 2020, Cash and cash equivalents totaled $525.0 million compared to $243.8 million as of December 31, 2019 and $445.2 million as of September 30, 2020.

Above is the slide we often share with LendingClub earnings reports, the breakdown of the investors on their platform. You can see that institutional investors have returned but now managed accounts make up the majority of LendingClub originations. Self-directed investors will go to zero from now on since they have closed their retail investor platform.

In his prepared remarks Scott Sanborn, CEO of LendingClub, focused his comments on the bank acquisition. But he did say this about their loans first, “The pandemic has demonstrated that their borrowers prioritize LendingClub loans over other loan payments, even credit cards.” He claimed that LendingClub has advantages over both traditional banks and other fintechs, adding, “Their marketplace bank begins today with industry leading loans and deposit products, a strong brand and loyal customer base, considerable technology and data advantages, and a differentiated offering that allows us to better serve an expanded addressable market.”

LendingClub CFO, Tom Casey, said “they intend to hold prime loans representing 15-25% of their originations on their balance sheet while selling the rest through the marketplace.” This gives them the best of both worlds and it aligns their interests with investors. Interestingly, he said that LendingClub’s borrowing costs will fall 90% from 3.3% to 0.35%. Radius Bank brings with it $2 billion in deposits and will reduce funding volatility.

Overall, this was a mixed earnings report. While they beat analysts expectations in earnings per share by $0.11, they did miss slightly on revenue. But there was a real sense of optimism from both Sanborn and Casey. You could hear the enthusiasm in their voices, that they are very much looking forward to the implementation of their digital marketplace bank.

Filed Under: Fintech Tagged With: lendingclub, LendingClub Bank, marketplace bank, Quarterly Results

Views: 490

SoFi is Acquiring a California Community Bank

The fintech leader is paying $22 million for Sacramento-based community bank Golden Pacific

March 9, 2021 By Peter Renton Leave a Comment

Views: 427

Emily Chang of Bloomberg interviews SoFi CEO Anthony Noto

It has been a busy first quarter of 2021 for SoFi. The new year kicked off with the announcement that SoFi will go public via SPAC in a groundbreaking merger that valued the company at $8.65 billion. Today, we learned that the company will be acquiring a small community bank called Golden Pacific Bank based in the Sacramento region. The transaction will cost SoFi $22 million and is expected to close by the end of the year.

Now, we know that last July SoFi applied for a national bank charter with the OCC and that was conditionally approved in October. But according to sources close to SoFi there was a parallel process that has been running this entire time. While the charter application progressed SoFi was also looking for a community bank to acquire. They have found the perfect match in Golden Pacific, a three-branch community bank with $150 million in assets. Now, they are changing their OCC application from a de novo bank to a change of control application.

If the OCC and Federal Reserve approve the merger then Golden Pacific will change their name to SoFi Bank and SoFi will contribute an additional $750 million in capital for its national digital bank. Its entire lending business, which operates with state lending licenses today, will move under the new bank as well as the SoFi Money accounts. The community bank will continue, operating as a division of SoFi Bank, and the leadership will remain in place.

Here is what Anthony Noto, CEO of SoFi said of this acquisition:

We believe that by pursuing a national bank charter, we will be able to help even more people get their money right with enhanced value and more products and services. We are thrilled to have found a partner in Golden Pacific Bank to both accelerate our pursuit to establish a national bank subsidiary, as well as begin to expand our offerings in SoFi’s financial products and Galileo’s technology platform to serve local communities. We look forward to working with Virginia and her team.

The CEO and President of Golden Pacific Bank, Virginia Varela said:

We’re excited for this new partnership with SoFi and the strength it will bring to enhance our ability to serve our customers at the highest level. We will continue our commitment to bringing more services and convenience for our individual customers, small businesses, and the communities that we serve in Sacramento and surrounding counties.

One interesting part of this deal is that it gives SoFi an entry point for their Galileo division to expand to providing their technology platform to community banks. They are already working with fintechs around the world and now they can potentially adapt their platform for community banks.

Is This the Start of a Trend?

SoFi is not the first fintech to acquire a community bank. Jiko acquired a community bank in Minnesota last year and, of course, LendingClub recently acquired Radius Bank although that is a little different in that Radius is a former community bank, they switched to become a digital bank in 2012.

Around 18 months ago I recorded this podcast with the CEO of ProBank Austin, Chris Hargrove, where we spent the entire episode discussing this very topic. Back then Chris predicted we would see a dozen or more transactions where fintechs acquire community banks. We are not quite on that pace yet but I think we could see this accelerate in the next year or so.

Late last year I wrote about the flood of fintechs that want to become banks. Since then more fintechs have announced plans to acquire a banking license so the trend is continuing. Following SoFi’s lead you can be sure that many future banks will be looking at the acquisition route as well as the de novo application. So, stay tuned for more news here.

Filed Under: Fintech Tagged With: bank charter, bank M&A, banking license, community banks, digital bank, SoFi

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