Lending Works CEO Matthew Powells reported an influx of more than 500K GBP deposits within 3 hours after launching the Lending Works Innovative Finance ISA (IFISA). Lending Works’ IFISA product offers 4% (up to 3 years) or 4.7% (up to 5 years term) tax-free for investments on the p2p lending marketplace. However Lending Works, anticipating the huge demand, has launched the offer with an upper ceiling: ‘We’re anticipating a significant spike in lending volumes as a result of the new ISA. Because we want to match your money swiftly at all times, we will only be accepting ISA monies from lenders in fixed, periodic tranches totalling £1 million at a time. Once this limit is reached, we will then temporarily be closing this window of opportunity until further notice.’ as stated on the company website. It is expected that Lending Works might lower rates after this threshold is met.
Investors can draw down either interest, or interest and capital over the term of the loan, or reinvest the interest. A recent survey of Lending Works’ existing investors found that 88% plan to open an IFISA, with around a third expecting to invest between 10,000 GBP and the maximum threshold of 15,240 GBP of their annual ISA allowance into the IFISA before the end of the tax year in April. In the next tax year the allowance will rise to 20,000 GBP. Continue reading →
Lenndy is the first lending marketplace in Lithuania that connects loan originators with individual and institutional investors. At Lenndy, investors can invest in asset-backed loans and get a 12-15% return.
What are the three main advantages for investors?
Loans are secured by buyback guarantee and collateral as well as personal guarantees.
12-15% annual return.
No investment amount limits and no platform fees for investors;
What are the three main advantages for loan originators?
Easy and transparent opportunity to obtain working capital by selling part of their existing loan contracts to investors (like Mintos).
Advanced IT integration with credit management systems capabilities.
Ability to grow reputation and brand awareness internationally.
What ROI can investors expect?
Currently, investors at Lenndy earn 12.53% average annual interest. Earnings usually depend on investment strategy and risk awareness. That is, when investors chooses to invest only in loans secured with buyback guarantee and collateral, they can expect to earn around 12% return. When investors seek 13-15 % annual return, they should consider adding invoice financing and business loans to their portfolio.
Is the technical platform self-developed?
Lenndy IT system is self-developed from scratch. IT development company was hired to complement in-house developers. It is very dynamic in order to react to market changes, adapt to multiple financing models and investors’ needs and comply with all legal requirements.
How reliable is the credit rating / credit history data available?
Loan originators collect information about borrowers from reliable credit agencies as well as public registers. We do not use standardized credit rating yet but we already have a developed model for it that will be introduced in the near future.
How is the company financed?
Company was founded in late 2015 and secured seed investment from an angel investor. Currently, Lenndy is negotiating with several angel investors and venture capital companies for another financing round that will be used to expansion and further product development.
What was the greatest challenge so far in the course of launching Lenndy?
Our goal was to create an investment instrument that would be attractive to investors, which would be liquid and would supplement any investment portfolio for great diversification. Loans market is massive, but only a fraction of it was available for investors. We know we have a great tool and we are looking forward to reaching individual and institutional investors across the whole Europe and beyond.
What is the current state of regulation in Lithuania?
Parliament of the Republic of Lithuania passed the Law on Crowdfunding, which was created by the Bank of Lithuania and the Ministry of Finance. The Law also describes Lending Marketplace as a crowdfunding model and Lenndy had already started the procedures of involvement in a list of crowdfunding operators.
Which marketing channels do you use to attract investors and borrowers?
Lenndy uses gentle digital marketing to attract investors from Europe and already has about 1000 investors who funded around 90 loans. Lenndy is growing very fast, even though we do not engage in heavy marketing. We believe it is a result of trustful model and word-of-mouth marketing. The word is spreading quickly in Lithuania, therefore we are preparing for international growth.
Is Lenndy open to international investors?
Yes, Lenndy rolled out English language and we have already started working on German and other languages.
Where do you see Lenndy in 3 years?
Lenndy has a target of at least 10 loan originators across Europe to improve portfolio diversification for our investors. In the following years we are planning to introduce portfolio buyout functionality which would allow investors sell their whole portfolio at once, secondary loans market where investors could buy and sell individual loan claim rights and many other features. We see Lenndy as transparent, innovative and trustworthy international lending marketplace.
