US GDP growth for the 4th quarter was revised upwards from 2.5% to 2.9%, capping an impressive 2017. Consumer spending has driven the bulk of GDP growth and it will be relevant to see if this trend continues given the weak retail sales in Q1 and softening in some leading economic indicators. Core PCE, the Fed’s preferred inflation indicator rose 1.8% YoY in February. Personal spending rose 0.2% while incomes rose 0.4% MoM suggesting that Americans are saving more – a long-term positive for growth – although a short-term pressure on retail sales and consumer spending.

Before we get into the industry news, we wanted to share a peek into PeerIQ’s credit facility management suite.

PeerIQ’s Credit Facility Management Suite

PeerIQ streamlines credit facility management for borrowers and lenders with easy-to-use and cost-effective solutions. The Credit Facility Management Suite has an enhanced self-service reporting functionality with automated report generation and an export to excel functionality.

The Credit Facility Management Suite provides:

  • Dashboard overview of multiple facilities across various asset classes
  • Daily Covenant Calculation and Monitoring
  • Time Series Visualization and Projections
  • Automated Borrowing Base Report Generation
  • Collateral Cashflow Projections
  • Scenario Analysis

Visit our booth at LendIt, or reach out to learn more!

FinTech News & Regulatory Updates

Prosper announced 2017 results that showed a net loss of $115 Mn, and a YoY increase in loan originations by 31% and transaction fee revenue by 37%. Prosper has now originated over $11 Bn in personal loans since inception. Prosper also updated investors on loan performance showing that delinquencies had peaked on the 2017 Q2 vintage..

In other fintech news, Bloomberg’s Julie Verhage has a profile piece on SoFi and discusses the opportunities and challenges facing SoFi’s new CEO Anthony Noto including upselling the company’s high-earning clientele and fending off GS’s Marcus.

FinTech financing continue. Avant founder John Sun has raised $15 Mn for a startup that may transform how consumers and credit bureaus manage and deliver consumer credit data.

In regulatory news, Arizona has become the first state in the U.S. to adopt a “regulatory sandbox” that will allow fintech firms to test their products for up to two years and serve as many as 10,000 customers before needing to apply for a formal license. We have been arguing for the need of a regulatory path to be provided to fintech firms to drive innovation in this space, and this is a step in the right direction.

The Philly Fed found that LendingClub’s lending has penetrated areas that may be underserved by traditional banks and areas where the local economy is not performing well, providing further ammunition that the FinTech sector is is promoting financial inclusion.

Growth of Digital Banking – Citi enters the ring to compete with GS Marcus

Citibank announced that it is going “light bricks, heavy clicks” as it launches a mobile app that will offer a full suite of banking, credit-card, lending, and investment tools to all users, including holders of the bank’s over 120 Mn U.S. credit card accounts. Citi had been shrinking its retail branch footprint to focus on affluent customers in major cities but will now gain a nationwide footprint with its digital bank.

Banks are aggressively rolling out digital services, and as we noted in a prior newsletter, banks are either partnering with fintechs or developing these capabilities in house. Banks without a digital footprint risk losing long-term customer relevance to “Big Tech” firms (e.g., Amazon, Intuit, Apple, Paypal, Square, etc.) with captive customer channels.

So far, Goldman Sach’s Marcus has been the most talked-about entrant in the digital banking space. Goldman launched Marcus exclusively to be a digital bank and recently consolidated its deposit base under the Marcus umbrella. Citi will offer digital and physical banking under the Citi brand, and also launch a roboadvisor through the app later this year. The digital banking is warming up with offerings including BBVA’s Compass and JP Morgan on the way.

Continuing the theme of bank-fintech partnerships, JPM has integrated Amazon’s Alexa to provide investment research and market quotes to its institutional clients. The news indicates a deeper partnership between the two companies as both firms are also exploring offering a co-branded checking account, are teaming up on a healthcare initiative, and already offer a co-branded credit card. See our analysis of Amazon’s financial sector ambitions here.

PeerIQ’s Lending Earnings Insights

Do check out our latest Lending Earnings Insights tracker. On a quarterly basis, following earnings announcements, we analyze lender performance with a focus on credit performance trends and forward-looking commentary. Some of the main themes that we explore in this tracker are where we are we in the credit cycle, credit normalization across lenders, how rising interest rates are affecting lenders and ongoing bank-fintech partnerships.


CEO Ram Ahluwalia will be speaking at LendIt 2018 on the 9th of April on “Why are Personal Loan Losses Rising?

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