P2P Lending In Japan – The Current Situation

This is a guest post by Tomoyuki Sugiyama, Representative Director of Crowdcredit, Inc (full bio at the end of the article).

Advent of P2P lending in Japan

maneo, Inc. and Exchange Corporation KK were the first P2P lending platform operators in Japan. In 2007, maneo, Inc. was established and it started the registration processes with Japanese authorities which were necessary to run the platform. And it launched the platforms – maneo – in 2008. Exchange Corporation launched its P2P lending platform AQUSH in 2009. Also SBI group established a subsidiary to run P2P lending platform – SBI Social Lending Co., Ltd. – in 2008 and launched the platform in 2011.

maneo at first focused on consumer loans, but soon changed its focus to SMEs loans. AQUSH focused on consumer loans and widened its line-ups to real-estate collateralized loans, overseas consumer loans (investments are made in the loans originated by LendingClub) and loans of which borrowers are solar energy power plant operators in early 2013. SBI Social Lending focuses on securities collateralized consumer loans.

From regulatory perspective, any legal entity (person or company) which lends money in Japan must make registration under Money Lending Business Act, which prevents the P2P lending platform operators to offer a platform which personal investors lend money directly to the borrowers. Hence in Japan, personal investors effectively lend their money to the borrowers through investing in the P2P lending platforms’ businesses which they lend money to the borrowers as the operators of investment funds (Anonymous Partnership Agreements under Japanese commercial law).

Recent trend in Japan

Compared to the growth of P2P lending markets in the UK or in USA, Japanese P2P lending market grew moderately – currently the amount of outstanding loans managed by the largest P2P lending platform, maneo, is estimated to be around 60 million dollars. This is assumed due to over-banking in Japan – in Japan, national average loan to deposit ratio of traditional banks is below 70% and the banks lend quite aggressively, which is quite different from the situation in the UK or in USA where the banks are lending less and less in de-leverage process of their balance sheet in post Lehman crisis period. Borrowers in Japan can much more easily access to traditional financial system compared to the borrowers in the UK or in USA and national average lending interest rate of the banks in Japan is currently 0.887%.

As a result, no operator entered into P2P lending market in Japan after SBI Social Lending and there were only three P2P lending platforms in Japan until 2013.

In late 2012, Crowd Securities Japan Co. Ltd. (previously Midori Securities) announced to launch the fourth P2P lending platform in Japan – Crowd Bank – in 2013 and they launched it in late December in 2013. Crowd Bank offers SMEs loans, real-estate collateralized loans and also overseas microfinance loans which the platform lends to MFIs in Asian region.

Also in early 2013, Crowdcredit, Inc. announced to launch the fifth P2P lending platform in Japan and it was launched in June 2014. Crowdcredit became the first P2P lending platform in Japan which focuses only on cross-border P2P lending. Crowdcredit, as the operator of the platform, has invested in credit market in Peru in Latin America as a start. Continue reading

Aqush.jp launches full p2p lending service

Aqush.jp which in May launched a friends and family only version now launched the “full fledged” version of it’s p2p lending service.

Exchange Corporation K.K. (www.exchange.co.jp) “ExCo” announced the launch of its social lending service. The Aqush platform empowers both individuals with extra money and credit-worthy borrowers. By connecting these two groups, credit-worthy people can borrow money more easily and at a better rate than they would get from a lending company, and retail investors can invest in loans that provide a higher return on investment than available from time deposits or money market accounts. Continue reading

Guest Authors Wanted at P2P-Banking.com

Are you passionate about p2p lending or p2p microfinance? Would you like to contribute reports, news and experiences related to this topic from your country?
Are you willing to research the details and look beyond the marketing messages of the p2p lending companies?

Become a guest author at the P2P-Banking blog. Your articles will be posted under your name. You will frequently share news, information and latest developments on p2p lending and how the established banking players in your country react on or embrace these trends.

P2P-Banking.com is especially seeking guest authors from Italy, Spain, Poland and Japan, which are fast growing p2p lending markets. But we do welcome writers sharing their knowledge and experience from other countries.

Continue reading

Aqush Adds Business Loans

Aqush.jp adds support for business loans to it’s p2p lending platform for friends and family.

The new AQUSH TOMO Business Loans service provides users with a simple and secure means of creating documentation to formalize small business loans between family, friends and other business associates. This new service offers small business owners and entrepreneurs a viable alternative to risk-adverse and costly traditional lenders. Business Loans between individuals and/or corporate entities, with or without a guarantor, are fully supported by AQUSH TOMO Business. After loans have been made, both borrowers and lenders can manage repayment using the AQUSH online platform.

