Uppspretta – First P2P Lending Service in Iceland

News from the far north: Uppspretta (engl. resource) launched the first Icelandic p2p lending service earlier this month. Uppspretta’s main goal is to allow startup companies to apply for microloans.

Uppspretta.is was founded by Björk Theodórsdóttir, Ingi Gauti Ragnarsson and Ragnheiður H. Magnúsdóttir. Uppspretta co-operates with Naskar, a group of Icelandic woman entrepreneurs, using them as a show-case for lenders and enabling a start with a secured supply of lender funds.

Iceland is a interesting market for p2p lending. While the market is small in size, the reputation of banks is nearing zero after the banking disaster last year. Theodórsdóttir told P2P-Banking.com: “There is definitely market for such a service as P2P lending in Iceland. We have been well received and in light of the bank‘s reputation, people celebrate the opportunity to bypass them. It‘s yet to be seen the impact Uppspretta will have on the lending market but we are optimistic that Uppspretta will be an real option beside the banks.”

Furthermore she pointed out that unlike other players Uppspretta is free of regulatory chains: “We worked closely with the regulators in Iceland and the conclusion was that Uppspretta would not require any licence to operate.”. Uppspretta charges a fee of 4 percent of the funded loan amount.

Studienaktie – P2P Student Loans with a Twist

Studienaktie.org is a Swiss non profit association offering p2p lending to students. The name translates to student share and is rather fitting, since the concept literally allows the investor to invest in a student and profit from his career development. Unlike with other p2p lending platforms for students,  investors do not really give a loan, but rather buy a share offered by the student.

An example illustrates how this works out. A student might offer to sell you a share for 100 CHF (approx 97 US$) now while in return promising to pay you 0.25% of the annual salary he will earn in 2017. Meaning if his salary will be 80,000 CHF in 2017 the investor will be repaid 200 CHF for his share then.

So this is really a bet of the investor on the students career chances.  To help on the selection investors can browse anonymous dossiers of the students and contact them. Chances for a positive ROI a probably good since Studienaktie originated at the university of St. Gallen, which has an elite reputation. Studienaktie is open to students of other universities, too.

The contract is signed directly between investor and student and the payment is directly facilitated between the 2 parties. Studienaktie only provides the platform. Investors pay a yearly membership fee of 100 CHF to participate.

The aim of the non-profit organisation is to enable more and better education.

Moneyauction – Booming P2P Lending Service in Korea

Moneyauction, a Korean p2p lending company, says it is “the No. 2 [website] in Korea’s non-bank area, but the number 1 website in the finance area”. And it has impressive figures to prove it. Between June 01th, 2007 and Sep. 15th the loan amount applied was 56.6 million US$.

Moneyauction partnered with telecommunication carrier Korea Telecom and offers a mobile service allowing borrowers to apply for and lenders to bid on loans via their cell phone.

In 3 months Moneyauction plans to launch a secondary market (called ‘Divided bond trading’). A spokesman told P2P-Banking.com that he expects this new feature to boost the transaction volume.

(Source: company management)

Swiss Private Banker: P2P Lending a Threat to Bank Balance Sheets

In an video interview in June, Konrad Hummler, managing partner at Swiss Bank Wegelin & Co, states how he sees p2p lending as a threat to banks.
P2P lending services could replace vital functions of banks. He says government influenced major banks are to inefficient. Established institutions will use calls for regulation to protect their business against newcomers.

(The interview is in German language)

CommunityLend Approaching Launch in Canada?

Microlending.ca reports that CommunityLend may be ready to launch soon as it cleared another registration hurdle. A legal document published at the Ontario Securities Commission site gives lots of details on CommunityLend’s p2p lending plans.

It also reveals that p2p lending in Canada will (at least initially) be restricted to accredited investors (high wealth individuals).

See Dan’s articleat Microlending.ca for a review of the document.

P2P Lending Technology – Make or Buy

The core ingredient a new P2P Lending company needs is a platform to operate on. The importance of the quality of the software used for the success of the business is high. Not only does interaction with the customer nearly exclusively take place via the interface the website offers, but ideally most processes that are to be conducted are built into the software.

Examples for these are interfaces to external suppliers of credit ratings, accounting functionalities and interaction with necessary bank accounts, possibly document input and handling functions (e.g. income verification).

Unlike other web 2.0 startups p2p lending companies cannot launch on a rudimentally developed platform and eliminate bugs and improve functions on the fly in beta. Customer expectations regarding security, correctness and reporting functionalities are rightly high when it comes to handling their money. The expectations of the users are set by the trustworthiness of online banking services.
Another factor is – depending on market – the regulation authority that might require proof for the reliability of the platform/processes

The management team has the choice between:

  • Developing the software inhouse
  • Hiring an external contractor to program the platform according to specifications made
  • Buying a tested and proven source code and use that as start for future development
  • Outsource the task to a whitelabel provider who provides the technical platform and future release improvements

Developing the software inhouse

The advantage is that the software can very specifically reflect the ideas and needs of the company’s founders. The disadvantage is the high risk to miscalculate time or budget needed.

Costs when starting from scratch are high. It has taken the p2p lending companies on average a year to develop their platforms. The SEC filings of US p2p lending companies reveal figures on software development costs.

Furthermore quality and performance issues might be underestimated requiring rework. Continue reading

Spanish Lubbus Announces Deployment of its P2P Lending Software in More Countries

In yesterday’s newsletter Spanish p2p Lending service Lubbus (see earlier coverage) has announced that it succeeded in deploying it’s platform to 5 additional countries.

Nuestra apuesta por los préstamos sociales persona a persona (P2P) ha ampliado fronteras. lubbus mantiene contactos tanto en España como en otros Países (actualmente cinco) para implementar nuestra Plataforma y nuestra Filosofía en dichos Países. Como siempre hemos hecho, nos basamos en tus opiniones, sugerencias, recomendaciones, etc para avanzar.

No further details were available.

Pertuity Direct Seems To Discontinue Operations

P2P lending company Pertuity Direct, which launched in January this year, seems to go out of operation. A special meeting of the board of  trustees of the National Retail Fund (the fund though which lenders invest in Pertuity Direct loans) took place “to approve the liquidation and distribution of all shares of the fund”.

Currently it is unclear what this means to investors and if past borrowers will be affected in any way. Currently it is not possible for new borrowers to apply for new loans and new investors can not sign up on the National Retail Fund website.

I’ll try to reach (former?) Pertuity Direct employees to comment on the situation and review the situation further.

(news broke via Prosper Lending Review)