Tag: Fintech

GetCapital appointed to PLAN Australia aggregator panel

GetCapital, specialist lender to small and medium sized businesses (SMEs), has announced its appointment to the lending panel of aggregator PLAN Australia from 20 August.

PLAN is one of Australia’s largest mortgage aggregation groups, with over 1,650 members and a total loan book value close to $70 billion. The aggregator’s commercial and asset finance volumes reached $990 million in the six months to March 2018.

The partnership will see GetCapital’s multi-product offering of business loans, equipment finance and trade finance become available on PLAN’s extensive broker network across Australia.

“We welcome the opportunity to work with PLAN as part of our commitment to support the growth of Australian SMEs,” said GetCapital CEO Jamie Osborn. “We look forward to delivering real value to PLAN’s experienced brokers, their customers and their businesses”.

PLAN has one of the largest partnership manager (PMs) workforces in Australia, with PMs across all states providing personalised support and business advice. They work with established financial planners, accountants and property business owners to find a sustainable way of delivering both end-to-end advice and lending services.

“We are delighted to partner with GetCapital and have them join our panel”, said Anja Pannek, CEO of PLAN Australia. “This will further strengthen our commercial and asset finance options for our brokers and their customers.”

Technology-enabled whilst still taking a traditional relationship management approach to servicing brokers, GetCapital’s range of finance solutions feature flexibility and convenience over traditional lenders, including approvals in under 24 hours.

These benefits complement PLAN’s broker support offering through technology, professional and business development, based on its four C’s: customer first, compliance focused, commercially oriented, and committed to the industry.

About GetCapital

Founded in 2013, GetCapital is a specialist provider of finance to SMEs. GetCapital offers fair and transparent financing facilities to mainstream businesses including business loans, trade finance facilities, equipment finance as well as property secured loans.

In 2017, GetCapital was named one of Australia’s fastest growing companies in Deloitte’s Technology Fast50.

SocietyOne celebrates 6th anniversary as total lending approaches $500 million

SocietyOne, Australia’s pioneering and leading marketplace lender, has celebrated its sixth anniversary of operations as total lending since inception approaches $500 million.

After making its first loan in August 2012, SocietyOne has now helped more than 20,000 customers thanks to more than $480 million provided by its investor funders.

Based on current lending volumes, SocietyOne expects to achieve $500 million in total lending in September – making it the first marketplace lender to achieve this milestone.

Since the beginning of 2016, total lending has grown nearly 6 times and SocietyOne’s loan book now totals over $220 million, up from $41 million at the start of 2016.

“The last 12 months have represented another year of growth, transformation and progress” said interim CEO Mark Jones.

“We have seen continued growth in lending with more than $150 million originated since our fifth birthday. Lending growth, combined with an improvement in margins and disciplined cost management, has translated to a strong improvement in SocietyOne’s financial performance. At the same time, we have continued to transform and simplify our business to focus on our core marketplace lending activities.”

“SocietyOne’s vision is ‘to be Australia’s leading, most trusted, lending marketplace’ and our mission is to achieve this by ‘providing a better deal for borrowers and lenders, one brilliant funding moment at a time’.”

“We have made good progress over the past year towards our vision and goals.” Among many highlights, Mr Jones noted the:

  • successful completion of the strategic investor capital raise in January 2018;
  • strengthening of the leadership team ranks with the appointment of Simon Farrell as Chief 
Technology Officer and Ross Horsburgh as Chief Credit Officer;
  • expansion of our distribution reach with the development of a new personal loan offering 
available through mortgage brokers;
  • successful implementation of systems and credit processes to ensure readiness for 
Comprehensive Credit Reporting; and
  • continued recognition for excellence and innovation through numerous industry awards. 
Most recently, SocietyOne was recognised in The Australian Financial Review Top 100 Most Innovative Companies List for 2018. 
“We have come a long way over the past 6 years and our success could not have been achieved without the collective effort of our hardworking and passionate team here at SocietyOne, and the backing of our Board, shareholders and key business partners” said Mr Jones.

“SocietyOne has been at the forefront of ‘fintech’ disruption of the financial services industry in Australia for 6 years. We have a real commitment to customer-first innovation and everything we do is guided by our values of being Transparent; Imaginative; Empowering; One Team; and Connected” said Mr Jones.

Looking ahead to the next 6 months, SocietyOne will be focusing on making further improvements to the customer experience; continuing to build its brand profile; developing new solutions for investor funders; broadening out its broker solution and developing new strategic partnerships; and further investing in its technology capabilities and platforms.

