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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


Several Fintech Companies Make the Deloitte Technology Fast 500

The 25th annual Deloitte Technology Fast 500 list of fast growing tech companies features many fintech names

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This year marks the 25th year of the Deloitte Technology Fast 500, the annual ranking of the fastest-growing North American companies in the technology, media, telecommunications, life sciences and energy tech sectors. While there was no specific fintech category, there were several fintech companies who made the list under the software category.

The list ranks companies by three year revenue growth from 2015 to 2018. Unlike the Inc. 5000 this list is open to private as well as public companies. Here is some background about how the list is compiled:

It was created to recognize the effort and dedication of the fastest-growing technology companies. Winners are selected based on percentage fiscal-year revenue growth over a three-year period. The ranking is compiled from applications submitted directly to the Technology Fast 500 website and public company database research conducted by Deloitte LLP.

Congrats to the following fintech companies for making this year’s Technology Fast 500:

  • LendingPoint #9
  • Unison #19
  • Peerstreet #23
  • Flexiti #40
  • Acima Credit #64
  • Opploans #91
  • Carta #101
  • Crowdstreet #111
  • Signifyd #115
  • Juvo #122
  • Remitly #150
  • Fundera #161
  • Forward Financing #195
  • LiftForward #198
  • Feedzai #231
  • Aura #236
  • Braviant Holdings #258
  • WealthForge #297
  • Fundrise #344
  • Lendio #378
  • PrecisionLender #387
  • Kabbage #448

The Opportunity For Fintech Has Never Been Bigger

If there were such a thing as a sure thing in business, today that thing would be fintech.

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[Editor’s note: This is a guest post from Douglas Lopes, the Chief Financial Officer of Airfox, a venture-backed fintech company based in Boston and São Paulo. Airfox is on a mission to accelerate financial inclusion for the underbanked within emerging economies. Airfox aims to create an entirely new financial services model for the underbanked that democratizes access to capital and financial services with a mobile-first solution.]

To produce the  EY Global FinTech Adoption Index 2019, EY researchers interviewed more than 27,000 consumers in 27 markets across the globe. They found that the FinTech “adoption rate is growing faster than anticipated. The actual global adoption rate of 64% in 2019 exceeds by 12 points the 52% future adoption rate” forecast just two years ago.

Fintech contenders frequently employ smartphones, cryptocurrency, and/or digital wallets to compete with traditional financial service delivery methods. A ready combination of technological advancement, shifting consumer habits, and enormous underserved markets — particularly in emerging economies — have fused to create the world’s greatest opportunity for disruption and a robust startup ecosystem.

Enabling technology

Greater global internet access and the widespread adoption of mobile technology couple with novel decentralized computational frameworks to underpin most fintech models (most notably in blockchain-powered projects). This comprehensive digitalization also generates mountains of data, which has, in turn, accelerated algorithmic advancement. New data-fed and rapidly evolving AI and machine learning capabilities are increasingly targeted toward speeding labor-intensive business processes and are particularly powerful in financial services applications.

According to Dresner’s 2019 Data Science and Machine Learning Market Study, Financial Services/Insurance respondents now rank data science, AI, and machine learning as critical to success in their industry at the highest rate amongst all market sectors surveyed.

AI and machine learning technologies can speedily process layer upon layer of vast and varied data while surfacing new patterns, reducing risk, and continuously improving function. As The Financial Brand recently reported, “AI changes the path to industry dominance in financial services. No longer will unfair strategic advantage be automatically granted to the bank or credit union with the most assets.” This presents an enormous fintech opportunity, since “scale of data will be increasingly important, with the ability to create unique, contextual experiences driving value and market share.”

Digital culture

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The Latest Firms Entering the Ultra Competitive Deposit Taking Space

We dig into the landscape of financial institutions competing over deposits from consumers.

