P2P lending service Lendingclub, which launched last month has passed 100000 US$ in closed loans. The growth rate, compared to other peer to peer startups launched this year in other markets (see previous articles) is very high. More than $210000 in loans will close in the next 12 days. (Source: Techcrunch)
It is speculated that Prosper might use the money to further develop its p2p lending model in order to enhance competitiveness with Zopa and others in the US.
It's been roughly 3 month since the launch of German p2p lending service Smava.de and I want to do a short résumé on the results so far. One huge achievement is that all borrowers made their first payment on time – no lates so far. While it certainly is to early for conclusions, since only one payment cycle (first repayment in the beginning of June) has taken place, the outlook for Smava concerning low default rates is very good. Looks like Smava will be much nearer to Zopa then to Prosper in this point.
Smava has a very restrictive approach for admitting borrowers and loan applications. Not only does Smava verify identity, credit score and income documentation – it goes one step further and calculates if the borrower's financial situation is well enough to allow repayment of the desired loan sum. Only after completions of all these checks is the borrower allowed to publish is loan listing.
As a result the majority of borrowers (about 70 to 80 percent of all applicants) are declined from using Smava. While this strict validation is good for quality it does slow the growth of Smava.
Since the launch Smava enjoyed large and positive press coverage (newspapers, magazines, TV, internet). Despite the good PR, Smava funded only about 50 loans with a loan volume of about 150000 Euro in the first 3 month. There are enough lenders – Smava lacks borrowers. The low volume contrasts sharply from the figures Boober.nl achieved in the Dutch market (see previous post)
The majority of loan listings that were published did get funded. Smava has two interesting functions that are unique and not used on other p2p lending services:
- Borrowers can close the loan early provided it is more than 50% funded
At Smava, listings usually run 14 days. However a borrower can decide to take the funded amount (provided it is at least 50% of the total amount) and close the listing early. Several borrowers have used this function. A borrower can open another listing (provided he has not reached his personal maximum repayment allowance) instantly for the remainder (he can even choose a different interest rate for subsequent listings)
- Borrowers can increase the offered interest rates on their open listing. If this happens the change is applied for all bids on this listing. This is a widely used feature. Many borrowers start with (ridciously) low rates. After a few days they realise their loan will not fund and they increase their interest rate – often in several steps
Smava has yet to find a good concept for groups. While there are groups their purpose is yet to be defined. Consequently the majority of borrowers did not bother to join a group.
I will continue post updates on the development of Smava here on P2P-Banking.com.
4 month after the launch, Dutch p2p lending service boober.nl is approaching a total volume of 1 million Euro funded loans (chart shows development of loan volume since launch).
In comparision, German p2p lending service Smava.de, launched only 8 weeks after Boober is growing much slower. Currently it reached approx. 150000 Euro loan volume. Look forward for a post on the development of Smava in the near future.
Boober plans to launch in Belgium as next country. While not started yet, the domain boober.be is already up, saying "beta".
Astonishing. Traditional bankers awarded Zopa the Banker Technology Award for Best Internet Project. Now, should we expect to see banks setting up project teams to launch their own social lending services? Or how will banks leap forward to be a part of the "future of finance"?
Prosper loans have meanwhile surpassed 66 million dollars loan volume. A look at wiseclerk's prosper loan aging table shows that Prosper.com succeeds in increasing originating loan volume nearly every month. Currently new loans for about 8 million US$ originate each month.
However the figures also show an alarmingly high volume for late and defaulted loans. Especially when looking at older loans (the new ones do not have aged enough to be technically able to default). For example of 2.1 million dollar loan value that originated in June last year, $177,000 loan value has defaulted and another $105,000 are 3 or more months late. The default rate for loans from June 2006 will therefore be well above 10 percent at the end of the 36 month term. And this is no execption. For March and April 2006 defaults are already higher than 10 percent of originating loan value.
Internet usage in Korea is booming, most surfers enjoy broadband internet access. Furthermore the population is very open minded towards new technologies.
This year two P2P lending services launched.
Popfunding.com allows borrowers to get loans up to a maximum amount of approx. 2000 US$. Interest rates are auctioned. Maximum interest rate is 29 percent. The CEO is Hyun Uk Shin. According to the Korea Times the service does NOT charge fees from borrowers or lenders. Only bank fees have to be paid. If a borrower fails to make a payment popfunding.com will disclose his identity and contact information to the lender.
Moneyauction.co.kr has a similar concept.
Financial regulators are looking into the concepts to check if they are in compliance with korean laws.
(Sources: Ringblog, Korea Times)
The figure quoted for borrowers that are late with at least one payment at dutch Boober.nl is 3.8 percent. This strikes me as quite high, considering operations of started only February this year. A (user composed and maybe not complete) list of the loans that are currently late at Boober, can be found here.
Actually Zopa.it is not run by the British Zopa Ltd. but by the franchise “P2P s.r.l” with offices in Milano. The company has licensed the use of the brand and the technology for Italy. Zopa.it will allow Italians to borrow up to 40000 Euro (roughly $55000), which is a high amount, compared to p2p services in other countries.
It is possible to pre-register on Zopa.it to be notified at launch time.
Correction and Update: I must excuse myself to have confused the CEO of Zopa Italy with another Italian banker with identical name. As Carlo of Zopa Italy pointed out in a comment to this post: “Zopa Italy’s Ceo is Maurizio Pietro Sella, not Maurizio Sella. Maurizio Pietro started is working career with Banco di Santo Spirito (Capitalia Group), then joined in 1990 Citibank, where he had several assignements (mainly in London and Switzerland) and in 2002 the Julius Baer Group in Geneva. Before Zopa Maurizio Pietro was CEO of Julius Baer Creval Private Banking Spa, a joint venture between the Julius Baer Group and Gruppo Credito Valtellinese.”
According to unverified sources the venture raised 2.8 million Euro funding from its shareholders. It is speculated that Zopa Italy will take higher fees (maybe 1 percent from lender and 1 percent from borrower) than Zopa in England. This seems possible since consumer banking costs in Italy are generally higher.