Are we headed for the next bubble? The book ‘Technological Revolutions and Financial Capital – The Dynamics of Bubbles and Golden Ages‘ won’t answer that question. But it does a good job analysing technological changes in the past and identifying patterns. The author Carlota Perez develops a model of the repeating interplay between finance and the drivers of technological evolution. Published in 2002 the book’s content seems timeless. I recently read it and can recommend it. Available at Amazon US, Amazon UK and Amazon DE.
Interview with Alejandro Cosentino, CEO of Afluenta
What is Afluenta about?
Afluenta is a leading marketplace lending company in Latin America (LatAm) who connects creditworthy borrowers with investors, to create more convenient loans and better investment opportunities. Our advanced technology provides an innovative investment alternative for individuals and institutions lenders interested in getting better yields through investing in consumer loans without the traditional middleman.
What are the three main advantages for investors?
There are not many alternatives for investors across LatAm emerging markets. We believe that Afluenta is a truly new alternative with a potential high net yield and low volatility but being specific Afluenta provides:
- Better yields compared with traditional banking products since Afluenta removes banks, as intermediary, and allows to distribute the traditional banking spread between borrowers and lenders.
- It’s simple, secure and easy to understand and operate.
- There are many features on the platform to facilitate the use and trading fractional loans such as the Secondary Market which allow lenders to have liquidity.
What are the three main advantages for borrowers?
Although, compared with investment alternatives, there are plenty of choices to get a loan in our region, those alternatives are not cheaper, convenient or hassle free for borrowers so we designed a better loan processes and conditions to provide:
- Access to cheaper loans than those they can get in the traditional financial institutions
- Get loans faster. Applicants get a response about the loan admission in 20 seconds and the loan is funded in approximately 3 days so they get the money much faster.
- The entire process is hassle free. Potential borrowers just complete a short application and not are requested to provide physical information. 100% of the process is online.
What ROI can investors expect?
The net yield that investors can expect is, swapped in US dollars, an average of 21.5%. The loans are provided in local currency and always will be in local currencies no matter the country we will be operating in.
How did you start Afluenta? Is the company funded with venture capital?
Afluenta was born in 2010 but for many years I had it in mind since I had a great experience in financial services obtained running American Express in LatAm as well as in Santander in Argentina and worked in Tech industry also in LatAm. In 2011 we fund raised from an angel investor to develop our technological development and then we got the approval from the Argentinean National Securities Commission to launch our operation initially in Argentina in September 2012. Since then we have grown to a large number of loans people to people
Afluenta was initially funded with my savings, then we got two fund raising rounds, Angel one and Series A (both of them Argentinean investors). We are about to close our Series B with US VCs and international institutional investors to support the regional expansion process.
What were the main milestones since your launch in 2012?
We set the rules for this industry in Latin American region. We operate as Lending Club or Prosper do their business in US. Afluenta is the first authorized P2P marketplace in the region. We solved the regulatory and tax issues initially in Argentina and then in Peru using current legislation allowing us to run a marketplace lender without asking for new laws or changing current regulations. On the other side, our technology is world class and Afluenta developed innovative features for lenders to operate simple, faster and profitable such as secondary market, automate investing, CRM of collections among other and add 100% transparency of all the data in the investment platform. Continue reading
International P2P Lending Volumes November 2015
The following table lists the loan originations for November. Funding Circle overtook Zopa measured by new volume followed by Ratesetter. I added two more platforms to the list. I do monitor development of p2p lending statistics for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.
Investors living in markets with no or limited choice of local p2p lending services can check this list of marketplaces open to international investors.
Table: P2P Lending Volumes in November 2015. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.
Notice to p2p lending services not listed: Continue reading
P2P Lending in Ireland
This is a guest post by Derek Butler, CEO of GRID Finance
The Market
The peer to peer lending market remains small in the Republic of Ireland. Across all types of peer to peer finance (donation, equity, lending and donation) we estimate that the size of the market in Ireland in 2015 is a maximum of 50 million EUR. This is however growing quickly, particularly with the arrival of Kickstarter in 2014 to the Irish market. GRID Finance is one of two peer to peer lending platforms in the Irish market – both provide access to small business loans. There are currently no consumer focused peer to peer lending platforms in Ireland. GRID focuses on small business loans up to €75,000. Irish based peer to peer lending platforms are both an alternative and competitors to the Irish banks. In aggregate, 4 billion EUR in small business lending is secured by Irish SME’s (Small, Medium Enterprises) annually.
Small business lending in Ireland continues to be dominated by AIB and Bank of Ireland, the two ‘Pillar’ banks of the Irish banking system. These banks struggle to serve the small business lending market due to the cost of product delivery, credit risk profiles, regulatory challenges and legacy distressed debt issues in the sector.
The Irish government has recently launched a platform investment fund, through the Irish Strategic Investment Fund, to support the development of platforms that originate loans online. This is another positive step in establishing the peer to peer lending market in Ireland.
Regulation
Peer to peer lending is not regulated in the Republic of Ireland. The Central Bank continue to monitor the space and are seeking a pan-European directive to regulate it. The recent announcement of the Action Plan for the Capital Markets Union has dispelled this as it outlines its reluctance to regulate the space at a Pan-European level while the industry is in its infancy. Local peer to peer lenders are seeking the Irish Government’s Department of Finance and The Central Bank of Ireland to support the development of the P2P lending space with a regulatory approach based on the UK’s FCA regime. The government’s strategy for the International Financial Services centre also calls for supporting Dublin as a premium location for Domestic and International Fintech start-up businesses. The introduction of a regulatory regime is key to building confidence and trust in this emerging sector and will act as a buffer from the arrival of weaker platforms into the market. Continue reading
Lithuania Will Regulate P2P Lending Starting February 1st, 2016
Lithuania will regulate p2p consumer lending starting February 1st, 2016.
The main requirements introduced by the new legislation in Lithuania are:
- 40K Euro of share capital required by the marketplace company,
- contingency plan in case of failure of the platform,
- limitation of 500 Euro investment per one loan,
- limitation of 5,000 Euros investment per platform for ‘inexperienced’ investors,
- marketplaces will be allowed to gain their revenue only from monthly instalments paid by borrowers. This means that all platforms will not gain revenue if their portfolio is not performing.
Laimonas Noreika, CEO of Lithuanian p2p lending company Finbee told P2P-Banking.com: ‘Once again Lithuania proved itself as a country with strict financial regulation. [The] new law gives more transparency to all – lenders, platform owners and public authorities. FinBee welcomes the regulation and invites international lenders to discover Lithuania as a country open for P2P lending.‘ Continue reading
LendingRobot Adds Functionality to Invest into FundingCircle US loans
3rd party service LendingRobot today announces a partnership with Funding Circle in the United States, expanding the reach of LendingRobot’s automated investment technology beyond consumer loans and into small business lending.
Through the integration, individual investors using LendingRobot can set automated investment strategies for Funding Circle’s marketplace based on an extensive set of loan filtering criteria, and leverage the unified platform to manage their investments across multiple marketplaces, including Funding Circle.
“Introducing Funding Circle to the LendingRobot family of platforms demonstrates that our algorithmic investment strategies are extensible beyond consumer credit,†said LendingRobot CEO Emmanuel Marot. “The growth of peer lending as an investment vehicle is naturally encouraging an increase in the number and size of focused, vertical marketplaces. What we are building with this partnership is a unified view of all the major aspects of peer lending for investors, …â€. Continue reading