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It seems like every week there is a new entrant into the US deposit taking space. Clearly there is an appetite for consumer deposits and banks and fintechs alike are willing to compete for the business. Ultimately, this is good news for the US consumer as never before has there been so many options. The competitiveness leads to both lower (or no) fees and higher yields on banking products. It’s an interesting phenomena as some fees are driven down to zero and there is less differentiation from one product to the next. It’s similar to what we’ve seen in stock trading as the newcomers in the space brought transaction fees to zero and other big firms eventually have had to follow suit. But who will ultimately be the leaders of tomorrow?

The way banks make money today is changing and we’re starting to see a wave of change in consumer banking. Today, most of these deposit products are offering around a 2% APY after falling recently due to the rate cut. Still this beats some of the traditional banks which still get away with paying almost nothing on deposit accounts. It turns out that there is a segment of the population that are set in their ways, but for those willing to make a change these financial firms are collecting deposits online and offer a very quick on-boarding process. In my opinion if you’re a US consumer and earning less than 1% on your savings account you should strongly consider switching to the many reputable product offerings in the market today. Here are some of most recent entrants and unique offerings in this space, all of which offer FDIC insurance.

Santander

The Spanish bank recently announced that they are going to launch a new online deposit platform in the US. Set to launch in the next year, the offering will reportedly pay a higher rate than that of Wall Street banks. The goal for the bank is to access cheaper costs of funding.

Robinhood

Robinhood’s first attempt at a ‘savings account’ fell flat and after ten months they have announced their second attempt. Robinhood’s Cash Managment will pay 2.05% APY as of October 8th. The consumer friendly product has no fees and is currently accepting users via a waitlist. CNBC shares further details.

Personal Capital

[Read more…]

The Current State of the Small Business Lending Sector

We explore the fintech companies who are changing the way small businesses access financing today

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If you look back to the lending landscape over the last ten years, one of the biggest transformations has been in small business lending. Options for US small businesses were severely limited a decade ago and the options that did exist were arduous. Fast forward to today and there has been plenty of innovation. In this post we’ll highlight some of the recent trends and share just how small business lending is being transformed.

The Pioneers of Small Business Lending

The companies that I view as pioneers in this space are Kabbage and OnDeck. OnDeck was founded in 2006 and Kabbage in 2008, tackling small business lending at a time when virtually no one was looking to make improvements in the space. The companies are similar in that they both allow small businesses to get quick access to capital through an online or mobile application.

Over time we’ve seen OnDeck shift their business model from selling loans to investors towards realizing revenue from the interest spread. The company made waves several years ago when they announced JP Morgan Chase as a customer of OnDeck as a Service now known as ODX. That partnership has since dissolved but OnDeck still counts PNC Bank as a customer and there have been hints at new partnerships being announced in the coming quarters.

While powering the small business lending operations at the banks hasn’t caught on as fast as many had thought there is still a large market here and one that I think OnDeck still has the potential to capitalize on. OnDeck is also pursuing a bank charter which could eventually lead to the company serving small business customers outside of lending.

Kabbage also offers the Kabbage Platform and currently has ING, FleetCardsUSA, Sage and Santander among others as customers. Kabbage has focused on making life as simple as possible for small business owners with their direct lending operation. They have been pioneers in using alternative data combined with technology that has allowed them to fund small business customers extremely quickly (in a matter of minutes).

Kabbage recently acquired Radius Intelligence which has a database with 20 million small and medium sized businesses. Radius Intelligence’s technology will be integrated into Kabbage and their products will no longer be available to other customers.

Although Kabbage and OnDeck were early to small business lending there are many other names in this space with varying models and scale including Funding Circle, Streetshares, Fundbox, BlueVine, Biz2Credit, Fundation and Credibly to name a few. LendingClub also has a small business lending operation but they primarily work with partners Funding Circle and Opportunity Fund today to originate these loans.

The Challengers of Small Business Lending

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The Current State of the Real Estate Fintech Sector

We share recent news as it relates to innovation across real estate crowdfunding, digital mortgages and buying/selling homes.

