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Online Lenders Featured in the Inc. 5000

Several companies from the online lending space made the Inc. 5000

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Every year Inc. pulls together a list of the top 5000 fastest growing private companies in the United States. This year there were around 250 companies that made it in the financial services category and there are several familiar names on the list. Inc. shares basic information on each company while also sharing 2016 revenue numbers, a metric that is often not publicly available. We congratulate all of the companies on making the list this year.

Below we’ve highlighted some of the big names:

Avant – #47

Avant is an unsecured consumer online lender that focuses on the near prime space. Over three years they’ve experienced 6,333% growth. The company did $437.9 million in revenue in 2016 and has 468 employees.

OppLoans – #219

OppLoans brands itself as an alternative to payday loans. The company has over 101 employees and did nearly $28 million in revenue last year. Growth over three years totals 1,970%.

Kabbage – #449

Kabbage is one of the leaders in small business lending. Last year the company brought in $171.8 million in revenue. Recently they raised $250 million from Softbank bringing their total equity raised to over $500 million.

loanDepot #1418

loanDepot has been somewhat of a quiet achiever but CEO Anthony Hsieh and his team have quickly built one of the largest non-bank lenders in the country. They brought in over a billion dollars in revenue last year and have over 5,000 employees, dwarfing every other company on this list. Earlier this year they crossed $100 billion in originations. Anthony Hsieh has a fascinating story and was on the Lend Academy podcast in 2016.

Other companies readers may recognize are Lighter Capital (634), Prime Meridian Capital Management (554), FastPay (1653), National Funding (2030), and ZestFinance (2202). You can view the full list which spans a wider range of financial services companies not covered here on the Inc. website.

New Report on Fintech from the World Economic Forum

A detailed report from the World Economic Forum questions the role that fintech firms will have in the future of financial services

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Back in April I attended a couple of roundtable discussions in New York organized by the World Economic Forum. Many leaders from the fintech industry were there as well as some leaders from traditional finance and consultancies. We had very productive discussions on the future of fintech and afterwards they said that out of these sessions would come a detailed white paper.

Today, the World Economic Forum released a report titled, Beyond Fintech: A Pragmatic Assessment Of Disruptive Potential In Financial Services, that was the result of those and many other discussions they had with leaders from around the world. The report aims to answer the question about whether fintech companies will really change the financial landscape. It builds on the last report in 2015 called The Future of Financial Services, sharing the impact of fintech firms and various outlooks for the future.

Here is a very short summary of the report released today:

Our findings suggest that fintechs have materially changed the basis of competition in financial services, but have not yet materially changed the competitive landscape. They play a critical role in defining the pace and direction of innovation across the sector but have struggled to overcome the scale advantages of large financial institutions.

Below are some of the key findings from the report:

  • Fintech start-ups have so far fallen short of their ambitions to upend the competitive landscape in finance, driving innovation but struggling to capture market share in mature markets.
  • What fintechs have done is define the direction and speed of innovation across most areas of financial services; they have also set new and higher bars for user experience.
  • Large technology firms like Amazon and Google may represent the largest competitive threat to financial institutions, as their AI and cloud computing services become more central to the sector, and customer data rises in importance.
  • Models of financial services innovation around the world are diverging, benefitting local firms and making it harder to co-ordinate a regulatory response.

It is a detailed report, some 196 pages, covering most of the major verticals in financial services: payments, insurance, digital banking, lending, investment management, equity crowdfunding and market infrastructure (including blockchain). If you want to get a sense for where financial services is heading this report is a must read.

Five Key Takeaways from the Interview with the CEO of ZhongAn Insurance

ZhongAn has more customers than any other insurance company on the planet and they are less than five years old

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A couple of weeks ago we published a podcast with the CEO of ZhongAn Insurance, Jeffrey Chen. I want to highlight some of the key takeaways today because I think they are a truly amazing company and some of these highlights might have been lost in translation.

Back in June, IFR, a Thomson Reuters publication, broke the news that ZhongAn had filed an IPO application to the Hong Kong stock exchange targeting a listing as early as the end of 2017, raising up to US$1.5 billion. If the deal goes through, ZhongAn will be the first insurtech company to be listed in Hong Kong. It will also likely become one of the most valuable fintech companies on the planet.