The following table lists the loan originations of p2p lending marketplaces in January. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 476 million Euro. I track the development of p2p lending volumes for many countries. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.
Zopa celebrated passing 2 billion pounds in loans lent since launch. That figure means 300,000 loans to 246,000 borrowers funded by around 75,000 lenders. Jaidev Janardana, Zopa’s CEO, commented: “We’re excited to be the first UK peer-to-peer lender to pass the 2 billion GBP milestone. Over the last 12 years, we’re proud to say we’ve helped a third of a million people get better interest rates for both borrowing and lending. The 2 billion GBP milestone demonstrates how far we have come, but our journey is only just getting started. Our decision to launch a next generation bank reflects our mission to create better options for consumers and to shape the future of finance.â€
Further milestones reached this month were:
Harmoney passes 500 million NZD since inception
Assetz Capital passes 200 million GBP since inception
Table: P2P Lending Volumes in January 2017. 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.
Dutch insurance company Aegon, international provider of life insurance, pensions and asset management, intensifies relationship with leading German p2p lending marketplace Auxmoney. Aegon plans to invest 1.5 bilion (!) Euro into p2p consumer loans issued by Auxmoney within the next 3 years. This is a stunning amount for institutional investments in the European p2p lending sector.
Aegon also leads the new 15 million Euro Series E funding round for Auxmoney. This financing round is being topped up by existing shareholders of Auxmoney.
Aegon the Netherlands, Eric Rutten, who will join the board of auxmoney, comments: “With innovations along the entire value chain of credit and its highly sophisticated and techdriven methods of risk assessments and scoring, auxmoney is another strong case for Aegon to drive innovations in the financial industry for the benefit of society.â€
Raffael Johnen, CEO and co-founder of auxmoney, says: “This investment is a strong signal for the entire FinTech industry in Europe and beyond. Through our efforts to provide capital to millions more people, we have emphatically made the case for a more inclusive financial system. Auxmoney is an impactful and sustainable FinTech leader in Europe, and we will continue to make a difference in the banking and finance landscape.â€
Johnen continues: “Aegon’s funding commitment will enable auxmoney to onboard banks that are looking to expand and improve their loan offerings to clients through auxmoney’s marketplace. We are looking forward to supporting more bank partners in serving their clients even better.“ Johnen adds: “When we first launched auxmoney, our vision was to empower customers who had no access to credit products. Today’s funding commitment from Aegon will enable us to expand our offerings of highly competitive all-digital loans at all levels of the credit spectrum.â€
The partnership between Aegon and Auxmoney started in 2015. Auxmoney management
We last reported on Lendico refocusing on SME loans instead of consumer loans in Germany. Sinces then there is more negative news. Sources say that Lendico was in talks with Spanish bank BBVA, but failed to close a financing deal. In December several employees left the company. Lendico said that these were normal fluctation and that the Lendico group has more than 100 employees.
Documents accessed by P2P-Banking.com show that the largest (by loan volume) German p2p lending marketplace Auxmoney made an operating loss of 13.1 million EUR in the year 2015 (compared to 8.48M loss in 2014). This was before receiving Series D funding in early 2016.
Funding Circle CE, Berlin, the German division of Funding Circle closed 2015 with an operating loss of 9.45 million EUR (compared to 2.83M loss in 2014).
Germany seems to be a very hard market for p2p lending companies to crack. Interest rate levels for consumer loans are very low compared to other markets. banks are competitive. And there is no significant amount of credit card debt that can be refinanced. P2P Lending marketplaces cannot offer better interest rates, they need to find other competitive advantages. And customer acquistion costs to win borrowers through online marketing channels are high in Germany.
While Lendico never published monthly origination volumes, Auxmoney and Funding Circle CE stopped making monthly figures available early in 2016. The latest publicly accessable figures were 10.6 million EUR new loan originations for Auxmoney in January 2016 (ranking in Top 6 of Europe’s marketplaces) and 0.8 million EUR for Funding Circle CE in June 2016.
Funding Circle has said that it will use part of the funds of the recent 100M US$ round to consolidate its position. It will be interesting to see if this results in higher activity in Germany as they announced to concentrate their continental focus on the Netherlands and Germany while stopping to issue new loans in Spain.