“With more than $60 million in committed investor funding at present, and continued interest from a number of institutions, we are in a strong position to further grow lending over the remainder of the year.”

“The next 6 months will be another exciting period of growth and innovation” said Mr Jones. While there is a lot of work to do, the momentum in the business is really pleasing. By the end of 2018, we will be well positioned for the next phase of growth. We remain on track to achieve operating breakeven by March 2019.”

 

Fintech OnDeck Lent More Than US$9 billion

Global, online SME lender OnDeck has reached a new milestone for the value of loans written since it entered the market, just over 10 years ago, via Australian Broker.

With operations across the US, Canada and Australia, the OnDeck Group has lent more than US$9 billion to more than 80,000 small business customers.

Demonstrating the strength of the local market, the group’s Australian business contributed significantly to the total and Australia is now the second largest alternative finance market in the APAC region, behind China.

Cameron Poolman, COE of OnDeck Australia said, “The Australian market is growing at 37% annually. However, while the total size of the alternative finance market in Australia is now 25 times the size it was in 2013, our market is still an emerging on-line lending market,”

OnDeck’s own data shows a number of pain points in the SME finance landscape and the lender has regularly called for better financing options for small and medium sized enterprises.

One in five Australian small businesses are unable to take on new work because of cash flow restrictions and nine out of 10 small businesses report better cash flow could improve revenue by an average of 11.7%.

Despite the challenges, Poolman expects the market will continue its strong growth trajectory and will likely reach maturity in less than six years; a process that took 12 years in the US.

OnDeck was one of six online lenders that signed the new fintech code of lending last month. The code was developed by the Australian Finance Industry Association (AFIA), the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), SME advocate theBankDoctor.org and industry association FinTech Australia.

Fintech Momentum Accelerates

According to the KPMG’s The Pulse of Fintech 2018, 2018 started with a bang for the fintech market, with overall investment across venture capital (VC), private equity (PE) and mergers and acquisitions (M&A) deals at mid-year already well above 2017’s total investment results. The sharp increase in activity was driven in part by two massive deals: the record-setting $14 billion raise by Ant Financial during Q2’18 and Vantiv’s acquisition of WorldPay in Q1’18 for $12.9 billion.

Across the Asia Pacific, momentum also accelerated, although Australia was at the back of the pack with just 7 deals in each of the first two quarters of 2018.

Notwithstanding the two outlier deals, fintech market activity worldwide gained momentum during the first half of the year as the geographic diversity and reach of fintech investment continued to expand. Brazil, for example, gained some prominence earlier this year as Nubank joined the fintech unicorn club. France, Switzerland, South Korea and Japan also saw significant fintech deals — extending investment well beyond traditional fintech leaders like the US, UK, China and India.

In the more mature fintech areas of payments and lending, dominant market players continued to emerge over the first 6 months of 2018, attracting larger and larger deal sizes. Meanwhile, a broader range of companies focused on newer areas of fintech innovation, such as artificial intelligence (AI) and data analytics, also attracted attention from fintech investors.

Regulatory issues have been a hot button topic for corporate and other fintech investors so far this year, particularly in Europe, as a result of the implementation of Payment Services Directive 2 (PSD2) and General Data Protection Regulation (GDPR). The increasing focus on managing regulatory requirements and compliance contributed to an increase in funding for regtech companies. In just 6 months, VC funding to regtech companies has already exceeded regtech funding raised during all of 2017.

2018 year-to-date funding has already exceeded total annual regtech funding in every year previous except 2016. The US and UK attracted the majority of this funding. At a technology level, regtech investments have been quite varied — from a $25 million raise by UK-based CloudPay — a payments processing platform compliant with specific regulations, to $38 million raised across two funding rounds by US-based Harbor — a blockchain-based compliance platform that tokenizes private securities for trading.

Regtech investment is still relatively immature, with approximately half of total funding raised by seed and early stage companies. In the most mature markets, there have also been a small number of mid-stage investments this year, including Series C raises by CloudPay and Tipalti.

Over the next 12 to 24 months, we expect to see investment in regtech to grow rapidly — particularly in areas like AI, Know your Customer (KYC) and Know your Data (KYD).

Blockchain continued to draw a significant amount of attention from investors in Q1 and Q2’18, although investments typically focused on more experienced companies and consortia looking to obtain additional rounds of funding rather than on new market entrants.

