Author: wiseclerk

How P2P Lending Services Collect User Feedback

wiseclerk

P2P lending services are young and developing in an innovative environment with little established best practise examples. Every company is constantly trying to learn how to improve the experience for its users. Whether it be user interface, information pages, business model and fees – there is lots of room for incremental improvements.

P2p lending services certainly test run some things before the general public gets to use them. Examples of methods to do this are closed betas, monitored usability tests, A/B tests, ….

One of the most valuable sources of information & ideas for improvements are the users themselves. The mass of users ensures that every little step of every process gets used possible times, bugs identified and misinterpretable information questioned.

Here is a set of methods that p2p lending companies can use to collect and profit from the wealth of user experiences.

  1. Run a forum (I talked in previous articles about the advantages of p2p lending forums)
  2. Consider using a simple to use ticket system instead of user support via pure email (advantage: allows statistical analysis of user problems, handling times and outcomes)
  3. Talk to your customers. Especially right after launch, it can be extremly helpful to call lenders and borrowers and asks them how easy they found the process and if they have any suggestions for improvement
  4. Analyse you webtracking stats. Where have users abandonned steps, where do they stay long times (possibly stuck) and where do they leave the site?
  5. Use online surveys to get structured feedback from customers.

Yesterday I attended the first ‘lender conference’ of Smava in Berlin. I put ‘lender conference’ in quotation marks because that term sounds a little magniloquent and misleading for the type of event it actually was. More fitting would be a discussion with a panel of selected experienced lenders. Smava handpicked 5 of those and invited them to Berlin reimbursing travel expenses. After a short tour of the premises, processes, lender wishes and market situation were discussed in depth (see longer report at P2P-Kredite.com). The small number of participants enabled an extremly useful discussion.

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Trustbuddy Acquires Loanland Operations

wiseclerk 1 Comment

Trustbuddy AB has acquired the operations of Swedish p2p lending site Loanland effective November 19th. This means that Loanland will not close as reported earlier. Trustbuddy AB is a Swedish company with Norwegian origins. Trustbuddy will continue operations and in mid-term plans to integrate the activities of the service into their own platform. Loanland users were informed that the transfer of the membership agreements does not change anything for them.

(Source: Company statements)

No financial details on the deal were available.

Money360 – P2P Real Estate Loans

wiseclerk 3 Comments

Money360 offers a first in p2p lending: To my knowledge they are the first live p2p lending service applying the concept to financing real estate loans.

Loan sizes are much bigger than seen before in p2p lending. Minimum loan amount is 200,000 US$, maximum is 5 million US$. The minimum a lender can invest in an individual loan is upscale too: 50,000 US$. This does fit the target audience though as only accredited investors residing in California can join as lenders.

Loans are secured: Each Lender is listed with an undivided fractional interest on the promissory note and deed of trust.

When the transaction is complete and the loan is closed, Money360 will receive a closing fee of 2% of the loan amount. This fee is paid by the Borrower, typically out of the loan proceeds. Money360 charges the Lenders an annual servicing fee of 1.5% of the loan amount for providing all loan servicing functions. Continue reading →

Yes Secure to Add Secondary Market

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Yes-secure, a British p2p lending marketplace launched in June 2010, will very soon add a secondary market called Secondary Loan Slice Market.

According to information the company provided P2P-Banking.com, the secondary market will have the following features:

Advantages for Loan slice buyers:

• Loans offered at premium and discount: Lenders are able to buy loan slices from other lenders at a premium or discount to the principal remaining amount. Lenders can invest in quality loan slices which they missed out on earlier.

• Ability to view repayment history: Potential buyers for the loan slices can view detailed information about the borrower repayment history, enabling them to make informed low-risk decisions based on track record of reliable repayments.

• Earn interest from day one: As the existing loans slices can be transferred within a few minutes, they can start earning interest with immediate effect.

• Build a balanced investment portfolio: Lenders can quickly build themselves an active and balanced portfolio by picking and choosing through different markets, rates and terms; this automatically leads to risk-diversification through loan portfolio management.

The advantages for Loan slice sellers:

• Encourages liquidity: Investors can easily generate cash as and when they require by selling their loans slices to other registered members of YES-secure.

