Month: March 2016

How to Open a UK Bank Account Online

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As I started to check the facts for this article I planned to title it ‘How to Open a Free UK Bank Account Online’. Lateron I had to omit the word ‘Free’ – see below, but it still is a bank account that anyone in Europe can open online, all that is needed is an Android smartphone. That’s right, it is not limited to British expats, but open to anyone living in Europe. There is no iPhone App yet, but it is planned.

Why I opened a UK bank account

For the UK p2p lending marketplaces I use as a non-UK resident, a bank account in the UK is not really necessary. I use Transferwise and Currencyfair to transfer money and handle the currency exchange. One process where I think having a UK bank account is very useful, is when I want to withdraw money from one UK p2p lending marketplace in order to then deposit it at another UK p2p lending marketplace. Naturally in that scenario, I do not want to convert the pounds back to Euro and I want the transfer to be fee-free.
Therefore I looked for a bank account, that would allow me to do this online. Another requirement was that I should be able to open this bank account without traveling to the UK and entering a bank branch.

I opened a Monese account

I opened a Monese current account. To do this, I first downloaded the Monese app on my Android phone. Then it took about 10 minutes to register. In the course of the process I took photos of the front and the backside of my ID, did a selfie (smile) and filled in a form. That part was completed rather fast.

After that I had an unverified account, which had some restrictions. To lift these I uploaded the PDF of a recent bill with my name and address on it and waited. It took about 6 days until my account was verified.

Benefits of a Monese account for me

I have an own bank account number. Together with the sort code (which actually is the one of NatWest since Monese cooperates with NatWest) I can transfer money inside the UK fast and free. This is the main function for me. The account has more features, but actually I won’t be using these. Should I want to transfer money from my Monese account to my Eurozone accounts I will continue to use Transferwise or Currencyfair instead of making the transfer as I currently think this is the best way to optimise forex rates and at the same time minimize transaction charges.

Is this a free account?

Monese accountWhen I signed up on March 18th, Monese promoted it as a free account. And in fact my account still is, I don’t pay a monthly fee and the transaction types I want to use are still free in my account (see screenshot). Other features – which I do not need like an ATM withdrawal or a card purchase abroad are priced.

But I talked to other investors, who signed up later than me (last week) and they were offered by Monese ‘First month free 4.95 GBP/ month‘. Seemingly Monese no longer offers accounts without a monthly charge to  new customers (if this is uncorrect and it is still possible to get open an account without monthly fees applied, please post hints and tips how to do it in the comments. Thx!).

It should be noted that the account is not covered by FSCS as it is regulated as an e-money product.

The app so far does what it should and is self-explanatory, if a bit basic.

About a week after I opened the account I received a welcome letter with a VISA debit card, which I actually don’t need for my intented use of the account. But for other customers it will be useful to have a card with the account.

Monese VISA debit card

Update: Just received the message that my account won’t stay free either: ‘Hi …, as one of our early members you have been enjoying a mostly free service as part of our launch celebrations, only paying our rock bottom 0.5% fee on currency exchange when sending money abroad. Without you, we would not be here today and as a small “thank you” we’d like to give you an additional 2 months free servic. From 1st June, 2016 you will be billed a simpley fixed price of £4.95 per month taken directly from your Monese account balance,…’

I Opened a MoneyThing Account

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Moneything logoTo achieve further diversification of my p2p lending investments I opened an account at the UK p2p lending marketplace MoneyThing. All loans on the platform are secured by assets, which consist of a mix of property and other items like cars. MoneyThing launched one year ago and has since originated 10 million GBP in secured loans. It is operated by Capital Mortgages Direct Ltd. in London. So far none of these loans had any troubles.

The key aspects for investors:

  • 12% interest rate p.a.
  • interest paid from the day the bid is made into a loan
  • no fees for investors
  • all loans secured by assets
  • bridge loans with a term of 3 to 24 months
  • there is a secondary market
  • minimum deposit is 100 GBP, minimum bid is 1 GBP

Steps to start lending

1. Registering

First I filled in the online form. MoneyThing is open to international investors, but the form had no country field, so I did enter town and country in the ‘town’ field. Later the same day I got an email from support asking me for ID and a further document to be uploaded as non-UK residents can not be automatically verified by their systems. I did that and within 5 minutes received the message that my account is now verified

2. Depositing

I used Transferwise to make my first deposit into the account to reduce transfer and currency exchange costs. A Transferwise alternative is Currencyfair. This time Transferwise took 3 days – a little longer than my usual experience for transfering to the UK with them.