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One area of fintech that doesn’t get as much attention as it should is real estate. It’s the largest lending category in the United States that still relies significantly on decades old technology. Over the years we’ve seen this sector transform from companies in the real estate crowdfunding area to companies tackling all sorts of interesting opportunities in real estate today. In this post we’ll provide a breakdown of each area and some of the interesting trends we’re seeing.

Real Estate Crowdfunding

Real estate crowdfunding has benefited significantly from the rebound of real estate since the financial crisis. These firms, although perhaps not as hyped as they used to be, are still a very interesting part of fintech. At the time when many companies in this space were founded, it was the first time that investors had direct access to real estate investment opportunities online, most notably in the fix and flip market. From my perspective we’re in a more mature phase as there has been some consolidation over the past few years with RealtyShares being the largest platform to cease operations. However, there is still very much an interest in income producing assets as we continue to be in a low interest rate environment.

The most recent news comes from Fund That Flip which recently raised an $11 million round from Edison Partners. Other notable achievements for platforms include LendingHome completing their first securitization. We also recently heard that PeerStreet, another popular platform crossed the $2 billion origination milestone. Outside of providing debt and equity to an online platform, a company called Roofstock is worth mentioning here. I recently had the chance to speak with CEO Gary Beasley to discuss their original offering which allowed for direct purchase of single family rentals and their new offering Roofstock One, which offers direct fractional ownership in income producing real estate.

iBuying and Improving the Buying/Selling Process

Many consumers are all too familiar with the pain points associated with buying and selling a home. This is the area that companies like Opendoor, Offerpad, Knock and Zillow Offers have targeted. These companies all fall under of a term which is being called iBuying. The individual business models of each company varies slightly, but they all focus on giving you a no hassle offer for your home so you can quickly sell your home without having to worry about realtors, showings etc.

Over the past few years a number of these companies have raised enormous amounts of money due to the capital intensive business they are in. While clearly there is significant investor interest in this category, Steve Eisman of The Big Short fame recently went on record stating that Zillow is over its head in their home flipping platform and doesn’t understand the real risks. It’s an interesting contrast to the success we’ve seen these platforms report. Not surprisingly, Zillow is currently one of Eisman’s shorts.

Other companies I’d lump into this category are those which help with home affordability. As real estate prices have increased, companies have stepped in to take the burden of large down payments off of the borrower. One relatively well known company is called Unison which co-invests with a homeowner when they are looking to purchase a home. Other newer companies include ZeroDown which recently raised $30 million. This platform is tackling high cost of living locations like the Bay Area and allows homeowners to buy a home with zero down.

Digital Mortgages

The most interesting area that fintechs are covering in real estate is the mortgage process. If you’ve bought a home recently I’m sure you would agree that there are areas for improvement in the mortgage process. Companies like Better, Blend and Roostify all have traction in this space. Most recently, Better closed an astonishing $160 million Series C round which included some interesting investors like Ping An, Ally Financial, Citigroup, American Express Ventures among many others. The company has now raised over $250 million for their growing business. The company expects to originate $4 billion in loans in 2019.

Blend, which raised $130 million back in June has taken a different approach, working with 150 lenders around the country. The company processes around $2 billion in loans every day. Personally, I can’t wait for new technology, no matter which fintech it is from to reach lenders small and large across the country. With all of the potential for API connections out there today there is no reason for so much manual work when it comes to the mortgage process. Over time, I expect that closing costs will come down as a result and that the actual mortgage process will no longer be the holdup to closing on a house. While I believe we’re on the right track there is still a long way to go with some of the largest mortgage lenders in the country today.

Conclusion

The above companies featured are just a handful of the ones that have traction in the US today and it’s going to be interesting to see which ones transform into household names. If you’re interested, some of the rounds highlighted above are tracked in our 2019 fintech funding Google Sheet which tracks fintechs that have raised over a $10 million this year. If you know of other companies doing interesting things in real estate I’d love to hear about them in the comments below.