With that background here are the five key takeaways from my interview with Jeffrey Chen.

1. ZhongAn is Backed By Some of China’s Largest Companies

Ping An Insurance is ranked by Forbes as the #1 insurance company in the world. They are an early backer of ZhongAn. The other early backers were Alibaba and Tencent, the two most valuable companies in China as measured by market cap. This would be like a fintech startup in the US receiving initial funding from Apple, Amazon and Berkshire Hathaway. Truly impressive.

2. Their First Product Was a Simple Insurance Offering for Alibaba Merchants

ZhongAn’s first product was called Zhong Le Bao, a type of e-commerce returns insurance. It was launched on Alibaba’s Taobao platform and was aimed at covering merchant shipping losses when consumers were dissatisfied with product purchases. It also allowed merchants to bypass Alibaba’s deposit requirements. [Read more…]

Witnessing the Creation of a New Asset Class

Gordon Suber, Ron Suber's father shares his perspective on the progression of the online lending industry.

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[Editor’s note: This is a guest post from Gordon Suber, the father of Ron Suber, soon to be President Emeritus of Prosper.]

I don’t have center court seats at Madison Square Garden, nor 50 yard line tickets. I did, however, have a once-in-a-lifetime front row seat to the creation of a new industry.

I am Gordon Suber, Ron Suber’s father.

Like many, I heard of the nascent peer-to-peer industry in 2012. It was explained, it was demonstrated, I read all about it. Like others, I had concern and suspicion that it wasn’t real, was perhaps a Ponzi scheme or just a fad. Nevertheless, I opened accounts at a couple of platforms to try it myself.

At the then new food court in the basement of the Plaza Hotel, l met young Matt Burton and listened to the platform that he was proposing to start soon; I read Lend Academy to stay up with news. I attended numerous Lendit conferences, meet-ups and other industry gatherings.

As we now know, peer-to-peer is a multibillion dollar global phenomenon that has become a new asset class for people and institutions around the world. I congratulate the pioneers for their passion, commitment and investing time and money to make it all happen.

In early 2013, after observing the rapid growth and increasing buzz, I said to Ron, “If there is sustained growth as you anticipate, first will come the lobbyists telling you why you need to hire them, then will come the regulators from the federal government and states in which you are doing business, and then the politicians themselves, through their representatives, seeking involvement. Get ready for the headwinds!”

Sure enough, the headwinds came from all directions in 2016, costing most of the platforms a reduction in value. Then I witnessed the industry come together, regroup, improve and thrive once again.

At 77 years of age, I leave you in the industry with this wisdom from Billie Jean King:

“There are those who think life is a marathon. I don’t agree. I think life is a series of sprints. You get to start over and over and over again, always adapting to the long and winding road in front of you. Along the way, you’ll have failures but if you choose to see these failures as feedback, it will help you plan your next step. When I used to play…. the ball would be coming to me. Each ball is a new opportunity. I have to make a decision so I have to take responsibility, and I have to decide if I’m going to hit it. If I hit it and the ball goes wide, I take that information, I enter that in my computer in my brain and I’m ready for the next shot. I get that same shot to make a correction…you think of it as feedback, not failure.”

Ron would concur, I think.

Often he would speak about the “new opportunity” when he encountered a pothole in the road or his competition had changed their serve. Sometimes he would even ask my advice. I would say to follow Yogi Berra’s advice: When you come to a fork in the road, take it.

Good luck handling the next serve, the next opportunity and adapting to the long, winding and exciting road ahead.

Gordon

New EY Report Highlights Fintech Adoption Rates

We dig into EY's most recent report that highlights fintech adoption rates across the globe.

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When I first started working for Lend Academy and LendIt I saw the massive opportunity for fintech companies to change the way consumers interact with companies in financial services. A good litmus test at the time for gauging awareness was asking friends and family if they’ve heard of Lending Club or Prosper. Most had not.

Now that the the industry has evolved, it’s a much broader question than that with fintech firms operating in almost every aspect of financial services. To this end, EY recently published a free report titled “EY FinTech Adoption Index 2017 – The rapid emergence of FinTech” which shares detailed information on consumer adoption rates across the world. The yearly report was first launched in 2015 and aims to look beyond the hype and dig into actual consumer usage.

