The first P2P lending platform in Lithuania, SAVY, is organizing their second annual P2P lending conference on the 23rd of March in Vilnius, Lithuania. Guest speakers from all over the world, including the co-founder of LendIt Conference Jason Jones and the leaders of the top Baltic P2P lending companies – Mintos, Bondora and SAVY, amongst others, will engage in a number of panel discussions and presentations.
The conference will be focused on the possibilities of P2P lending and Crowdfunding, while the participants will touch some important topics related to the prospects, challenges and trends for Alternative Financing on a global scale and in the Baltic region specifically, as it offers a considerably higher return on investments than most Western European countries.
Live stream of conference starting at 13:30 GMT+2 on March, 23rd
*Sponsored post: This post was paid for by Savy.lt, the conference organizer. I rarely publish sponsored posts, but in this case I thought the content is a very interesting fit for the blog audience.
Today I am in Prague at the P2P Investing Day organized by Symfonie Capital. There are several Central and Eastern European marketplaces present like Bondora, Finbee, Estateguru, Zlty Melon, Symcredit and Zonky, but also Lendinvest and Ablrate from the UK. The content of the panels and presentations was not as basic as in last year’s conference. I’d estimate about 150-200 attendees.
One interesting discussion centered on the differences between a bank loan and a p2p loan for a SME loan borrower that has problems to make the payments. One argument was that the advantage of a p2p lending marketplace is that it can be more flexible in finding a solution, e.g. by prolonging the loan term – having power of attorney granted by investors it is free to find a solution it deems right for the situation. The counterargument was that the platform should adhere to a rather strict set of rules since it owes its investors predicitability. Personally I understand both views but as an investor I prefer platforms to stick to a predefined process, because only that will make collections and defaults rates predictable. If there is too much flexibility and on the spot decisions it will be very hard to statistically evaluate platform performance and development for troubled loans over time.
One interesting anecdote was mentioned by Lucie Tvaruzkova, CEO of Zonky, a consumer loan marketplace in the Czech Republic, launched several month ago. She said that at the moment there is a waiting list of 7,000 investors wanting to use the platform but to scale it properly in line with loan demand, she lets those in only bit by bit. So far 5,000 investors are already active on the platform.
Panel on consumer focused platforms with representatives of Savelend, Bondora, Finbee and moderator Michael Sonenshine
David Bradley-Ward, CEO of Ablrate, told me that he expects to put more airplane loans on the platform in 2016 than in the previous year, but has to be selective in which loans fit the investor appetite. He also says the situation gets easier as he now has institutional investment in place that can pick up loan parts that would otherwise go unfunded by institutional investors.
I liked the panel that had 3 SMEs, that borrowerd through a p2p loan, on stage, as this gave an interesting change of perspective. Continue reading →
LendIt Europe conference in London, where I have been the last three days, was a special highlight for me. The expertise and knowledge level of the attendees as well as the quality of the presentations is outstanding. The number of attendees jumped from from about 450 last year to more than 750 this year. And it was a chance for me to chat with representatives of many European p2p lending marketplaces.
Insurance company Aegon will invest 150M Euro on Auxmoney Dutch insurance, pension and asset management Company Aegon will invest the amount in German consumer loans on the Auxmoney marketplace. This is a major move for both Auxmoney and the industry as it is the first big institutional investment coming form an insurer. It shows the industry has matured enough to attract capital from a clientele which is deemed rather conservative and long-term oriented in their investments.
Peter Renton opening Lendit Europe conference (Source: Lendit Europe; photo used with permission)
There are so many things evolving and it is sometimes hard to see which are the most relevant ones. And it certainly is a question of perspective. But from my view the three biggest developments are
1. Institutional investors will increasingly dominate the investor side
There is quite a consensus among most of the p2p lending marketplaces that institutional capital is very important for growing and scaling the marketplaces. While marketplaces value a mix of capital sources and many of them feel an obligation to retail lenders, which allowed the industry to create itself, the volume will be increasingly dominated by institutional investors. One way some platform see as a route to cater for a broader base of retail investors is to create funds that allow retail investor to buy into this asset class through traditional distribution channels. Still those platforms that are open to both kinds of investors pledge to guarantee equal access and not allow institutional lenders preferential access.
The ‘Up and coming European platforms’ panel I moderated with panelists from Investly, Lendix, Mintos, Zencap and Fellow Finance (Source: Lendit Europe; photo used with permission)
2. Continued expansion in additional geographies
The headline news with the merger of Funding Circle and Zencap fits into the bigger picture as many platforms are moving beyond there national market. Examples include:
Matthias Knecht said that Funding Circle deems the Italian and French markets for SME loans as attractive targets for further expansion
Afluenta exanded into Peru and will expand into Mexico
On the other hand Aaron Vermut, CEO of Prosper, said at the dinner event ‘Global trends in consumer lending’ (thanks again for the invitation to that -it was very interesting) that Prosper has no plans to expand into other geographies, as that would distract Prosper too much and all activities are focused on the US market which offers a huge potential for further enormous growth.