(Source: Aqush company management)

Maneo Introduces Guaranteed P2P Loan

Maneo introduces guaranteed p2p lending in Japan. On the new “G-Loan” the lender does not need to worry any more about defaults. Minimum investment is only 10,000 JPY (approx. 100 US$). The loans are guaranteed by Orix Credit Corporation which entered into a partnership with Maneo.

The downside is that on “G-Loans” the lender only receives 1.5% interest.

The borrower pays a fixed interest rate, which is set depending on his credit grade:

Borrowers now have the option of selecting a standard loan or a G-Loan. Selecting maneo’s standard loan gives borrowers the opportunity to lower their interest expense if sufficient lenders bid on their loans. In contrast, interest rates on G-Loans are fixed at 7.0%, 8.0%, 9.5%, 11.0% and 12.0% depending on the borrower’s credit rating. According to Tadatoshi Senoo, CEO of maneo, “We believe borrowers who select G-Loans will have an easier time attracting funds from lenders thanks to the guaranty by Orix Credit, and that the liquidity of maneo’s online social lending marketplace will increase significantly as a result, making borrowing at maneo even more attractive.”

In my view the choice whether it is a guaranteed loan or not should not be the borrower’s, but only for the lender to choose when bidding.

With an interest rate of only 1.5% the only merit of this model for lenders is that he can not lose money when bidding on a guaranteed loan.

Aqush Launches Family and Friends P2P Lending in Japan

Aqush.jp has launched Aqush Tomo, a p2p lending service to facilitate loans between friends and family members. Aqush is a service of Exchange Corporation K.K., which states it’s mission as “… to leverage innovation and international best practices to pioneer ‘Social’ financial services in Asia. Our goal is to bring transparency and choice to markets and assets that previously were illiquid, opaque and tightly controlled, by empowering people to legally and securely deal directly with each other.”

Aqush offers a framework that helps borrower and lender in creating loan documentation and repayment plans.

Features of the “Basic Service” are

  1. Creation of promissory notes and repayment schedules
  2. Interest rates mutually agreed between borrower and lender
  3. Three types of repayment supported – Amortized, Interest Only and Fixed Payment with Balloon.
  4. Repayment management and tracking using online tools, document backup and email-remainders

The fee for the “Basic Service” is 8,800 Yen (approx. 88 US$)

The “Plus Service” adds additional features:

  • Professional review by Aqush staff
  • Repayment processing – payments are made and tracked through an Aqush account
  • Annual reporting

The “Plus Service” is priced at about double the “Basic service” plus a small fee for handling each repayment.

Russell Cummer, Executive Director told P2P-Banking.com:

AQUSH TOMO, is a Family and Friends loan documentation and management service …. We are the first service of this kind in Japan ….

We will also be launching a full-service P2P lending exchange, “AQUSH Market”, this summer to cover both the friends and family and true P2P aspects of social finance in Japan.

Aqush is an alternative spelling of the Japanese word for handshake, “Akushu”.

(Sources: forum post, press release, company management)

Review of peer to peer lending developments in 2008

As the end of 2008 approaches here is a look back on the highlights of peer to peer lending news in 2008:

Maneo launch in Japan

Maneo.jp today launched the first active p2p lending service in Japan. The service connects lenders (aged 20-65) and borrowers (aged 20-60). Maneo verifies the identity, credit grade and the income of potential borrowers (minimum annual income required is approx. 30,000 US$). Borrowers then create a loan listing and set a maximum interest rate. Lenders can bid on the loan through an auction process.

For information about Maneo’s funding see the earlier coverage: “Maneo to introduce p2p lending in Japan

Maneo screenshot date 10/15/2008

Maneo to introduce p2p lending in Japan

Maneo.jp aims to be the first active p2p lending service in Japan. Their mission statement (from a press release):

maneo Inc. plans to offer a user friendly and highly secure online community for people to borrow and lend money through an online auction system. maneo is about helping people lend and borrow money with each other, sidestepping the expense and inconvenience of traditional banks and consumer finance companies. People who want to borrow money register with maneo and create loan listings. Potential lenders register with maneo and bid on the loan listings they are interested in. maneo aggregates the bids with the lowest rates to fund the relevent loans and handles all of the administrative matters relating to the loans

Maneo received venture capital from J-Seed Ventures Inc. and Yasuda Enterprise Development Co., Ltd. The last funding round was in April 2008 for 80 million Yen (approx. 0.75 million US$). The first funding round was in April 2007.

The company website currently says “Coming in Summer 2008”. Zopa and Prosper also have announced plans for Japan, but no launch date has been set so far.

(Sources/further reading: 1, 2, 3 – all in japanese)

maneo screenshot date 08/01/2008