UK app Pariti has integrated loan offers by p2p lending marketplace Zopa into its app allowing users to check whether they could get a better rate for their debt. User can apply for a debt consolidation loan directly from the app. Pariti is using Zopa’s API to access data for the offers.
Just before the weekend Bondora sent me an email with a personalized investment overview video (click here to see mine; I was not able to embed it directly here in the blog). The video page encourages sharing via social media (Google, Linkedin, Facebook, Twitter), so obviously an aim is to aid in investor marketing. In future I might need to spend less effort on my personal portfolio reviews and post the video instead (just kidding). The highlighted return figure is higher than my own calculations, but I did achieve a high return on Bondora over the past years.
Have you seen other attempts on viral marketing via investors by p2p lending marketplaces? Let me know in the comments, please.
EDIT: Succeeded in embedding the video now:
In October 2012 I started to invest into p2p lending at Bondora. I periodically blog about my experiences – you can read my update from Dec. 2015 here. Over the total time I did deposit 14,000 Euro and withdrew 13,380 Euro. So as you see I cashed out an amount almost equal to the amounts I deposited. The good news is that I still own 705 loan parts with an outstanding principal of 10,362 Euro at an average interest rate of 23.74%. Of these 6,355 Euro are in current loans, 1,004 Euro in overdue loans and 3,003 Euro in 60+ days overdue loans. The reason that I still have such a large loan book despite cashing out nearly as much as I paid in, is that I reinvested nearly all interest and principal repayments from 2012 till 2015.
Bondora shows a net return of 24.6% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.0% return.
Let’s look how my remaining portfolio is distributed by several criteria
Chart 1: My portfolio by country
Chart 2: My portfolio by rating
Chart 3: My portfolio by loan purpose
A lot has changed in the past four months. With the introduction of new regulation in Estonia, Bondora now prefunds all loans and also keeps a stake in the loans (‘skin in the game‘). Manual bidding on loans is not as straightforward as previously because now investors can make bids, which are not binding until allocation happens. This leads to situations were say 155% of the loan amount has been bid for, but the allocation has not happened yet, because some of the bidding investors have not enough cash in their account to match their bids and those bids that are sufficiently funded don’t add up to 100%. Furthermore Bondora gives bid preference to bids with larger amounts. If at allocation time bids with enough cash add up to more than 100%, then the bids for higher amounts will succeed, while the smaller amount bids will be rejected.
Currently there is an increase of promotions by p2p lending marketplaces in order to acquire and activate retail investors. Cashback offers are more frequent and Funding Circle is giving away iPads to investors that will invest at least 20,000 GBP during the Funding Circle spring promotion. Investors welcome these added benefits, but for marketplaces it is a fine line to walk. They want to grow originations, but risk that investors will expect getting extras and might hold back further investments until the next offer is made.
(Image source: Funding Circle)
I have written about the partnership between Google and Lending Club earlier. The image below shows an actual advertising message Google is sending to its Adwords customers. Note that a special loan is offered, not a standard Lending Club loan. This partnership is a great match for both Google and Lending Club. Google can enable its customers to get access to the funds they need to grow their business and potentially spend more on advertising services supplied by Google. Lending Club can target selected businesses, which were prescreened based on the data Google has via the Adwords customer relationship.
Image source: Business2community.com
In Germany p2p lending marketplace Lendico uses a solution offered by startup FintecSystems to simplify the borrower application process. Automatically accessing online banking data for the past 90 days of the applying borrower the service makes the postal submission of bank statements and certificates of salary via postal services redundant. This saves time and costs involved in the verification of the borrower’s loan application.
Co-Founder Christoph Samwer said: ‘The integration […] is an important step to offer our borrowers an application process rid of media discontinuity and to improve our risk assessment‘ (original quote in German, own translation).
Here is what FintecSystems says about their service:
…Our recently released new product called FintecSystems RISK enables lenders to obtain real time financial information about their customers using just their online banking account. This results in a more accurate and seamless loan application processes by enriching existing application processes or existing data.
With FinTecSystems RISK lenders can access up to 90 days of customer account activity. For lenders it is possible to derive certain information of interest from the account activity, e.g. using salary to carry out risk assessments. Also validating or completing financial information of the borrower to have a consistent data basis, while reducing the need for manual interaction efforts and costs for both parties.
With FinTecSystems RISK, we build a bridge between BigData and SmartData. Accurate information about a borrower enables the lender to be more effective with loan terms. Precise and quality data is more important than data quantity. Data quality is the crucial factor to establish an online financing process in Germany and Austria. Eliminating a manual finishing processing step for the lender…