They surveyed 22,000 digitally active consumers in 20 markets across the globe. One highlight is the below graphic which shows an overview of adoption across the markets. Average adoption across all consumers was 33%, defined as consumers using at least two fintech services. The report shares that in the theory of innovation adoption, fintechs have reached the key milestone of “early majority” adoption.

Not surprisingly, China and India both came in at the top of adoption rates. We’ve written many times about the Chinese market and it was clear that even in the early days China was leading the way when it came to fintech. The survey also cited increasing awareness in Australia, Canada, Hong Kong, Singapore, the US and the UK., with 84% of customers being aware of fintech services compared to just 62% in 2015. The entire report is worth a closer look, but here are a few other key takeaways:

  • Average adoption rates across emerging markets is 46%
  • Money transfer and payments are the most popular category, used by 50% of consumers in the last 6 months
  • Insurance is experiencing growth, reaching 24% adoption across markets
  • Age segments with greatest fintech usage: 25-34 (48%) and 35-44 (41%)
  • Fintech “super-users” (adopting 5+ services): 13% of all consumers
  • Markets with highest usage intent: South Africa, Mexico and Singapore
  • Services with highest expected increase in demand: borrowing and financial planning

Conclusion

While the survey is generally good news for companies in the industry there is still room for growth especially in the US which comes in at the average adoption rate across countries polled. There are also other categories I believe that have more growth potential. For instance only 10% of digitally active users have borrowed using a p2p or online lending platform. Same goes for the potential on the investment side with only 20% of consumers using p2p platforms, crowdfunding platforms, online investment advice and online stockbroking. Adoption rates for services such as online budgeting and financial planning tools also came in low at just 10%.  In addition there is more potential in emerging markets as more consumers become digitally active.

Banks Going Digital – Transforming Branches, Apps and a Focus on Customer Experience

Banks know they must go digital and many are embracing new technology to improve the customer experience

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In Austin last week American Banker hosted their annual Digital Banking Conference where banks of all sizes gathered to discuss the innovation in banking today. There were a few main themes that came out of the event; banks are focused on transforming the customer experience, mobile first approaches are prevalent and technology solutions like AI and cyber security are becoming must haves within the bank.

The big banks have all started to understand that the traditional way of banking is a thing of the past. Keynote speaker Yolande Piazza, CEO, Citi Fintech talked about disrupting from within, changing how they operate to enable the customer and move to a mobile first approach. She explained how this approach is radical for a bank and the layers of compliance did not make the transition smooth. They have completely rethought how they hire, 50 percent of their fintech talent is from outside the company. They have looked towards fintech and technology companies to fill their pool, while the banking talent comes from within.

Consumer oriented experiences really drove a lot of the conversations at the event, banks and the vendors were all talking about how to best utilize the consumer’s time when they engage. Mobile apps seem to have become a bit of a competition among the banks, though some would describe it more as a competition of experience and not necessarily as a competition between different banks. No longer are banks looking to drive where the customers should go, they are looking for the customers to drive what they want in the experience.

Consumer experience is not limited to the digital channel; banks and companies like Samsung are also focused on changing the way people interact within the branch. In speaking to Reginald Jones, Director of Sales for Regulated Industries, he talked about how the consumer electronics giant is working with banks to help change the way people think and interact with their local branches. [Read more…]

Research on Financial Inclusion and Poverty Reduction in China

The newest member of the Lend Academy team highlights financial inclusion in China with three case studies.

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[Editor’s Note: This is a post from Sherry Zhang who is the latest member of the Lend Academy and LendIt teams. Sherry is based in China and previously covered the Chinese fintech market. She is helping us craft our LangDi Fintech agenda but you will also see her contribute here on Lend Academy to give us additional insight into the Chinese market.]

A brief history of financial inclusion in China

In June 2012, then Chairman Hu Jintao mentioned financial inclusion at G20 summit in Mexico. This was the first time a top Chinese leader mentioned “financial inclusion” in a public speech.