Ten Years of Investing in Marketplace Lending

I look back at my ten years of involvement in marketplace lending and share the major changes I have seen in the last decade

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This month marks ten years since I made my first investment in what was then called peer to peer lending. In July, 2009 I transferred $500 in to LendingClub to give it a try. Little did I know that first small investment would end up changing my life.

I had first read about peer to peer lending back in 2008 and I was immediately intrigued. I discovered Prosper but when I tried to open an account there they were in a quiet period. So I went looking for an alternative platform and found LendingClub. Within a few months I added $10,000 to that initial $500 investment. Then, I became so enamored with the whole idea of peer to peer lending that I was soon rolling over 401(k) accounts for my wife and I, as well as telling all my friends about it.

It was just over a year later that I decided to start blogging about this industry. Back then no one was writing about it and I really believed the industry had so much potential. So, I started the blog that would become Lend Academy back in November, 2010. The more I learned about peer to peer lending the more convinced I became that it had tremendous potential.

In 2013 as the industry was getting ready to take off I started LendIt, along with my fellow co-founders. It was the first ever conference focused on online lending and the one day event sold out. Then came the go-go years of 2014 and 2015 where dozens of new platforms got under way and venture capital was flowing into the space. The industry had its biggest setback in 2016 with the LendingClub crisis but the strong platforms endured and industry moved to focus on profitability.

Now, as I look back on the last 10 years I see so much has changed. The industry is now known as marketplace lending (thanks to Charles Moldow of Foundation Capital) and it has driven a resurgence in consumer lending and small business lending.

Ten Ways Marketplace Lending Has Changed Since 2009

1. Scale [Read more…]

Direct Mail Boosts Fintech Traction

Direct mail complements digital, influences consumers, drives higher ROI

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[Editor’s note: This is a guest post from Mike Gunderson, Founder and President of Gunderson Direct Inc., a 15-year-established direct marketing agency that helps businesses drive new leads and close more sales through traditional offline channels, especially direct mail. Clients include Innovative fintech and peer-to-peer lending companies and top-tier financial companies. Clutch has recognized Gunderson Direct as a leading direct marketing agency in 2019.]

Used correctly, direct mail and digital communications make the perfect pair for Fintech companies. They complement each other, and both have unique strengths. That’s in part why direct mail is enjoying a resurgence in general and a surge in Fintech, with increasing numbers of companies looking to integrate direct mail into their marketing platforms.

At first, this can seem counterintuitive. After all Fintech is all about technology, and therefore should use technology tools to promote itself, right? Nope.

There’s a true story of an IT consultant who travels to clients’ homes. His receipts consist of handwritten carbon copies using carbon paper. When asked why, he responded that he speaks to his audience—largely seniors—in the way that’s most familiar, friendly and effective.

Judging by Fintech consumer response to direct mail, it appears that this methodology also is proving familiar, friendly and effective. The simple fact is that when direct mail lands in the mailbox along with a check, etc., there’s a much higher chance of being viewed and acted upon. Print is anything but dead.

And that’s not just the view of older audiences. Direct mail is being embraced as a robust marketing tool by all audience ages, including millennials. Marketing strategists and direct mail recipients alike see the value, regardless of age.

A 2018 Forbes.com article frames the discussion: “With more companies evaluating their ad spend and marketing budgets, many believed they should gravitate to advertising tactics like virtual reality, digital ads and boosted social posts. However, companies have discovered these ad tactics often don’t yield the same results as traditional marketing strategies.” [Read more…]

LendIt Fintech USA 2019 Industry Awards Finalists Announced

The winners will be chosen at the conclusion of LendIt Fintech USA 2019 on April 9th at the Industry Awards dinner.

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Throughout the year we often hear about many of the successes of fintech companies whether it be new partnerships, funding rounds, product innovations or the successes of the great leaders behind each company. It’s not often we get to stop and recognize the companies and individuals who are driving change in financial services. This is why LendIt Fintech created the Industry Awards.