Investor interest in blockchain was not limited to one jurisdiction. Good sized funding rounds were seen during the first half of the year, including $100 million+ rounds to R3 and Circle Internet Finance in the US and $77 million to Ledger in France. The US was particularly active on the blockchain front, with total investment in the first half of the year already exceeding the total seen in 2017.

Asia Pacific.

Ant Financial’s record-shattering $14 billion Series C funding round in Q2’18 lifted Asia’s mid-year fintech investment to a massive $16.8 billion compared to $5.4 billion in all of 2017. The single deal accounted for over half of the $23 billion in VC fintech funding seen globally during the 6-month period.

Excluding this massive outlier deal, Asia still saw strong fintech investment, with quarter-over-quarter increases in overall fintech investment in India, Australia and Singapore from Q1’18 to Q2’18. The number of deals in Asia also rose at each deal stage during both Q1 and Q2’18.

Fintech investment in China strengthened in the first half of 2018 compared to the end of 2017. In addition to Ant Financial’s massive deal, China saw four other $100 million+ megarounds—including $290 million to Dianrong, $160 million to WeCash, $130 million to MeiliJinrong, and $100 million to TiantianPaiche. The majority of banks in China have been expanding their focus to digital and developing transformation strategies. This has led to an increase in B2B focused fintechsable to enable banking transformation. Banks have invested in myriad areas, including blockchain, big data and AI.

Australia.

Australia appears to be a Fintech backwater, with none of the Asia Pacific top 10 deals being done in the country. That said, in the first half of 2018, Australia’s financial regulator provided its first restricted ADI license to a digital bank, Volt Bank14, although more are expected to be issued in the coming quarters. The purpose of the new license is to support digital banks entering the market and to encourage more competition.

 

Trade Ledger wins “Ashurst FinTech Startup of the Year”

Digital banking platform start-up, Trade Ledger, has been named the “Ashurst Fintech Start-up of the Year” after expanding into the UK market and signing up a series of major deals in just one year.

Trade Ledger is the world’s first open digital banking platform that gives banks and other business lenders the ability to assess business lending risk in real time. This will enable these lenders to address the £1.2 trillion of undersupply in trade finance lending globally, while providing high-growth companies with the working capital needed to sustain growth.

The award goes each year to a fintech start-up “that has disrupted the financial services sector with new and innovative services, creating competition and transforming the way we experience financial services”.

Trade Ledger has done this by being the first corporate lending platform in the world to automate the entire credit assessment process, assess SME supply chain data in real-time, and calculate risk down to the individual invoice.

This allows banks and other business lenders to tap into the AU$90 billion of unmet business credit demand in Australia, and US$2.1 trillion globally.

“As the global economy transitions towards smaller, high-growth businesses – our all-important start-up and innovation ecosystem – business lenders have an obligation to learn how to supply working capital desperately needed by these businesses of the future,” said Martin McCann, CEO and Co-Founder of Trade Ledger.

“Australian banks and business lenders also face risks on several fronts. On the one hand, they need to improve both their cost/income ratio and their capital efficiencies within this segment that is traditionally considered as high risk. On the other, they are facing increased competition from technology behemoths such as Amazon, Tencent, and eBay, who are all threatening to use their hordes of data to enter financial services.

“The Trade Ledger platform equips these lenders with the same degree of technological proficiency as these massive tech firms, while arming them with the tools needed to meet our booming innovation ecosystem’s need for credit,” concluded Martin McCann.

This is the third year the FinTech Awards have been running, and the FinTech Awards owner, Glen Frost, was particularly impressed with both the quality and quantity of this year’s applications.

Speaking on the night, Glen Frost said: “The 3rd Annual FinTech Awards recognise and reward the innovators and the risk takers. To be recognised by your peers for your innovation and entrepreneurial spirit will sustain you through the tough times, it will motivate you, and it will show your customers, investors and staff, that you’ve got what it takes.

“I congratulate Martin McCann, and his team at Trade Ledger, on winning the Ashurst FinTech Startup of the Year.”

The keynote guest speaker for the evening was the Hon Scott Morrison, MP, Treasurer, who told the crowd that he was relying on the fintech community to ensure the success of his policy on comprehensive credit reporting.

ASIC Scrutiny Good for Fintechs – Moody’s

The close attention of ASIC that prompted Prospa to scuttle its IPO will ultimately work out well for the fintech small business lending sector, says ratings agency Moody’s via Fintech Business.

In a note published on Friday, Moody’s Investors Service senior analyst John Truijens said ASIC’s focus on Australian fintech lenders will be a “credit positive” for the sector over the long term.

