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Updated: State of Selected P2P Lending Companies

wiseclerk 2 Comments

Exactly one year has passed since P2P-Banking.com published the post ‘State of Selected P2P Lending Companies‘. Time to update the information.

This post reviews a selection of p2p lending companies and does a rating on more factors than just loan volume. While I describe below what factors led to my rating, please note that the rating represents my personal opinion.

The table lists the companies in alphabetical order and gives:

New loan volume per month

This amount is in all cases but Zopa retrieved  from the company websites and represents loans funded from Feb. 16th till March 15th 2012, and then converted into US$ at today’s currency exchange rates.

Brand/Press

Extend and tone of press coverage in the past months. Since a large share of new users is introduced to p2p lending services via media, positive media coverage is extremely important. Continued positive media coverage has helped some companies to associate positive values to their brand.

Growth/Marketing

This column especially rates if the new loan volume is growing continuously month after month. Furthermore it puts the absolute volume into perspective to the size of the market. It is obvious that absolute numbers in a country with a small population (e.g. Estonia) will be much lower than those in a country with a large population (e.g. US). Furthermore it takes into account if the (online) marketing measures of the the company succeed in winning new borrowers and lenders (though in most markets lenders do not need to be actively acquired).

Sustainability

Sustainability rates a mix of several factors:

  1. ROIs for lenders / default rates
    Most p2p lending companies that failed in the past, did so as a result of high default rates which led to negative lender ROIs and caused massive lender churn
  2. Ability of company to raise new funding
    Most p2p lending companies still have to bridge a considerable time-span at their current growth rate before they become cash flow positive. The ability to raise more funding to finance continued operation is essential for their success. Isepankur announced that it operated profitable in 2011.
  3. Business model

User satisfaction

This rates the publicly voiced user opinion. Major factor are the comments in forums. To a lesser degree I took the user experience published in blog articles into account. The problem with lender experiences published in blogs often is that the writer is casting a positive image, since he earns commissions for newly referred customers through the affiliate program of the p2p lending site. Also these review are often written at the start of the lending activity at which point the lender’s ROI is naturally unharmed by the experience of defaults.


*estimate
Empty fields: I had not enough information to rate these. E.g. with some of the new UK p2p lending companies I felt I had too few indicators to reach an opinion.

Availability of information also influenced the selection of companies. Due to language barriers including more services (e.g. the Japanese p2p lending companies) was not feasible for me.

Developments since last year

UK and US markets show impressive growth. A few smaller players stopped funding new p2p loans (Quakle, CommunityLend, BigCarrots). German services are struggling to achieve growth (Auxmoney had 2 good months lately).

Zopa Turns 7 – Arranged over 180M Pounds in Loans

wiseclerk 3 Comments

British P2P Lending marketplace Zopa celebrated its 7th birthday today. Zopa was the first to initiate a p2p lending marketplace over the internet, an innovation that meanwhile has grown to an industry with dozens of p2p lending services launched operating in most G20 economies.

Giles Andrews, cofounder and CEO of Zopa said, ‘After 7 years, Zopa members continue to enjoy better rates on personal loans and savings than the banks offer. Meanwhile, despite their size and virtual monopoly, banks have struggled to even stay solvent, requiring huge taxpayer bailouts.’

Since launch, Zopa has arranged more than 185 million GBP (approx. 291M US$) in loans. As older loans have been repaid, an estimated 90M is currently still loaned out. According to company statements Zopa loans now account for between 1% and 2% of all new personal loans issued in the UK each month. In January Zopa arranged more than 8.2 million GBP of loans.

Ratesetter Adds More P2P Lending Choices

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Ratesetter yesterday added more choices. Borrowers can select loan terms of up to 5 years.  Lenders can invest money for 1 or 5 years (in addition to the existing monthly access and 3 year term choices). It is interesting that Ratesetter has decoupled the borrower’s products from the lender’s products. For a borrower loan with an 18 month term there is no directly matching lender product. Ratesetter will combine funds invested in monthly access with money invested in 1 year bonds to fund these loans.

Bottom line of this, as I see it, is that Ratesetter will steer towards more active management of the money invested. Unlike other p2p lending marketplaces that act more like a platform, but where the users alone make the investment decisions, Ratesetter will directly take action.

Crowdcube Celebrates First Birthday – Crowdcube Infographic

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British P2P Equity marketplace startup Crowdcube celebrates its first anniversary (Happy Birthday from P2p-Banking, too :-)). Lately Crowdcube picked up speed substantially in attracting more and more startups pitching for funding. While investors are currently very selective in what to fund, the volume funded has shown nice growth too. The following infographic by Crowdcube illustrates that (see ‘Amount invested’).


(Source: Crowdcube) Continue reading →

How Do the Efforts of Prosper and Lending Club in Search Engine Marketing Compare?

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Internet ventures are dependant to a certain degree to new visitors that are referred to them via search engines. A visitor that did a search on a very specific search term, e.g. ‘get a personal loan’ will have a very high chance to sign up if after that search he is introduced to the Prosper or Lendingclub website. There are tools that measure how ‘visible’ a domain is on Google and other search engines providing an index chart, that allows to compare the visibility of several websites.

Prosper’s visibility index (blue line) is much higher than Lendingclub’s. Prosper.com ranks good for more and more important keywords in organic search rankings. Organic search means, that Prosper shows in a the search results at search engines that are not paid ads. But which search terms do the actually rank for? Continue reading →

Adwords Marketing Activity of British P2P Lending Marketplaces

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I did some research on use of Google Adwords in the online marketing strategy of Zopa, Funding Circle and Ratesetter.

Who is most active in search engine advertising?

I was surprised to see that Funding Circle is the most active in advertising on Google Adwords.

The chart shows that Fundingcircle had active ads nearly the whole year, while Zopa ran the ads only for certain intervals and Ratesetter only gave it a small try. Continue reading →