Estonia, Latvia, Lithuania
Here are some recently published articles on several p2p lending topics:
Sociallending.net: The Best Day to Borrow Money at Lending Club
P2P Lending News: Prosper and Lending Club Compete for Investor Market Share
CreditUnionTimes: Consultant Warns Banks and CUs Risk Becoming Passé
DoughRoller: Lending Club Investment Strategy (Update)
Janari Rahablog: Omaraha.ee laenude vahenduse portaal
GlobalVoices: Brazil: Crowdfunding Potential
More than 2 years have passed, since P2P-Banking.com published the first overview table of p2p lending companies. At that time the focus was to create a comprehensive list and to get a perspective on the loan volumes.
Today I want to look at a smaller selection of p2p lending companies and do a rating on more factors than just loan volume. While I describe below what factors led to my rating, please note that the rating represents my personal opinion.
The table lists the companies in alphabetical order and gives:
New loan volume per month
This amount is in most cases retrieved from the last month(s) figures from the company websites (if they have statistic sections), and then converted into US$ at today’s currency exchange rates. In other cases it is a rough estimate by me based on volume figures published in media in the recent past. For CommunityLend I failed to find a per month figure (the total figure from launch to mid-February is here).
Brand/Press
Extend and tone of press coverage in the past months. Since a large share of new users is introduced to p2p lending services via media, positive media coverage is extremely important. Continued positive media coverage has helped some companies to associate positive values to their brand.
Growth/Marketing
This column especially rates if the new loan volume is growing continuously month after month. Furthermore it puts the absolute volume into perspective to the size of the market. It is obvious that absolute numbers in a country with a small population (e.g. Canada) will be much lower than those in a country with a large population (e.g. US). Furthermore it takes into account if the (online) marketing measures of the the company succeed in winning new borrowers and lenders (though in most markets lenders do not need to be actively acquired).
Sustainability
Sustainability rates a mix of several factors:
User satisfaction
This rates the publicly voiced user opinion. Major factor are the comments in forums. To a lesser degree I took the user experience published in blog articles into account. The problem with lender experiences published in blogs often is that the writer is casting a positive image, since he earns commissions for newly referred customers through the affiliate program of the p2p lending site. Also these review are often written at the start of the lending activity at which point the lender’s ROI is naturally unharmed by the experience of defaults.
Empty fields: I had not enough information to rate these. E.g. with some of the new UK p2p lending companies I felt I had too few indicators to reach an opinion on the sustainability.
Availability of information also influenced the selection of companies. Due to language barriers including more services (e.g. the Japanese p2p lending companies) was not feasible for me.
Estonian p2p lending service isePankur successfully improved the loan quality in 2010. The company added several validation steps for loan applications. On top of the existing credit bureau checks and it’s own scoring model isePankur introduced several manual checks on the borrowers in May and July. Since September borrowers need to submit bank statements which isePankur uses to verify information presented in the loan application. The measures implemented are listed in detail here.
CEO Pärtel Tomberg told P2P-Banking.com: “… these [new] loans will … be the most profitable social banking loans for investors across the globe”.
To prove this claim Isepankur is publishing real time performance data on its marketplace.
(See Isepankur site for larger size interactive charts)
‘Unlike other companies you can see the quality of loans per month so the growth rate of the portfolio will not hide the actual returns from loans issued previously.‘ says Pärtel Tomberg.
The charts reflect the drastic reduction of bad debt from loans issued after May 2010 and the very positive impact on lender returns. Continue reading
A few days ago Finnish p2p lending site Fixura launched. The bilingual (Finnish & Swedish) site already lists over a hundred loan requests.
CEO Simon Sandvik told P2P-Banking.com:
This social lending company differs from the ‘standard’ ones as it does not provide lending auctions. Instead, the borrower sets his/her own interest rate, amount (1, 000 – 10,000 EUR) and duration of the loan. Then a Finnish credit scoring company processes the data and the borrower gets a one-to-five star rating. If a borrower is marked for payment issues in the past, the loan request automatically gets rejected.
… investors can also diversify their investments through different loans in 100 EUR lots. …
The company operates totally free of paper as it uses the local banks’ identification systems, a kind of e-signature. The investors can invest directly online and the borrowers can sign their contracts.
If a loan does not get fully funded the borrower can choose after 14 days from the first investment to accept a part of it, or reject it as he or she sees fit.
Currently investors pay 4 Euro for each withdrawal. Fees for borrowers are
Compared to other p2p lending services these fees are rather high.
Visualizations are great to show data that would otherwise just be a long list. I decided to create a map of the p2p lending landscape in Europe. It shows active and discontinued p2p lending services in Europe (including p2p microfinance). Not listed are sites that are in pre-launch stage. All of these marketplaces have been featured earlier in the P2P-Banking.com blog. If you want more information about any of them just enter the name in the search box on the top right of this blog.
Notice to other websites: You are free to copy and use this map, provided you agree not to alter or resize the image and you will set a link to this article.
Notice to p2p lending sites: If you want to be included in a future version of this map, contact me to learn how.
IsePankur, the Estonian P2P banking site, this recently added three innovations to their platform:
isePankur decided to add a new auction type based on requests from the borrowers that allows the borrower to choose if the auctions ends after a set time period or when its fulfilled 100 per cent. The borrowers currently have an alternative to borrow from banks, pay-day loan companies or isePankur. The two former institutions provide the loan to the customer with-in 1 to 3 days from the application. Hence some of customers asked to implement a system by which they would be able to choose between a quick financing or a low interest rate in order for them to be more willing to use the peer-to-peer platform.
isePankur also launched an important new feature allowing legal entities to register, lend and borrow on the site. The maximum loan amounts (only for companies) have been increased to 150,000 EEK (approx. 13,175 US$), approx 15 times higher than the loan limit for individuals. There were three major reasons for the addition: (a) small companies lack financing opportunities as the banks have stopped providing credit whilst there are no official debt markets in Estonia; (b) companies with excess funds do not have simple investment opportunities that would provide them with returns of over 3-4 per cent per annum; and (c) there is a 0 per cent corporate tax in Estonia hence most of individuals with excess capital keep it in their companies’ accounts. isePankur aims to increase the loan volumes on the site multi-fold after the public and companies have had enough time to get familiar with the benefits provided by the business services.