Klear is a Peer to Peer Consumer lending platform. We target Prime Bulgarian Borrowers. We pre-fund the loans, then we list them on the market where investors from EU and EEA can buy parts of them.
Klear has been built by a team of professionals from the consumer credit industry. Almost all of us came from BNP Paribas Personal Finance Bulgaria, the market leader (known as Cetelem in some other countries). For example, Nikolay was the IT development team leader, Lukasz was the CFO then the Chief Risk officer and I myself was the CEO.
Klear is all about building something solid.
What are the three main advantages for investors?
A good net return. 5.5% expected in average, well above the remuneration of deposits, which is close to zero. Klear does not charge fees.
A low risk. We are one of the few platforms in Europe serving good profile borrowers. No subprime or payday loans customers. Such portfolio of credits should be much more resilient in case of economic downturn.
An easy exit option. If an investor sells his loans without premium or discount, all the loans without bad payment history will go on the primary market.
What are the three main advantages for borrowers?
The best interest rates on the market. Cheaper than the banks’. It’s key to attract excellent borrowers.
Full online process. Unique in Bulgaria for prime loans. Authentication is performed through a convenient and efficient video-call. Partial or full early repayments can be done online.
No hidden fees. We have a one-off fee when the loan is disbursed. That’s all.
What ROI can investors expect?
5.5% in average. Thanks to our credit scoring algorithm, we attribute a risk segment to each borrower (from A to D) and determine his interest rate based on it.
Our portfolio is mainly constituted of A and B. But investors can select the segments they want to invest in, according to their risk / return appetite.
Is the technical platform self-developed?
Yes. Everything was developed in-house. The team includes 5 software developers and a designer. Our third co-founder is an IT architect with huge experience in handling core banking systems. We invested a lot of energy building the platform: in the front end to offer a great user experience, and in the back end to ensure a solid setup.
How reliable is the credit rating / credit history data available in Bulgaria?
It’s probably one of the countries with the richest set of available data. The credit bureau registers all the credits financed in Bulgaria, by banks and non-banks, with 5 years of history.
Besides we consult the National Health Insurance database, where we can check the salary and the employment history of any credit applicant. We also consult the Police database to check if the ID card is not stolen.
The founders financed the company by committing 1 million Euro from personal savings and collecting from family and friends. That is amazing – how do you feel about this achievement?
That’s great! It shows trust in the team, in our experience, in the project and common goal. We built something to last. We all have been very successful in our careers in the banking industry and now we want to do things differently, for the better and we believe we can. That’s the main drive for all of us.
What was the greatest challenge so far in the course of launching Klearlending?
To explain that we are NOT a new subprime or payday loan company, like the many other non-bank institutions in Bulgaria. To demonstrate that we are providing something better than banks, for both sides, borrowers and investors.
Can you please describe the market environment and regulation in Bulgaria?
The total consumer credit market is around 5 billion Euros. These loans are issued in the domestic currency, Bulgarian Leva (BGN), but it’s important to know that Bulgaria is in a currency board with the Euro since 1999 (at that time it was with the Deutsche Mark) and the parity has not changed since. So, there is almost no currency exchange risk, when investing in Klear loans in Levas.
Although there is no specific regulation for peer to peer lending, we decided to apply for a non-banking financial institution registration in the National Bank. We have this accreditation and it gives us the possibility to consult the National Credit Bureau.
Which marketing channels do you use to attract investors and borrowers?
Since one year, we have been providing online financial education tools (an online budget management application) and a blog where we regularly publish articles regarding personal finance. That’s an efficient inbound acquisition channel.
We are also very active on social media and we perform online advertising.
Is Klear open to international investors?
Yes, to citizens from the European Union and European Economic Area, who have a bank account opened in a bank from these regions.
Where do you see Klear in 3 years?
Having a visible market share in the consumer credit market in Bulgaria and operations in a few other countries. As we have worked in many before and are familiar with the specificity of their domestic markets.
Being recognized as a fair, transparent and social impact player, also helping people who cannot get a credit by providing them financial advice and support to solve their debt issues.