3. Selecting the loans on the market

MoneyThing lists all loans in a single market view – there is no separate secondary market view. All available loan parts are highlighted in yellow. Since loans are sorted chronologically to find parts of older loans on sale the easiest way is to resort by the ‘Available’ column. Otherwise just scroll down.

Moneything loan listings

Clicking on a loan reveals detail information about a loan and supporting documents (e.g. a valuation report). Continue reading →

Live Stream of the P2P lending Conference in Vilnius presented by Savy*

Sponsored Post

The first P2P lending platform in Lithuania, SAVY, is organizing their second annual P2P lending conference on the 23rd of March in Vilnius, Lithuania. Guest speakers from all over the world, including the co-founder of LendIt Conference Jason Jones and the leaders of the top Baltic P2P lending companies – Mintos, Bondora and SAVY, amongst others, will engage in a number of panel discussions and presentations.

The conference will be focused on the possibilities of P2P lending and Crowdfunding, while the participants will touch some important topics related to the prospects, challenges and trends for Alternative Financing on a global scale and in the Baltic region specifically, as it offers a considerably higher return on investments than most Western European countries.

Live stream of conference starting at 13:30 GMT+2 on March, 23rd

*Sponsored post: This post was paid for by Savy.lt, the conference organizer. I rarely publish sponsored posts, but in this case I thought the content is a very interesting fit for the blog audience.

P2P Lending Marketplace Afluenta Raises 8M Series B From IFC and Elevar Equity

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Afluenta LogoAfluenta, headquarted in Buenos Aires, announced today the completion of its Series B funding round from the International Finance Corporation (IFC), the private sector institution of the World Bank Group, and Elevar Equity, a venture capital firm. IFC and Elevar Equity are investing 4 million US$ each.

Afluenta seeks to disrupt the traditional financial services industry, cutting out middlemen and using proprietary technology to transform the process of applying for a loan, thus facilitating access to financing. Afluenta says it offers borrowers a simple, affordable and less bureaucratic experience, while delivering better yield for individual and institutional lenders.

A pioneer in the region, Afluenta plans to use the proceeds of the Series B financing for accelerating its network expansion plan across Latin America. Launched in Argentina in 2012 and in Peru in 2015, Afluenta plans to launch new services in Mexico, Colombia and Brazil in the next 12 months to consolidate as the first pan-regional player of this new and disruptive alternative financing. Continue reading →

Twino to Remove Currency Risk for UK Investors

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Latvian p2p lending marketplace Twino today announced plans to shield UK investors using the platform from currency risks. So far all investments on the platform are conducted in Euro. Twino already takes the currency risk of Polish Zloty, Danish Krone or Georgian Lari versus the Euro. Now it plans to make the platform more attractive for investors holding their assets in GBP. The announcement reads:

One of TWINO promises is that we protect investors from currency risk. Thus, while investing on TWINO you don’t need to worry about Polish Zloty, Danish Krone or Georgian Lari appreciating against euro, as every transaction on the platform is performed in EUR.

However, investors from the UK still face the risk of EUR appreciating against GBP, which might lower their returns. Therefore, next week we are planning to launch a major upgrade that will remove the currency risk for investors, who hold their investable assets in British Pounds, equalizing the benefits of investing on TWINO with Eurozone investors.

The functionality will allow investors to choose the currency that they want to invest in (either EUR or GBP), and every transaction on TWINO will be processed in the chosen currency (including deposits, withdrawals, investments, repayments, etc.).

We will provide a further notice when the new functionality launches, and will be reaching out to existing investors, asking if they want to convert their TWINO accounts to GBP.

We are glad to be the first platform in Continental Europe to provide such functionality and hope some of you will benefit from it!