In Nov 2013, the Party’s central committee approved an important document entitled “Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform”. The document made it clear that China “will develop inclusive finance.”

In Jan 2015, CBRC established a financial inclusion department under the committee to oversee micro-finance, micro-loans, P2P lending, and issues of agriculture, farmer and rural area.

In Jan 2016, the State Council issued a circular and made a five-year plan (the Plan) to develop the country’s inclusive finance. The goal of the Plan is to set an inclusive finance system that is in coordination with the construction of a moderately prosperous society by 2020 and satisfies people’s need for financial services.

This research will focus on three case studies in the financial inclusion market: CFPA MicroFinance, Ant Financial, and CreditEase.

Case study 1: CFPA MicroFinance

CFPA Microfinance is one of China’s largest microfinance players:

  • As of Dec 2016, CFPA Microfinance currently has branches in 229 counties and 18 provinces throughout China, and 85% of the branches are located in areas designated by the Central or Local Governments as poverty stricken counties.
  • As of Nov 2016, CFPA Microfinance has disbursed loans valued at RMB CNY 18.4 billion ($2.7 billion) to 1.61 million clients, with average loan size of CNY 11,000 ($1,620). 62% of all loans have been deployed for the purpose of raising livestock, breeding fish and farming and etc.
  • Approximately 3 million low-income villagers have received microloans from CFPA Microfinance for improving their livelihood and raising local production.

CFPA Microfinance’s largest shareholder, China Foundation for Poverty Alleviation (CFPA), was established in 1989. CFPA was one of the first non-profit organizations in China. International Finance Corporation (IFC) became acquainted with the foundation in 2007, and suggested that it make its microfinance business an independent business.

In November 2008, CFPA Microfinance Co. was established. In 2010, Sequoia China Capital and IFC made equity investments in CFPA Microfinance. After the investments, the CFPA’s ownership in CPFA Microfinance was reduced from 100% to 61%.

In Dec 2016, Ant Financial, IFC and High Impact Capital Advisors announced another investment in CFPA Microfinance. After that, Ant became the second-largest shareholder after CFPA.

A report by IFC (2012) said that, IFC helped CFPA Microfinance in terms of corporate governance, IT systems, HR, risk management, so CFPA Microfinance has achieved both business performance and social development:

Business performance:

  • CFPA Microfinance now ranks among the top microfinance institutions in China in terms of profitability, asset quality, operating efficiency, and (low) average loan size.

Social development:

  • 91% of all CFPA Microfinance clients are women
  • At least 80% of CFPA Microfinance clients would not have been able to borrow from anywhere else, according to a survey by the China Agriculture University and China Academy of Social Sciences
  • 49 out of the 53 CFPA Microfinance operating outlets are in China’s Nationally Designated Poverty Countries, the poorest areas in the country.

[Read more…]

What I Learned at the Leading Blockchain Conference Consensus 2017

A review of how the new technologies are being developed and implemented.

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Blockchain has quickly become the buzzword in fintech for 2017; Consensus 2017 took place this week in New York City and I wanted to share my thoughts on the event.

There were a few major themes I took away from the conference. Blockchain uses are expanding rapidly beyond financial services, there were auto companies, pharma companies and technology giants who were in attendance and spoke. This technology is a worldwide phenomenon. I met and saw speakers from the US, China, Japan, Korea, Australia, Europe, Latin America, South Africa, India and more. These distributed ledger technologies are becoming more diverse, in addition to the blockchain you now have Ethereum, Corda, Quorom and more. [Read more…]

Registration for LendIt Europe 2017 is Now Open

LendIt Europe returns to London for the fourth time on October 9-10 at the InterContinental London—The O2.

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I was in London last week where we officially launched LendIt Europe 2017. We are returning to the InterContinental at the O2 for the second year in a row where we expect over 1,000 attendees this year.