• Flexibility: Investors can easily manage their investment portfolio, buying and selling chosen loan slices and fine-tuning their lending portfolio to suit their risk profile.

• Loans sold at premium or discount: Lenders can set a price for their loan slices at rates within +/-10% of the remaining principal amounts of their loans.

It is interesting to see that Yes Secure does not face the regulatory challenges Zopa cites (see: Zopa Rapid Return Secondary Market) or has overcome them.

MYC4 Chickens Out – Closes Forum

wiseclerk 4 Comments

P2P microfinance platform MYC4 has closed its discussion forum. Links to the forum have been removed from main navigation.

The official explanation on the blog says: “The forum was originally created to ignite a dialog among the investors.  We haven’t seen all that many sparks recently. Most of the posts on the forum in the last year have been either investors asking specific questions to MYC4 or MYC4 communicating news to the investors. Not much dialog.

We decided to try something different, so we created a blog.

… You can still write questions to the Partners on the forum. But the other topics have been frozen. You can find all the old posts there, but you can’t write any new ones.”

It seems weird to argue that a forum is replaced by a blog because a forum is not fit for dialog. My impression is that the MYC4 forum had 3 aspects which can have caused the removal:

  1. Lenders pinpointed things that were not working properly on MYC4 (e.g. default levels, certain processes, provider quality). They kept track on the results following up earlier announcements of MYC4 on measures taken.
  2. In many cases answers by MYC4 did not satisfy the persons asking. This negative customer experience became publicly visible through the forums, possibly deterring new lenders.
  3. Possibly answering questions in the forums tied up to much staff time (but I would expect that the same questions are now send via email, therefore closing the forums does not change this issue)

So I do feel that MYC4, a company that at it’s launch trumpeted utmost transparency goals, chickened out. They no longer want to discuss and face customer demands and criticism in public, but rather elected to replace it with a blog, which is much more a one-way-communication channel.

Everyone is invited to continue the discussion on the MYC4 forum here on Wiseclerk.com.

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Zopa Rapid Return Secondary Market

wiseclerk 2 Comments

One of the disadvantages for lenders in many p2p lending markets is that money lent cannot be withdrawn early during loan terms.

Zopa UK now introduces a secondary market called ‘Rapid Returns’, which allows lenders to cash out on all or selected market loans early. To do this a lender simply selects all or specific markets to ‘sell’ his loans.

For each of these loans, the system looks for other lenders offering to the same market at the same or a lower interest rate. Where a match can be found, each loan is then permanently transferred to the lowest bidding lender in that market. The winning lender will then earn the interest rate that the previous lender was getting on that loan, even if they offered at a lower rate. The lender receives the total outstanding capital on the loan from the offered funds of the winning lender.

Zopa deducts a 1% admin fee from the transferred capital.

There are some limitations: Loans made through ‘Zopa Listings’ are not eligible. Also excluded are loans where the borrower ever has missed a repayment. Some more restrictions apply.

And of course there needs to be a matching lender offer with a rate low enough.

Asked why lenders can not bid on loans on offer – thereby buying at a discount or premium – a Zopa employee explains:
“What you describe here is a true secondary market which …, we are not regulated to provide. I hope all will become clear when the full functionality is available in the next couple of weeks.

Our overarching rule when developing Rapid Return has been that it should allow lenders who want to exit some of their cash to do that. It is not designed to tinker with a loan book – in particular we wanted to avoid a scenario in which an experienced lender could cash out of some loans at the expense of an inexperienced lender.
As a final note on the ‘never missed a repayment rule’ – we started development with this rule as ‘not currently in arrears and hasn’t missed a repayment in the least three months’ but when we looked at the proportion of the total loan book for each, there’s a negligible difference. It’s therefore much clearer and fairer to go with the former.”

Currently Rapid Returns is only collecting offers on the buying lender’s side, letting lenders amend their bid offers to include Rapid Return loans. The feature will actually go live in a couple of weeks. Then selling lenders can mark their loan books for sale.

I expect that the Rapid Returns feature will further boost Zopa’s growth in the British market. Congratulations.