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.
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.
MYC4 has announced that the software development department of MYC4 will move form Kampala, Uganda to Copenhagen, Denmark where the MYC4 headquarter is located.
Quote from the announcement by CEO Mads Kjaer:
Dear Community,
After long and careful consideration, MYC4 has decided to move the software development department from Kampala, Uganda, to the Copenhagen office. The decision is made in close connection with MYC4’s strategic focus on streamlining the organization by focusing all efforts on (a) building a solid and scalable IT platform, (b) creating a strong basis for growth in Africa, and (c) improving the capacity and quality with MYC4’s current Partners.
There are two crucial reasons behind this decision:
Creating an effective cooperation between Copenhagen and Kampala has proven too complex. The Development Team in Kampala is strong and hardworking, but the current setup does not allow us the close dialog, sharing of ideas, productivity and flexibility that we require. To give an example of the challenges – the internet connection to the Kampala office, which we share with another company, is one of the best available, yet it is only 750 Kbits/second and is expensive (30,000 DKK/month).
The overhead costs are too high. Especially “hidden costs†for travel, slower development, waiting time and rework due to difficulties in communication.
Initially we saw a lot of benefits from having the software development team located in Africa. However, after having kept trying to improve to set up and make development run flexibly, we must face the fact that the setup is too complex to meet the demands and goals for MYC4’s development. Therefore, over a transition period of 2 months, the Kampala Office will be closed and a software development department established in Copenhagen.
…
Despite the fact that this is a difficult situation with personal as well as practical consequences, we are confident that it is the only thing to do in order to meet MYC4’s mission and vision and ensure the long term quality and scalability of the platform. …
As P2PLendingNews reports, the latest amendment of Loanio’s SEC S-1 filing reveals that Loanio has licensed their source code for 375,000 US$ to an unnamed company.
100,000 US$ have been payed upon signing. For more details read the full article here.
In this – rather long – article I’ll examine if and why p2p lending has the potential to become disruptive and displace the “conventional” way banks hand out consumer loans.
A good read to get some opinions before continuing is reading these posts:
Wikipedia gives the definition that Clayton M. Christensen has coined in 1995:
Disruptive technology and disruptive innovation are terms used in business and technology literature to describe innovations that improves a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers.
Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption (i.e., consumers who would not have used the products already on the market), whereas a lower-end disruptive innovation is aimed at mainstream customers for whom price is more important than quality.
Disruptive technologies are particularly threatening to the leaders of an existing market, because they are competition coming from an unexpected direction. … In contrast to “disruptive innovation”, a “sustaining” innovation does not have an effect on existing markets. Sustaining innovations may be either discontinuous (i.e. “revolutionary”) or “continuous” (i.e. “evolutionary”). Revolutionary innovations are not always disruptive.
There are multiple examples in the Wikipedia article. I want to give two others here. The newspapers ignored or at least failed to adapt to what the internet meant to their classified ads business. As a result they were one of the first to loose offline business to totally new competitors (multiple ad sites, Ebay, Craigslist and others). The music industry fought a downhill battle not to let CDs be replaced by replaced by (initially pirated) digital distribution.
In both cases the shift to the internet was inevitable, because the new technology offered a better process with superior customer experience at lower cost. The question here is if, had the dominant players faster reacted to the new medium, would they have retained (a larger part of) their dominant market position?
Cutting out the middleman?
One of the argument of p2p lending companies is that they are “cutting out the middleman”, meaning the bank out of the lending process. The way p2p lending works today, that is an argument open to attack. Continue reading →
While online platforms may never replace conventional lending institutions, such as banks, it is important that the community development finance industry be aware of this emerging technology. Moreover, P2P finance platforms will continue to evolve—allowing for third-party issued loan sales, for example—which may fundamentally alter the way credit is allocated in the future. In either case, the potential community development finance implications are too significant to ignore.