The Twino CEO Jevgenijs Kazanins indicated that Twino is hedging the currency risk, an action that is possible for a platform with volume but not available or viable for individual retail investors, would they strive to do it on their own.

LendInvest Raises 17M GBP Series B from Atomico

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Lendinvest logoLendInvest, a UK online marketplace for property finance, has completed a 17 million GBP (25 million US$) Series B equity investment from Atomico, the technology venture capital firm founded by Niklas Zennström, the co-founder of Skype.

This is LendInvest’s second equity investment in nine months. In June 2015, LendInvest secured a 22 million GBP (33 million US$) Series A investment from Beijing Kunlun, the listed Chinese technology company.

The round takes LendInvest’s total institutional funding (debt and equity) to over 200 million GBP (285 million US$).

LendInvest was launched in 2013 by founders Christian Faes and Ian Thomas, and has lent 560 million GBP to finance 2,100 properties in the UK. The UK mortgage market – a £1.3 trillion sector  is traditionally offline, slow and generally a very poor consumer experience says LendInvest.

Today LendInvest’s technology reduces the time taken to process mortgages from months to days, while maintaining rigorous credit controls. LendInvest has also opened up mortgages as a new and attractive asset class that delivers returns of over 5% per annum for investors.

LendInvest will use this funding to accelerate its investment in technology and extend its lead in the property finance market. The company is recruiting its first Senior VP of Engineering and will expand its technology and product teams. Continue reading →

Which P2P Lending Marketplace Do You Recommend?

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I am often asked “Which p2p lending marketplace do you recommend?“. It is a natural question to ask for people that are familiar with the concept of p2p lending, but have not invested yet.

I feel hesitant to answer it with an outright recommendation for any one marketplace.

Sure I do have my preferred marketplace. Everybody has. But ask 10 different seasoned p2p lending investors and you might get at least 5 different answers. What is right for me, may not feel right for you. There can be no one size fits it all for p2p lending marketplaces. Interestingly as a sidenote investors seem to have less problems to agree why they dislike a platform – and they can also agree on ‘better’ platforms, you just don’t get consensus on the best platform.

What an investor prefers is influenced by his personality and past investment experiences. Investors differ in the expectation they tie to the investment, in risk appetite, in how they perceive and gauge risks. They may prefer a more actively managed investment or a passive investment style. Some enjoy auctions and elements that create competition for others factors like user interface might be a factor that lifts one platform over another.

That such a variety of different models has evolved and still prospers shows that they cater to an audience that is not homogeneous in their needs and wishes. One could argue that there is such a variety because it is a new field and everybody was just implementing ideas and experimenting and there were no role models, but that eventually the models will converge towards a best practise model. And I believe that is and will be happening, but only to a certain degree. Doing business over the internet allows marketplaces to deviate somewhat from the mass market and develop a style that fits a certain clientele easier than it would be for an offline financial offer because the economics of reaching out to and serving this clientele are different.

One entrepreneur recently told me ‘We are different, we just need 10% of the users to like us’ (sry if I rephrased that to much). My answer was ‘Just don’t be to different. Investors are conservative. Why scare 90% of your potential customers away’. I still believe in my answer, because I think it commercially makes sense. However it is minted by my past experience and my perception of the investor behaviour. So I actually want him to succeed in doing things VERY differently and making it as satisfying and enjoyable for those 10% he wants to be the perfect marketplace for.

What do I answer on the question?

At conferences or in other situations without much time, I usually suggest several marketplaces the investor might want to look into and point to my blog for more information.

If there is more time, I usually ask questions to try to find out what the person is looking for, what factors are important for him and what his past investment experience is. Then I tell which marketplaces do well on these factors and might in my opinion be a good match based on what I understood he is looking for. It still feels imperfect and uncomfortable for me sometimes. Maybe it is just a cultural thing, that most people are not comfortable in making recommendations how other people should invest money.

What would be the best answer?

I often think, the straightforward answer is ‘It depends‘. I have never given this answer. Even in situations when I am pressed for a very short answer.

