A new study of the DIW Berlin (see page 3-9) (authors: Nataliya Barasinska, Nicola Jentzsch und Dorothea SchÃ¤fer) has analysed Smava loan data from the years 2007 to 2011 and found out that people who use p2p lending Smava for borrowing resemble the average population using conventional bank loans. Against expectations there was no major difference in age structure:
Regarding gender there is a gap, 28% of Smava borrowers are female; whereis in the comparison group 40% of borrowers are female. Regional distribution of borrower residence did not differ from average population. Continue reading →
Are women more risk-averse then men when it comes to lending money to strangers via p2p lending services? A recent study by Nataliya Barasinska, analyzed what impact gender has on the investment decisions. In the study, which was supported by a grant by the European Commission, she looked at bidding and loan data of the German p2p lending service Smava for the time span from March 2007 to March 2010.
Women are a minority among lenders, but are no more risk-averse than men
Only about 10% of the lenders at Smava are women. But they do not perceive and react to risks differently than men, when it comes to picking loans for investments. Continue reading →
Speculation is that the high customer acquisition costs (especially for borrowers) led to the need for another financing round. Estimates put the cost for borrower acquisition as high as 500 Euro. In certain customer acquisition partnerships, Smava pays the partner up to 1.3% of the loan amount (equals 650 Euro for a borrower with the maximum loan amount of 50,000 Euro). While Smava is growing, the growth rate has in the past months stopped to accelerate and is about 2 million Euro funded loan volume per month (chart).
In January 2010 I wrote down my predictions for p2p lending trends in 2010. Now letâ€™s see how good my crystal ball was. The black text is my original prediction, with the review added in green and yellow.
More competition and entering more national markets (probability 100%) This is a fairly easy bet. There are many, especially European markets, where no p2p lending service is operating yet. Even accounting for the fact that laws and regulation in some national markets make it hard or impossible to establish a service, there is still plenty of room. Looking at an individual country, it is much harder to tell. I still wonder that there are no competitors to Zopa in the British market (yet). As expected this was an easy bet to win. Plenty of new p2p lending companies launched. Zopa got 4 new competitors in the UK (Ratesetter, Fundingcircle, Quakle and Yes-Secure). 3 companies launched in Finland. FairPlace started in Brazil.
More products (probability 100%) Currently nearly all p2p lending platforms only offer one product: unsecured, fixed term loans. The differences are more in the details of loan funding (bidding, no bidding, markets, listings) but not in the offered product. In 2010 we will see additional products (e.g. secured loans). Ratesetter introduced rolling monthly loans with variable interest rates. (Note: variable interest rates were one of my predictions for 2008 – I was a bit early on that one). Money360 tries p2p mortgages. CommunityLend might be up to something really interesting with FinanceIt. Some smaller enhancements to the existing product were developed too (e.g. cars as collateral).
A bank will acquire an existing p2p lending service (probability <25%) While last year’s prediction was that there is the first bank experimenting with p2p lending (and there was), 2010 might see a bank (or other financial institution) buying a running p2p lending service.Buying will be much faster, cheaper and risk-less than if the bank tries to build a new service. Did not happen. An interesting development was the decision of a Korean Savings Bank to act as a lender on MoneyAuction. Continue reading →
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.
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)
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
Analyse you webtracking stats. Where have users abandonned steps, where do they stay long times (possibly stuck) and where do they leave the site?
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.