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online lending

Lending Data Fintech dv01 Acquires Pragmic Technologies, Closes $6 Million Series B

dv01 has acquired Pragmic Technologies, according to a note from the company. The acquisition follows a $6 million series B3 financing round led by Pivot Investment Partners and joined by new strategic investor, AGNC Ventures, LLC, an affiliate of AGNC Investment Corp. (Nasdaq: AGNC), a residential mortgage REIT with over $97 billion in assets.  dv01’s total financing to date stands at $34 million, with past investors including Quantum Strategic Partners Ltd., Jefferies Financial Group Inc., OCA Ventures, Illuminate Financial Management, Ribbit Capital, and Regions Financial Corp.

dvo1 explains that Pragmic’s algorithms will provide investors with intra-month performance insights on agency MBS (mortgage backed securities), helping investors better optimize their portfolio management and hedging processes in a market that trades $65 trillion a year. dv01 will also be able to combine its understanding of loan-level data within securitizations with proprietary analytics to provide ESG ratings for structured products.

dv01 is a top Fintech providing deep data on the online lending sector. Pragmic Technologies is an early-stage company that is “reimagining” data infrastructure of the agency MBS market.

Charlie Oshman and Memo Sanchez, Pragmic Technologies’ founders and co-founders of commercial real estate data analytics company Reonomy, will join dv01.

“Unlocking real-time performance data in agency MBS will be a massive paradigm shift for a market that trades $65 trillion a year,” said dv01 Founder and CEO Perry Rahbar. “With this acquisition, we are at the forefront of building a proprietary data infrastructure that will significantly enhance our offerings across all structured products, in addition to agency MBS.”

dvo1 notes that the market for data-driven ESG investments has surpassed $40 trillion. With the addition of Pragmic Technologies, dv01 will be in a better position to combine its understanding of loan-level data within securitizations, with external data sources and proprietary analytics to work with partners to provide the first true ESG ratings for structured products.

Oshman called dv01 the ideal partner to “revolutionize the agency market.”

“With our combined resources, we will provide unmatched market transparency and quickly develop a dominant agency MBS business line to complement dv01’s non-QM, consumer unsecured and student loan coverage.”

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Cambridge Centre for Alternative Finance, World Bank and World Economic Forum Present Global Study on COVID-19 Impact on Fintech

The Cambridge Centre for Alternative Finance (CCAF), along with its partners the World Bank and the World Economic Forum, hosted a presentation this week outlining its findings in a study reviewing the COVID-19 pandemic and its impact on the Fintech industry.

The survey was launched several months back when it became clear that COVID-19 was quickly becoming a global health crisis compelling lockdowns and remote work in an attempt to slow the spread of the highly infectious disease. Fintech platforms have been dramatically impacted by the coronavirus with many experiencing accelerated growth as part of the overall digital transformation occurring in financial services. The Global Covid-19 Fintech Market Rapid Assessment Study surveyed approximately 1400 Fintechs operating in a diverse range of financial services to gauge how the pandemic has impacted digital financial services firms. The CCAF survey held three specific goals:

  • First, the research looked at the impact of the global pandemic on Fintech markets – understanding how Fintechs are performing financially based on their operating model and jurisdiction among other criteria
  • Second, they studied the responses of these organizations in shifting their products and operations throughout the pandemic –  seeking to understand how these companies are dealing with remote working measures and a more digitized economy
  • Finally, to identify issues Fintechs are facing on a regulatory front

As one may anticipate, the Fintech industry is performing pretty well during the health crisis with the singular exception of online lending that saw an 8% decline in activity when comparing H1 2020 to H1 2019. CCAF reports that this sector experienced an approximate 10% increase in defaults as borrowers struggled as the coronavirus spread – understandable in light of the economic challenges.

According to the report, the top sectors of Fintech in regards to percentage growth in transactions are as follows:

  • Digital custody – 36%
  • Digital asset exchange – 33%
  • Digital savings  – 26%
  • Wealthtech  – 24%
  • Digital payments – 21%

Anecdotally, there have been some prominent examples of the rapid rise in Fintech services as consumers and businesses were forced to adapt to a new way of existence. Digital payments that are contactless is a clear winner. The Robinhood phenomenon has enticed a new generation of investors to trade online.