Ultimately, Mr Truijens said, closer regulation of fintech small business lenders will result in improved transparency and governance in the sector.

The comments come after Prospa indefinitely delayed its planned IPO on June 6 with minutes to spare following queries from ASIC about the terms of its loans.

Regulators (and the royal commission) are reviewing unfair loan contract terms, said Moody’s – and the fintech sector is working on a new code of conduct to “lift transparency” on the sector.

Because most small business loans are unsecured, lenders will have less incentive to safeguard their position by acting on non-monetary default clauses, said Moody’s.

“We therefore expect that any adjustment required to contract terms to address any of these unfair terms will have a muted impact on the credit quality or commercial value of such loans,” said the note.

“Unfair contract term law gives courts a power to find that a term is ‘unfair’. If a contract term is found to be unfair, it will be void, which means it is not binding. The rest of the contract will continue to bind the parties if it is capable of operating without the unfair term,” said Moody’s.

The fintech small business lending sector, which has already pushed for self-regulation, is in the process of creating a code of conduct with a target date of 30 June 2018.

“In light of the development of the code of conduct, we expect that the disclosure of interest rates implicit in loan contracts will be adopted by the industry as the standard practice in the future,” said Moody’s.

“Greater transparency around the cost of loans and the improved governance resulting from an industry code of conduct will enhance the sustainability of the sector.

“There is therefore reduced risk that a borrower’s obligation to pay their loan will be waived due to any of the non-monetary default clauses under review,” said the note.

Fintech Athena Home Loans Direct Model Funded

From The Adviser.

A new fintech Athena Home Loans founded by two former NAB executives has received $15 million from major investors to facilitate its entry into the Australian mortgage market. This was reported in the AFR on Monday.

Cloud-based digital mortgage platform Athena Home Loans has closed a Series A raise of $15 million with investment backing from Macquarie Bank, Square Peg Capital, Apex Capital and Rice Warner.

Athena, founded by former NAB executives Nathan Walsh and Michael Starkey, pulled in a $3 million seed round in June 2017 and has now set its sights on disrupting the $1.7 trillion Australian mortgage market.

Speaking to The Adviser, co-founder and CEO Nathan Walsh noted that Athena plans to bypass the banks, offering super fund-backed mortgages directly to borrowers through its cloud-based digital portal.

“We know that the big banks are very constrained by customer pain points that are caused by ageing technology in the manual, paper-based processes, and we know there’s a real opportunity to improve on that,” Mr Walsh said.

Chief operating officer Michael Starkey claimed that Athena’s super fund-backed investment model would also allow it to offer lower interest rates than its competitors.

“By investing in home loans directly with Athena, super funds can cut the spread between what mortgage borrowers pay and investors receive,” Mr Starkey said.

“In countries such as the Netherlands, where pension systems are similarly advanced, the impact of this model is already evident.”

Mr Walsh added: “The potential savings for a typical Australian family switching from the big four banks to Athena could be as much as $100,000 over the life of the average loan.”

Mr Walsh also noted that Athena aims to settle $100 million in home loans this year, which the CEO said equated to approximately 200 home loans.

The Athena chief went on to say that the online lender plans to ramp up its offerings once it is established in the marketplace.

“We see a big opportunity [for brokers] here,” Mr Walsh continued.

“Next year, [it’s] game on; we really see a big opportunity. It’s a big market and we’re very keen about giving all Australians access to a better deal on their home loan.”

No immediate plans for the broker channel

Mr Walsh revealed to The Adviser that while Athena has no immediate plans to originate home loans through the broker channel, it could be an option in the future.

“[We’re] a direct model, so consumers are going direct to [Athena] and opening accounts directly, but we do know that, clearly, mortgage brokers are an important part of the market and we’ll consider that in our roadmaps for the long term,” the CEO said.

“[We] are considering those options, so I think those are probably things for future discussions.

“At this stage, we’re really focusing on our launch, which is targeting our direct channel.”

Compliance with responsible lending obligations

Mr Walsh also insisted that Athena would ensure it’s complaint with responsible lending obligations, saying that a “huge part” of the build phase has been “the ongoing process of design, legal and compliance review, to really make sure that we’re stepping through each stage of that journey.”

The CEO said: “[We want to] make sure we’re providing those really important protections, but at the same time, managing the complexities so it is a process that borrowers feel comfortable using digital channels. And that’s a really big part of the design thinking that’s gone into building that.”