Now in its third year, we are excited to announce the carefully selected finalists from the over 500 submissions we received. From here industry veterans will decide on the winner of each of the 20 categories. Winners will be announced at our awards dinner on April 9th at the Julia Morgan Ballroom in San Francisco. A limited number of tickets are still available for the dinner and they can be purchased on the LendIt Fintech website.

Congratulations to all of the awards finalists!

Fintech Innovator of the Year

  • Plaid
  • OnFido
  • Figure
  • ZestFinance
  • Stash
  • Varo Money

Executive of the Year

  • Steven Streit, GreenDot
  • David Kimball, Prosper
  • Tom Burnside, LendingPoint
  • Noah Breslow, OnDeck
  • Shivani Siroya, Tala

Fintech Woman of the Year

  • Jennifer Tescher, CFSI
  • Luvleen Sidhu, BankMobile
  • Yihan Fang, Yirendai
  • Andrea Gellert, OnDeck
  • Valerie Kay, LendingClub

International Innovator of the Year

  • WeLab
  • Borrowell
  • Yiren Wealth
  • Blue Motor Finance
  • LexinFintech
  • Innovative Assessments

Top Consumer Lending Platform

  • GreenSky
  • Prosper
  • Zopa
  • LendingClub
  • Marlette

Top Small Business Lending Platform

  • Funding Circle
  • Kabbage
  • BlueVine
  • OnDeck
  • Credibly
  • Lendio

Top Real Estate Platform

  • LendingHome
  • PeerStreet
  • Sharestates
  • Anchor Loans
  • Landbay
  • Roofstock

Top Fintech Equity Investor

  • Colchis Capital
  • CreditEase Fintech Investment Fund
  • Edison Partners
  • QED Investors
  • Upper90

Most Successful Cross-Border Partnership

  • Centre for Finance, Technology and Entrepreneurship (CFTE) and Ngee Ann Polytechnic (NP)
  • Kabbage and Alibaba
  • Kasisto and Standard Chartered Bank

Most Innovative Bank

  • BankMobile
  • Laurel Road
  • HSBC
  • NBKC Bank
  • Varo Money

Customer Alignment

  • JUMO World
  • Upgrade, Inc.
  • Aura
  • LendingClub
  • Oportun
  • Scratchpay

Top Law Firm

  • Goodwin Procter LLP
  • Morgan, Lewis and Bockius LLP
  • Ballard Spahr LLP
  • Buckley LLP
  • Manatt
  • Orrick

Blockchain Innovator of the Year

  • Figure Technologies
  • Symbiont
  • Global Debt Registry
  • Harbor
  • Hydrogen
  • Finastra – Fusion LenderComm

Top Service Provider

  • Deloitte
  • Experian
  • Wilimington Trust
  • Millennium Trust
  • First Associates

Top Emerging Technology Company

  • Narmi
  • Tally
  • Nova Credit
  • dv01
  • DebtTrader
  • CuneXus

Top Enterprise Technology Company

  • ThreatMetrix
  • Emailage
  • Blend
  • Marqeta
  • Roostify
  • TrueAccord

Most Innovative Mobile Technology

  • Dave.com
  • Clarity Money
  • AutoGravity
  • fonyou
  • Auto Payment Shopper

Most Promising Partnership

  • Amount and TD Bank
  • OnDeck and PNC Bank
  • Finicity, FICO and Experian
  • HSBC and SoftBank Robotics America
  • TransUnion and PeerIQ
  • BMO Harris Bank and SpringFour

Excellence in Financial Inclusion

  • Opportunity Fund
  • Oportun
  • MoneyLion
  • LenddoEFL
  • Insikt
  • Elevate Credit

Emerging Lending Platform of the Year

  • Upgrade
  • Qwil
  • Figure
  • Uplift
  • Better Mortgage
  • CircleUp

10 Fintechs Have Already Raised Monster Rounds in 2019

We share from our perspective the biggest rounds in fintech year to date and a page where we're tracking fintech funding rounds.