Regarding how the various regions are performing the UK was the only sector that saw a transaction volume decline – perhaps due to the oversized impact of digital lending. Otherwise, all other reviewed regions experienced an increase led by the MENA region (Middle East North Africa) rising by 40% and followed by North America and South America (both increasing by 21%).

It is interesting to note that jurisdictions that experienced more stringent COVID protocols such as remote work requirements and business closures, saw higher digital finance transactions. CCAF said that “the higher the COVID-19 stringency, the higher the adoption of Fintech services. The increased adoption is not necessarily caused by the pandemic, but there is a direct correlation between strict lockdowns and increased adoption of Fintech services.”

Many Fintechs launched new products or adjusted services due to the pandemic, adjusting product supply as demand increased or changed.

Regulatory challenges remain a hurdle as many Fintechs indicated they are in need of more regulatory support and faster approvals for financial services.

CCAF said that retail facing Fintechs, in particular Digital Payments, Lending, and Banking, were among the most agile verticals to implement changes to their offerings with a vast majority making changes.

Regarding capital formation, CCAF reported that approximately 40% of “Digital Capital Raising Platforms” indicated that they had been hosting COVID-specific offerings – something Crowdfund Insider has reported on in the past.

One area that may be viewed in a disappointing light is that government entities have been slow to leverage the agility of Fintechs to deliver services during COVID as some governments instituted business support programs to backstop the sliding economy.

A panel followed the presentation of the data generated by the survey with some interesting comments emerging.

Blythe Masters, the former CEO of Digital Asset – now at Motive Partners, noted that while the US is a highly developed country there are still 55 million people or 22% of the population that are unbanked or underbanked. A pretty astounding number. Regardless, Masters said that COVID has accelerated digital transformation in financial services by at least 5 years and perhaps up to 10.

Jon Frost, Senior Economist, Innovation & the Digital Economy, Bank of International Settlements, added that there is a risk of a digital divide and there is some work that needs to be done – alluding to the fact that certain demographics or regions lack access to digital financial products.

Fragmentation in products, more specifically Regtech, is inhibiting growth, said Robert Wardrop, co-founder and Director at CCAF.

Ana Fiorella Carvajal, Lead Financial Sector Expert at the World Bank Group, said please streamline the regulation and provide faster authorization – especially in emerging markets.

And what about the growth in digital assets and digital custody? Masters believes that a maturing industry with more institutional involvement is aiding sector growth. She said that over 8% of Americans own or have owned Bitcoin – a percentage that is increasing.

What is obvious is that Fintech adoption is accelerating and the digitization of finance is inevitable. COVID is acting as an accelerant fueling this digital transformation that bodes well for consumers as well as business – beyond some avoidable hurdles.

The full report will be released later this month. Stay tuned.

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On Final Day of Securities Offering, Mintos Tops £7 Million on Crowdcube

Peer to peer lending marketplace Mintos has surpassed £7 million on Crowdcube on the final day of the securities offering. The Mintos security offering should be one of the largest offerings on Crowdcube for 2020.

Mintos is raising equity capital at a pre-money valuation of £68 million. Currently, 6816 individuals have participated in the securities offering that set an initial hurdle of just £1 million.

Mintos is an interesting platform as it aggregates p2p loans from regional platforms and then consolidates the debt offerings for investors to select specific loans.

Mintos reports an investor base of approximately 340,000, growing at over 125% per year for 5 years. It claims a 45% market share in continental Europe with €5.7 billion in loans funded. While Mintos growth has been strong during the past few years, it has been hit by the COVID health crisis as some of its partner lenders have struggled in the challenging economic.

It is important to note that Mintos, headquartered in Latvia, expects to secure Investment Firm and EMI licenses by early 2021. By receiving this regulatory approval, Mintos will be able to operate across the EU providing a larger portfolio of financial services and perhaps operate more like a digital bank.