Square Peg co-founder joins Athena board

As part of Square Peg Capital’s investment, co-founder Paul Bassat is set to join the Athena board.

“We are thrilled to be joining Athena’s journey,” Mr Bassat said.

“This is a great example of the type of team we love to back — smart, driven and focused on solving an important problem.

“The win-win model that Athena offers to investors and borrowers has huge potential to disrupt the way home loans are originated, serviced and funded in Australia.”

Aussie fintech startup wins Barclays’ global “Open Innovation Challenge 2018”

Aussie trade financing deep technology startup, Trade Ledger, has finished ahead of nine other VC-backed companies from across the world to be named the winner of the Barclays UK Ventures “Open Innovation Challenge 2018” in London this week.

The ten finalists were hand-picked by Barclays due to their potential to offer game-changing business solutions across a variety of industries, however Trade Ledger came out on top because of the way it completely transforms processes in business lending, through its world-first technology platform.

“Within Barclays UK Ventures, we’re looking for companies we can partner with to develop and deliver transformational products and services,” said Ben Davey, CEO of Barclays UK Ventures.

“We chose Trade Ledger as they have re-imagined the lending process by improving the processes through automation and opening up lending opportunities to a larger client base, which fully aligns to our Shared Growth ambition.”

The competition involved a face-to-face pitch by each of the ten finalists to Barclays’ technology leadership team. Other finalists hailed from high-tech industries such as AI security, recruitment CRM and marketing automation, process mining software, application performance management, IoT, chatbots, and robotic process automation platform creation.

The event served as a means for Barclays to gain access to some of the most advanced technologies being developed from across the globe.

“These events are a great way for us to uncover solutions that will materially improve our business and the solutions we offer to customers and clients,” said Sean Duffy, Managing Director of Technology Media and Telecoms in Barclays Corporate Banking Division.

“This is the first time we’ve hosted this event in the UK, which is a testament to the growing strength and depth of VC-backed companies in our home market.”

Gaining international exposure through competitions such as this one is an important aspect of Trade Ledger’s “born global” strategy, designed to tackle the £1.2 trillion under-supply of business credit globally.

“We are delighted that Barclays has chosen the Trade Ledger business lending platform as the winner of this global challenge,” Martin McCann, CEO and founder of Trade Ledger.

“It was an incredible opportunity to be able to present our tech and strategy for helping banks address the massive under-supply of business credit, to such a large and diverse group of the bank’s technology leaders.

“We believe the platform will help Barclays accelerate their transformation into data-driven lending, and that our selection proves the unique value of the Trade Ledger platform to support the bank’s innovation and growth ambitions.”

Further discussions on a partnership with Barclays are ongoing, and will help Trade Ledger prove product marlet fit within tier 1 banks globally.

Charting The Financial Services Revolution

I caught up with Glenn Hodgeman, the brains behind the upcoming AltFi Australasia Summit  2018 to be held in Sydney on the 16th April at Doltone House Jones Bay Wharf.

This is the third annual event and is designed to bring various industry players, private equity, venture capital, innovators and regulators together to share insights at the inflection point of the fintech revolution as it moves “from marginal into the mainstream”.

The revolution underway is partly being driven by new innovative players and platform providers who can move quickly, without legacy, whilst larger more established players wrestle with legacy systems and culture, yet some are now beginning to see the potential. The potential opportunity is significant, not just paving the cowpaths, but to create totally new business models and new customer value propositions.

Glenn believes the large incumbents will increasing be focussing on “big corporate” borrowers, which creates space for small fleet of foot players to address in particular lending in the consumer and small business sectors.  Of course there are also a myriad of cashed up investors seeking to get footholds into the opportunity stack

AltFi have strong connections with London, and they believe Australia is currently perhaps 4-5 years behind the leading edge there. This creates opportunity to learn from events overseas, as well as from New Zealand, Israel and local success stories.

Glenn was keen to underscore the fact that the conference is not a “scatter gun” of concepts, from the alphabet soup which is Fintech, but rather he wants to drill into a small number of high potential critical areas, from lending, payments and robo advice.

Topics scheduled include global case studies in alternative finance, the thought leaders in the Australian Banking and Finance Industry, Digital Mortgage lending, Microfinance, alternative SME lending and point of sale credit.

This is rich menu, and the event is likely to be well frequented.

You can get 20% off the conference price by using this link, and the promotional code DigitalFinanceAnalytics.

I get nothing from this, but it does offer some additional benefit to DFA Blog readers! I may see you there.