Our 2017 event will be a little different to last year. Similar to what we have done at our USA event we are expanding to include other aspects of fintech beyond online lending. While we will still be covering lending in some depth we also want to highlight the innovations happening in other areas of financial services. Europe continues to be a hotbed of innovation and we will be covering a number of new categories: artificial intelligence, machine learning, biometrics, blockchain and we will also dig deep on digital banking. Supporting the startup community is in LendIt’s DNA and we are excited to have PitchIt @ LendIt return for the second year at our Europe conference. Below is an agenda framework to give you some idea of what we have planned:

Early confirmed keynote speakers include Jaidev Janardana, the CEO of Zopa, Francesco Brenna, an Executive Partner at IBM Global Business Services and Shane Williams, the co-head of UBS Smartwealth. Our current confirmed speakers are here and if you are interested in becoming a speaker at LendIt Europe 2017 you can submit an application here.

Lend Academy Readers Receive a 15% Discount

The launch price of £795 is in effect until June 2nd, but as a Lend Academy reader you can receive an additional 15% discount by using the code LENDACADEMYVIP at checkout. The discount code is always good for 15% off but you will receive the best pricing if you purchase before midnight on June 2nd. You can register now on the LendIt website.

Our fourth London event I expect will be our biggest and best ever. I am looking forward to hearing from a range of industry leaders in not just the UK but from across Europe. It will be interesting to see the impact that Brexit has on the event and with open banking arriving in Q1 next year that is going to provide some major impetus for change that we will be covering as well.

Below is a video with some highlights from our event last year that was at the same location. I hope to see you at LendIt Europe 2017 in October.

11 Of The Largest Companies In China Dominate Chinese Fintech

A Rundown of the Huge Chinese Fintech Conglomerates That No One Is Talking About.

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There is a belief in China that Fintech is going to be larger than E-Commerce and the race is for companies to stake their claim in this new market.  China has a massive emerging middle class and very little traditional banking services for consumers and small businesses.  Of the 1.4 billion people in China, only about 300 million are in the national credit bureau, which means that more than a billion people have no credit profile.  Hundreds of millions of Chinese “unbanked” consumers are middle class, have high discretionary income, and would be considered prime or super prime borrowers. On top of that, the large Chinese banks have no history in making consumer and small business loans and were never designed for that purpose (they make infrastructure and commercial real estate loans).

This huge void in the market has been identified by virtually every major Chinese company that has a business-to-consumer (B2C) relationship.  If a firm has data on a large sample set of consumers, then they have a unique proprietary edge from which to assess the creditworthiness of those unbanked consumers.  We are seeing the leading Chinese companies from a diverse set of industries muscle their way into the fintech sector.  This article highlights some of the key players that have made the horizontal jump into fintech.

E-Commerce:

Ant Financial

Ant Financial Services Group is owned by Alibaba Group, the largest e-commerce firm in the world.  Ant Financial is focused on serving small and micro enterprises as well as consumers.  With the vision “to turn trust into wealth,” Ant Financial is dedicated to building an open ecosystem of Internet thinking and technologies while working with other financial institutions to support the future financial needs of society.  Businesses operated by Ant Financial Services Group include Alipay for payments, Yu’e Bao for money market services, Ant Fortune for wealth management, Ant Check Later and Ant Micro Loans for financing, Zhima Credit (formerly Sesame Credit) for credit reference, Zhao Cai Bao for online lending, and MYBank for small business lending.  Ant Financial is the largest fintech company in the world.

JD Finance

JD Finance Group operates seven lines of business: supply chain finance, consumer finance, crowdfunding, wealth management, payment services, insurance and securities trading. JingBaobei is their microlending platform and Baitiao is their crowdfunding platform. Jintiao and Xiaobai are their wealth management businesses. Through their access to transactions and credit management systems the companies provide financial services to enterprises and consumers.

Search:

Baidu Jinrong

Baidu Jinrong is the financial services arm of Baidu Corporation that was formed in 2015. Baidu operates the second largest search engine worldwide behind Google. Baidu Jinrong is focused on many different verticals under different brands including consumer finance (Baidu Umoney), wealth and fund management (8 Baidu), payments (Baidu Wallet) and financial asset transaction platform services. Through joint ventures the company also does business in internet banking and insurance. [Read more…]

About Lend Academy

Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.

The Lend Academy team loves peer to peer lending and our staff have all invested their own personal money in one or more of the platforms. Lend Academy Media is part of Cardinal Rose Group which also owns LendIt, the leading industry conference, and has a majority interest in NSR Invest.

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