3. The UK market offers a perfect environment for p2p lending companies
The UK market is a market were all puzzle pieces are falling into place and offer p2p lending marketplaces (and other alternative finance companies) an environment that has no parallels in any other country
The leading p2p lending marketplaces set up the P2PFA with represents about 90% market share (by volume) and was successful in getting heard when it came to new regulation
Regulation is specifically tailored considering aspects of p2p lending
The regulatory body FCA actually welcomes, if there are new entrants in the markets. In his speech Financial Conduct Authority Director of Strategy, Christopher Woolard, in essence said that the FCA thinks that the more new platforms are entering the market (providing they meet the minimum requirement) the better.
The government is highly supportive with new tax rules that allow offseting defaults against earned interests and investing into p2p lending through the new alternative ISAs
Given these preconditions analyst Cormac Leech is predicting that alternative finance companies might take away as much as 20-30% of bank’s consumer lending activity and more than 40% of banks SME lending activity over the next 10 years. Banks are still looking to find out what an appropriate startegy is to respond to that, and according to Matt Hammerstein of Barclay they’ll need to execute the strategy fast, once they defined it.
The debate on how this asset class will fare in the next recession is still ongoing. Continue reading →
Yesterday I spent my day at the ‘Whatthefintech 2’ event at Startplatz Cologne. The attendees were an interesting mix from startups, banks, service companies and interested users.
While none of the pitches and startups were focused on p2p lending, it was highlighted several times as one of the use cases. An interesting discussion evolved around the question whether startups have sustainable business models or just fill in a gap that is there for a limit time span. One argument was that too many fintech startups just add an incremental improvement rather than solve a big problem. An example given was that many startups can deliver a much better user experience than banks, so they win users now. But banks are learning and will catch up on the field of presentation and user experience and when the playing field is leveled then the startup has not much to show as the data and backend processes are still owned by the bank.
I think this is an important point but one that is answered by p2p lending marketplaces – they have a business model that adds real value by offering a more efficient process than banks do. While some p2p lending marketplace use and cooperate with banks, they certainly have developed own technologies which are a core for their product and are not a mere sales-frontends as some of the criticized fintech models.
The banks certainly are eager to open up to the developments. Jana Koch of comdirect bank presented the ‘Startup Garage’ program of comdirect bank, which is a essentially co-working space with mentoring from the bank professionals for teams which have just an idea yet and want to bring that to the first development stage. The bank pays the team to enable them to concentrate on the development of their idea, but does not expect equity or ownership of the idea. From the banks viewpoint the program will be kind of an outsourced research and development offering fresh impulses to the thinking of the bank’s executives.
Some other viewpoints out of the banking sector surprised. Two persons from major banks stated that they expect the branch to play a very important role in the next 20 years as a sales channel for banks and only thereafter to become obsolescent. Maybe this is the paradox that Bankstil also commented last week. What banks publicly say is that the branch is essential and used even by their young and technology liking clients. But what they do is that they close branch after branch after branch.
I liked the presentations, especially those by Peter Barkow who talked about the relationship between German fintech and venture capital and Gernot Overbeck of Fintura, a comparison tools which promises to find the cheapest bank loan for SMEs within 15 minutes and close it within 72 hours.
The pitches of the 3 pitching fintech startups were well crafted (they had 7 minutes each).
As usual the most interesting part for me was the networking.
I am really looking forward to the next conference I’ll attend, which is LendIt in London in 2 weeks. If you register you can still use discount code wiseclerkvip to get 15% off.
Impression from the event. More photos on Twitter.
LendIt Europe will be held in London on October 20-21, 2015. LendIt is the major conference for the p2p lending industry with venues in New York, San Francisco, China and London. I attended Lendit London last year and can recommend it to anybody in the p2p lending industry. You can read my Lendit Recap 2014 here.
With the event only 3 months away and registration open you can now grab tickets at earlybird pricing. Earlybird price for the conference is 495 GBP (plus VAT), price will go up to 895 GBP (plus VAT) after July 31st. For my valued blog readers I obtained Lendit discount code wiseclerkvip – enter this voucher code on the payment page and you get a special 15% discount on the ticket price.
LendIt Europe will bring together the leaders and pioneers at the forefront of the p2p and online lending industry in Europe. In addition to the leading lending platforms, LendIt Europe is expected to draw institutional investors, financial analysts, private wealth managers, family offices, individual investors, and media representatives from across the globe.
LendIt Europe 2015 will be a two day event with the second day in partnership with the UK P2P Finance Association (P2PFA). Agenda, speakers, and sponsors will be announced in the coming weeks.
The conference at the Hilton Metropole Hotel will feature keynotes from the CEOs of the leading UK platforms, as well as interactive panel sessions with leaders from across Europe. There will also be a pre-conference cocktail party held the night before at the Landmark Hotel.
I am looking forward to LendIt London and hope to see you all there! For those of you who can’t make it – the event will be broadcasted live on the internet.
Yesterday I attended the ‘Between the Towers‘ event in Frankfurt, which is organized by Mainincubator, the Commerzbank backed fntech incubator. The event format features a keynote speaker, followed by 4 startups delivering 7 minute pitches. Continue reading →