- P2P lending volumes for May 2015
- The P2P lending market’s endorsement through Octopus Investments, Dragonfly, Downing and Goldman Sachs.
- RateSetter passed £250 Million in SME Loans.
- Treasury Committee Chairman warns FCA on p2p lending regulation.
- Pros and cons for ISAS.
- Crowdfunding and crowdlending replacing cash-strapped governments and global institutions.
International P2P Lending Services – Loan Volumes May 2016, (P2P Banking), Rated: AAA
Funding Circle leads ahead of Zopa and Ratesetter.
LendInvest dropped by 80% vs previous month !
(Prosper and Lending Club no longer publish origination data for the most recent month.).
In defense of online lending, (Techcrunch), Rated: AAA
The corks have been flying among the naysayers of online lending over the past few weeks. Fintech has been exposed as a pretender to the financial throne and “we hate to say we told you so!” has been the rallying call of the vindicated Luddites.
The marketplace industry will be just fine. It is uncertainty – rather than a fundamental flaw in the business model – that is the root cause of the sector’s present turmoil. There’s uncertainty over the platforms’ internal monitoring processes, over the veracity of loan data, over shifts in loan rates, over shifts in the economy – and indeed over the platforms’ capacity to weather such shifts.
Alternative lending (I’ll use this term to encapsulate both the balance sheet and marketplace varieties) is fundamentally about plugging excess liquidity directly into innovative sources of loan origination. The internet acts as the connector, facilitating a more seamless transmission of money.
Octopus Investments – the UK fund management platform which manages over £5.5bn in assets for over 50,000 clients – entered into the peer-to-peer lending sector in April. The new platform is called Octopus Choice.
Dragonfly has a proven track record, having made nearly 3,500 loans worth nearly £2bn since launching in 2009 – with a loss rate of less than 0.1% to date.
And yet Octopus, for all its advantages, sees strategic value in the peer-to-peer/marketplace lending model. This lends weight to the suggestion that an investment marketplace – one facilitated by technology – is a more efficient means of accessing loan assets than what went before. It also serves to bolster the idea that the marketplace investment model will be a lasting innovation.
Downing’s actions add yet more ballast to that notion. The London-based VCT and EIS specialist – which manages over £700m in assets –launched a new crowdfunding platform in March. The platform’s first deal was a £3.2m solar bond with a 1 year term, paying 6.25% p.a. Again, Downing enjoys a loyal following among financial advisors, yet still the lure of a marketplace-based system of investment proved too strong to pass up.
We know that Hargreaves Lansdown is cooking up a peer-to-peer lending operation of its own, which is expected to arrive in the Autumn.
The world’s premier investment bank Goldman Sachs is busily preparing an online lending venture of its own – codename Mosaic. Former Discover Financial man Harit Talwar is heading up the new venture, and was immediately made Partner upon joining the firm (one of only c. 400).
Mosaic will look to issue both consumer and small business loans of between $15 and $20k in size. These loans will not be funded by a pool of retail and institutional money. Instead, the book will be financed directly through Goldman’s New York State-chartered banking subsidiary, which was born in the wake of the 2008 financial crisis, when Goldman became a bank-holding company. This business held $128bn in assets as of June last year.
RateSetter Hurdles £250 Million in SME Loans, (Crowdfund Insider), Rated: AAA
RateSetter is reporting it has surpassed £250 million in lending to UK businesses. The benchmark event comes after a series of recent business developments for the marketplace lender. According to RateSetter, participation by the British Business Bank, updated lending limits and a growing executive bench have all help to propel RateSetter. RateSetter has lent over £1.23 billion in total to individuals, businesses and property developers. In 2015, the online lender facilitated over £500 million during the year. RateSetter currently has approximately 40,000 investors on its platform including individuals, institutions, and corporations.
RateSetter points to several recent hires designed to improve business lending – the largest sector of UK P2P / marketplace lending. Since the start of the year, RateSetter hired Paul Marston as Head of Commercial Finance Divisions and Brian Cartwright as Head of Business Finance.