Impressions from the P2P Investing Day in Prague

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Today I am in Prague at the P2P Investing Day organized by Symfonie Capital. There are several Central and Eastern European marketplaces present like Bondora, Finbee, Estateguru, Zlty Melon, Symcredit and Zonky, but also Lendinvest and Ablrate from the UK. The content of the panels and presentations was not as basic as in last year’s conference. I’d estimate about 150-200 attendees.

One interesting discussion centered on the differences between a bank loan and a p2p loan for a SME loan borrower that has problems to make the payments. One argument was that the advantage of a p2p lending marketplace is that it can be more flexible in finding a solution, e.g. by prolonging the loan term – having power of attorney granted by investors it is free to find a solution it deems right for the situation. The counterargument was that the platform should adhere to a rather strict set of rules since it owes its investors predicitability. Personally I understand both views but as an investor I prefer platforms to stick to a predefined process, because only that will make collections and defaults rates predictable. If there is too much flexibility and on the spot decisions it will be very hard to statistically evaluate platform performance and development for troubled loans over time.

One interesting anecdote was mentioned by Lucie Tvaruzkova, CEO of Zonky, a consumer loan marketplace in the Czech Republic, launched several month ago. She said that at the moment there is a waiting list of 7,000 investors wanting to use the platform but to scale it properly in line with loan demand, she lets those in only bit by bit. So far 5,000 investors are already active on the platform.

Symvest 2016 p2p lending conference
Panel on consumer focused platforms with representatives of Savelend, Bondora, Finbee and moderator Michael Sonenshine

David Bradley-Ward, CEO of Ablrate, told me that he expects to put more airplane loans on the platform in 2016 than in the previous year, but has to be selective in which loans fit the investor appetite. He also says the situation gets easier as he now has institutional investment in place that can pick up loan parts that would otherwise go unfunded by institutional investors.

I liked the panel that had 3 SMEs, that borrowerd through a p2p loan, on stage, as this gave an interesting change of perspective. Continue reading →

Bondora Enhances Reporting Feature

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Bondora logoAfter what felt like a drought period, Bondora seems to focus again on working to improve functionality for investors. This week they released a new version of the cash flow report, with the following upgrades:

1) Historic payments will be split between current loans and loans in default as per the status active at the date of the payment
2) We will introduce day-level information that shows cash flow categorized per each investment
3) Forecast settings can be defined also for historic schedules so you can use cash flow based adjustments for predicting future payments
4) You can adjust your net return calculation based on the probability settings defined in the cash flow report
5) Cash flow report will show the opening cash balance and closing cash balance for each period
6) You will be able to define which data series to show on the chart
7) Historic planned schedules will be split between current loans and loans in default
8) Cash flow table results can be exported to Excel
9) You will be able to define which data series to show in the cash flow table
10) Live data from the current day (currently under Account statement for the last 24 hours) will be incorporated into the cash flow report
11) All data is in one table
12) You will be also able to filter to a specific loan in the Investments list straight through the cash flow report so you can quickly take loans off secondary market or put them there based on the information visible in the cash flow report

I have experimented a bit and like the way this report page gives me a quick visual representation of what is happing in my account and that it is very customisable. Plus it lets me set my personal values for expected loss rates and use that to calculate net return displayed in the dashboard. Read also what investor Oktaeder blogged about this feature.

If you are not investing at Bondora, this Bondora video will give you a good overview of the functionality.

International P2P Lending Marketplace List – Loan Volumes February 2016

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The following table lists the loan originations for February. Funding Circle leads ahead of Zopa and Ratesetter. I added Harmoney and Crowdproperty to the list. I do monitor development of p2p lending statistics for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.
Investors living in markets with no or limited choice of local p2p lending services can check this list of marketplaces open to international investors. Investors can also check how to make use of current p2p lending cashback offers available.
Last month these companies crossed significant milestones:
  • Pret d’Union reached 250M EUR since launch
  • Harmoney crossed 200M $ since launch
  • Smava reached 100M EUR (counting p2p loans only, not the brokerage model for banks) since launch
P2P Lending Volume February 2016
Table: P2P Lending Volumes in February 2016. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.
Notice to p2p lending services not listed: Continue reading →