Have a crowdfunding offering you’d like to share? Submit an offering for consideration using our Submit a Tip form and we may share it on our site!

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P2P Lender Robo.cash Claims it’s Been Successful During Current Crisis Because of Profits from 2019 and Working with Affiliated Loan Originators

A study recently performed by the European peer to peer (P2P) lending platform Robo.cash reveals that the main factors for its success during COVID were the profits it generated in 2019 and “work with affiliated loan originators.”

Robo.cash claims that “remarkably, interest rates, funding volumes and the platforms’ experience do not play big roles here.”

Robo.cash’s research study looked at the 15 most popular or widely-used P2P platforms from 6 different European countries – which includes platforms that have been “performing successfully” during the pandemic and those that have recovered “at least 80% of their pre-crisis volumes.” This is category A of businesses, Robo.cash noted.

Another category of businesses that Robo.cash looked at were those platforms that are trying to bring back their volumes “after the first wave of COVID-19 and have not yet reached 80% of the funding levels prior to the crisis.” This is the second or category B of lending platforms.

Robo.cash wrote in a blog post:

“[Our] research indicates 2 major factors that have apparently determined the platforms’ successful performance. First, all the A-category platforms except one work with their own or fellow loan originators. Second, profitability matters. All the platforms (or financial groups they operate within) from the category A have reported positive profits in the previous year. The B-category platforms, on the other hand, finished the FY 2019 with negative profit – or have not published any reports for this period at all.”

They added:

“Surprisingly, interest rates and the period of the platforms’ operation have shown little to no correlation with their success during the crisis. The ‘size’ of the platform does not determine its successful performance either. Large platforms might seem more capable of weathering the storm, but as they often work with third-party loan originators, it is not always the case. In the meantime, smaller platforms are more flexible.” 

As reported in early September 2020, Robo.cash had claimed that it was still profitable, despite COVID related Issues. The company said that it was preparing for its initial public offering (IPO) in December 2020 in Australia.

Sergey Sedov, CEO at the Robocash Group, had confirmed during a webinar last month that the IPO will take place toward the end of this year. He also mentioned that Robocash is planning to secure AUD 60 million (appr. $43.7 million) in capital.

Sedov added that most of the funds will be directed towards developing Robocash’s existing line of products and also to expand further by offering new products. The P2P lender will also be entering new markets in 2021, Sedov said.

The funds raised from the planned IPO will also be used to establish a virtual bank in the Philippines.

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LendInvest Update: Raises LTVs to 80% and Launches Funding for Student Lets/ First-Time Landlords

LendInvest a UK-based marketplace for property financing, announced earlier this week it has introduced updates to its Buy-to-Let product range; including raising its LTV and maximum loan limits, and broadening its lending criteria to include first-time landlords and student lets.

LendInvest reported it is now offering 80% LTV products on standard properties, with a maximum loan size of £500,000. The online lender is also increasing its maximum loan size for standard properties to £1.5million, with the maximum loan size for MUFB cases increasing to £3 million with LTVs up to 75%.

LendInvest also revealed it will be launching a funding offering for first-time landlords, and student let HMOs up to six bedrooms. LendInvest BTL customers will receive a £500 cashback contribution towards legal fees when they take out a 5-year fixed BTL mortgage for standard property types on products up to 75% LTV.

While sharing more details about the updates, Andy Virgo, Director for Buy-to-Let at LendInvest, stated:

“Landlords are looking to move fast, and stay flexible when considering new projects at this time – in order to do that, they need the right products available to them. With these new updates, I am confident we are not only able to deliver competitive funding options, but also the right team and expertise behind them to act as a vital partner for our customers as they seek to expand their portfolios.”

Lucy Barrett, Managing Director at Vantage Finance, then concluded:

 “These product improvements are yet another clear affirmation of LendInvest’s reputation for listening to, and supporting BTL landlords. The addition of larger loans, higher LTVs and support for HMO landlords with reduced fees will be a winning combination for landlords to grow their businesses throughout the ongoing SDLT holiday.”

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