SalaryFinance appoints Funding Circle’s Marina Theodosiou as head of decision science, (Finextra), Rated:A
Launched in 2015, SalaryFinance offers businesses in the UK a financial employee benefit that allows staff to consolidate their personal debts and repay them via a low-cost, fixed-rate loan. Loan repayments are collected directly from payroll, rather than direct debit, reducing the cost and interest rate to around one-third of the market average. SalaryFinance integrates rapidly and seamlessly with existing payroll systems and processes. There is no cost or liability for employers.
Theodosiou is the latest senior hire to join SalaryFinance as the firm continues to scale its rapidly growing client portfolio.
Theodosiou previously led Funding Circle’s risk and analytics team for a year and a half, helping the firm to reach its £1bn lending milestone in 2015. She also worked as an economist at the European Central Bank and held a number of positions in the decision science departments of fintech startups.
LendInvest revamps bridging loan offering, (Financial Reporter), Rated: A
LendInvest has revised its bridging loan pricing, and split the offering into three separate tiers: Residential Bridging Tier 1, Residential Bridging Tier 2, and Commercial Bridging.
Residential cases that meet the criteria for Tier 1 can access rates from 0.65% through to 0.95% per month at the maximum 75% LTV.
Residential cases that fall outside of this criteria – for example, HMOs, heavy refurbishments and second charge loans – will fall within Tier 2. At the maximum LTV of 75%, the interest rate per month will range from 0.99% to 1.25%, depending on the security provided and the status of the borrower.
Tyrie warns FCA on regulation of peer-to-peer lending, (MortgageStrategy), Rated: AAA
Treasury committee chairman Andrew Tyrie has written to the FCA and the Prudential Regulation Authority warning on the risks of peer-to-peer lending and questioning whether current regulation of the market is appropriate.
In a letter to FCA chief executive Tracey McDermott and PRA chief executive Andrew Bailey, Tyrie asked how P2P platforms judged creditworthiness.
He also challenged the regulatory bosses on how P2P users knew they were getting accurate information and how they could assess the risks of this lending.
Tyrie also had reservations about P2P’s resilience to future economic shock.
“But greater regulation is not necessarily the answer. If this market can substantially increase competition it may offer benefits to the consumer.
“It is crucial that the regulator is doing what it can to find the right balance between these risks and opportunities.”
Innovative finance Isas and your clients, (FT Adviser), Rated: A
Simon Bashorun, financial planning team leader at Investec Wealth and Investments, said: “The access to unorthodox ideas such as P2P lending and crowdfunding investments within a tax-free Isa wrapper is a welcome benefit.
“Rates on offer can also be more attractive than cash accounts within standard cash Isas.”
Another advantage, according to Chase de Vere certified financial planner Patrick Connolly, is that investing in an Innovative Finance Isa does not preclude people from investing in a cash or a stocks and shares Isa during the same year, therefore giving greater flexibility.
However, Mr Connolly highlighted: “Investments which offer higher returns typically come with more risk and as the P2P market continues to grow and develop, we are likely to see new entrants entering the fray.
“While more competition should be positive news for investors, with it comes increased risk that all providers might not be of suitable quality.”
Technology Valley renewal dependent on crowdfunding, (Scoop), Rated: A
Crowdfunding and crowd lending will play a major role in the success or otherwise of the Hutt’s rejuvenated Technology Valley initiative that is set to be relaunched on June 9. “For Technology Valley to grow it will require a great deal new investment and this can be achieved through new developments in crowdfunding and crowd lending”, says Professor Gary Mersham, a digital business technology researcher based at the Open Polytechnic
Cash-strapped governments and global institutions are turning to crowdfunding. The World Bank has said development financing needs to go from billions to trillions and governments, donors, and multilateral organisations need to explore crowdfunding because it provides a low-cost way to reach groups of expatriate donors who are scattered across the globe. Crowdfunding startup Homestrings recently partnered with USAid to channel investment from the African diaspora into innovative projects on the continent.
“The recent successful crowd-funding campaign to return Awaroa beach to the Abel Tasman National Park is an example of this potential in the New Zealand context. The investment industry is being disrupted and redefined as are other industries. It’s healthy, undeniable and irreversible” Mersham said.
Professor Mersham will host a free open session at the Dowse Art Museum from 10-11am this Saturday introducing attendees to equity, reward, donation-based crowdfunding, and the recent development of crowd lending, as part of the Hutt Valley STEMM festival.