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We are only two months in to 2019 and it has been a fast start for investments in fintech companies both in the US and abroad. We came into 2019 after a strong year of fintech investments with about $40 billion invested globally according to CB Insights. All signs point to a strong interest in investments in financial services. While there have been dozens of rounds announced, there are 10 that stand out to us which are listed below.

Featured Fintech Rounds

  • Acorns
    • $105 million round led by NBCUniversal and venture arm of its parent company Comcast. NBCUniversal is now their largest shareholder.
  • Better
    • $70 million Series C from American Express Ventures and the Healthcare of Ontario Pension Plan (HOOPP). The company originated $1.3B in mortgages in 2018.
  • Figure
    • The $65 million Series B round was led by RPM Ventures as CEO Mike Cagney continues to show his fundraising prowess. Their valuation is said to be $365 million today about double the valuation from last year. Read our coverage here.
  • MarketInvoice
    • $72 million round was split between debt and equity. The funding round was led by Barclays and the venture capital arm of Santander. The debt facility came from Viola credit.
  • N26
    • The $300 million Series D round was led by Insight Venture Partners. N26 last raised $160 million around 11 months ago and has ambitions to enter the US.
  • OakNorth
    • The $440 million commitment comes from SoftBank’s vision fund and is Europe’s largest fintech fundraising. The company is valued at around $2.8 billion.
  • Raisin
    • Backers in the $114 million round include Index Ventures and PayPal.
  • Starling
    • The £75 million Series C round was led by Merian Global Investors, including the Merian Chrysalis Investment Company. The round included £15 million from an existing unnamed investor.
  • Stripe
    • Stripe raised $100 million from Tiger Global Management and is now estimated to be worth $22.5 billion. The round follows a $245 million round last fall.
  • Uplift
    • The relatively unknown company raised $123 million to provide point of sale financing to travelers. The company hopes to originate $1 billion in 2019. See our coverage here.

Noteworthy mentions:

  • Akulaku
  • Bud
  • Climb Credit
  • dv01
  • Nav
  • Nutmeg
  • Personal Capital
  • Petal
  • Tink
  • Yieldstreet

A New Resource From LendIt Fintech News

There are so many funding rounds and we wanted a place to keep track of them all. So we have created a spreadsheet and a dedicated page to fintech fundraising as we track rounds over $10 million that been announced starting January 2019. We include round size and source links so those interested can learn more about these fundraising rounds.

Conclusion

The trend we are seeing bodes well for fintech companies in 2019 and it will be interesting to see whether the industry can surpass the 2018 high water mark. The rounds included in this list and in our research point towards a maturing fintech industry as rounds are much larger than before and are mostly going to the more established fintech players. This is something we also saw in 2017 as a few rounds made up a significant amount of the volume.

2018 Was a Breakout Year for Banking/Fintech M&A

Led by rallying financial stocks, favorable policy developments and rising interest rates, 2018 was a big year for banking M&A

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While M&A activity in the banking sector for 2017 was relatively subdued, a Deloitte study released at the end of that year suggested that 2018 had the potential to be a big year for banking M&A activity. That suggestion wound up being an accurate one. Led by the rallying of financial stocks that helped stabilize and boost the value of companies’ capital war chests, more favorable policy developments that helped ease regulatory constraints, rising interest rates and the tax reform bill’s boost to bottom lines, banking M&A made numerous headlines throughout the year.

Many large financial firms that had been sitting on the sidelines since the financial crisis, spent 2018 actively exploring and completing some major fintech acquisitions or investments as the continued rise in technology innovation played a major role in this increased activity as well.

For fintechs, 2018 got off to a fast start and that early momentum was felt throughout the year. Two massive deals dominated the headlines as the $12.9 billion acquisition of WorldPay by Vantiv and PayPal’s acquisition of Swedish fintech firm iZettle for $2.2 billion most certainly set the stage for a big year.

The total number of retail banking deals globally was numbered at 287 through the first three quarters of 2018 according to White & Case M&A Explorer, which was broadly in line with previous years. However, these transactions were worth a combined $76.2 billion – a 25% increase over the first three quarters of 2017. [Read more…]

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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