Germany

Smava – 6 month after start nearly all current

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On March 24th Smava.de launched its peer-to-peer lending service in Germany. Time for a recap on how Smava fared in its first 6 month of operation. How Smava operates can be read in this earlier article.
First the very positive news: So far in only 3 cases borrowers missed payment dates and in two of these cases the borrowers payed with only a few days delay. Therefore only one loan is currently late, resulting in that more than 99% of all loans are current. On the usability and interface side there have been no problems or complaints, the interface is working as expected. Thereis however room for improvement, especially in the account section where the handling gets a little clumsy once the lender has many loans.

But despite receiving very positive and extensive media coverage Smava so far failed to achieve mass appeal. While Smava says it has over 13000 registered users, Wiseclerk figures show approximately 250 active lenders and 180 active borrowers.


Source: Wiseclerk.com

In the 6 month Smava handled a loan volume of 500000 Euro (approx 0.7 million US$), rather tiny compared to the loan volumes Prosper and Zopa handle. One move to foster growth was that Smava opened to lower credit grades in the beginning of August. While this led to a rise of loan listings (see chart below), fewer of the new loan listings were funded. But still over 50% of loan listings do get funded. It is to early to judge how the low credit rate loans will impact the default ratio.


Source: Wiseclerk.com

Possibly the main reason for Smava’s slow growth is the effficiency of German banking. German banks have automated the consumer loan process and small consumer credits have interest rates (APR) of as low as 4 to 5% (for best credit grade). At Smava the interest rates at which loans are funding have risen compared to launch date, voiding the argument that Smava offers better rates then a bank for many cases.


Source: Wiseclerk.com

Smava is still faring well in the absence of serious peer to peer lending competion. With Dutch Boober troubled by regulation worries, the long announced plans of Boober to expand into Germany have yet to happen. Smava avoided regulatory problems in the first place because it partnered with a bank, which fulfils all regulation requirements.

Like Prosper Smava has yet to define the benefit of groups, which exist but have no plausible way of influencing/reducing the default risk.

German Smava opens to lower credit grades

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The German site for social lending Smava.de today allowed borrowers of the lower credit grades G and H to participate. Previously only borrowers of credit grades A through F could participate. According to information published by Smava, 80% of the German population have credit grades in the range A-F, while credit grade G accounts for 10% and credit grade H accounts for 5% of the population.

This move is contrary to the development at Prosper.com which started with a very broad range of credit grades and only later restricted borrower access tighter.

However Smava, so far has experienced not one late payment. Three payment cycles have been completed with 100% of borrowers paying on time.

Other changes at the Smava site today included a lower minimum bid of 250 Euro (down from 500 Euro) and a higher interest rate ceiling (maximum interest rate 18%; up from 15%).

Smava affiliate program launch

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Last week at the end of my post on the Prosper referral program I suggested:

The next step for even more growth

Currently all referral programs mentioned above have one thing in common. They are open only to existing members of the p2p lending services. Assuming they are successful and the p2p lending serves are seeking opportunities to enable even faster growth then the next step could be to start an affiliate program through networks like Zanox, CJ or Affilinet.

And today German Smava.de has launched an affiliate program through Affilinet. Though probably not a result of my blog post (or is it?), it is nice to see the development headed in the direction I anticipated.

The Smava affiliate program pays 15 Euro for each referred borrower that creates a listing and 10 Euro for each referred lender (who completes process of opening an account).

(Source: p2p-kredite.com)

Boober limits allowed investment sum

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Dutch p2p lending service Boober.nl changed the rules last week. Lenders are now restricted to a maximum investment sum of 39000 Euro. Boober told users that this step confirms that Boober is a platform for individuals and not for professionals or companies. It is believed that this step was neccessary due to regulation.

German Smava has restricted lenders to a maximum of 25000 Euros since the start. This too, is a precaution, since under German regulation professional lending without a license is not allowed.