Deutsche Börse Venture Network adds Swiss p2p lending marketplace Cashare to its program. The program by the German stock exchange is designed to aid innovatice companies to get better access to financing from investors.
Cashare was established in 2008 and facilitates loans to consumers and SMEs in Switzerland on its marketplace. According to the website 1,111 loans have been financed. Due to regulatory reasons each loan can be financed by a maximum number of 20 different investors.
There have been some indicators in the past weeks that Zopa is working to restructure the offered product and to re-introduce a non Safeguard offer to investors. But it was only todays the Zopa announced the details.
This is the announcement email:
Today, we are very excited to announce the next generation of Zopa lending products!
Over the past months we’ve been listening to our lenders about what they want from their lending products, and what matters most when it comes to lending through our platform. You’ve told us ease of access and the ability to take on more risk are key to offering a broader, more appealing product set. Based on your feedback, we’ll soon offer more choice and providing benefits from recent regulatory changes, particularly around the tax status of peer-to-peer interest.
In mid March, we’ll be replacing our existing lender products with three new ones: Zopa Classic, Zopa Access, and Zopa Plus. Together, these products will offer much more choice and flexibility to both existing and new Zopa lenders. As with all peer-to-peer lending, your investments are not covered by the Financial Services Compensation Scheme (FSCS), so your capital is at risk. If you wish to access your money by selling your loans, this is dependent on other lenders being available to purchase those loans.
We are sharing indicative rates today, and exact rates will be announced on 1st March. As with our existing rates, the new product rates will vary with the market, so if borrower interest rates go up, the rates on your new loans will go up too and vice-versa.
The New Zopa Products
Zopa Classic (4-5%) – Safeguard lendingÂ
Zopa Classic will give customers the security of Safeguard and access to their money at any time, subject to a 1% fee. This product is most similar to what our lenders have today, however what’s new is that it combines 1-5 year loan terms.
Zopa Access (3-4%) – Safeguard lending with fee free easy accessÂ
For customers who value easy access to their money, we’ve created Zopa Access, which has Safeguard but which has no access fee and a slightly lower expected return.
Zopa Plus (6 -7%) – Non-Safeguard lending, some added risk with higher returnsÂ
For customers who are willing to accept more risk for higher returns, we’ve created Zopa Plus. Over the last year we have been testing the performance of D and E rated borrowers with our institutional lenders, and based on these tests, we would like to offer loans with D and E rated customers to all lenders. With the introduction of Zopa Plus, customers can lend across A*-E risk markets. Loans in Zopa Plus are not Safeguarded, and so it will suit customers who don’t require this additional security as they are comfortable lending their money via Zopa’s diversification model. Predicted rates of return will be higher but will come with some additional risk.
When the new products launch, what will happen to customers’ loans that are in the short and long products?Â
If you’re a current Zopa lender, then as we retire the existing short and long products, your repayments will cycle into the new Zopa Classic product. So the rates will stay the same on your existing loans, but as they get repaid, the repayments will be used to buy new loans within the Zopa Classic product.
How will customers be able to have multiple products? How can they be funded?
Customers will be able to have multiple lending products with us – you can have an Access, Classic and Plus product – however only one can be selected for new funds at any given time.
If you are an existing customer and you wish to move your existing loans from Zopa Classic into one of the other new products, you can choose to turn off re-lending and allow repayments to collect within the holding account and then allocate those funds to a new product. Alternatively, you may sell your loans and purchase new ones within a new product.
In my view there are 3 major aspects:
According to the FAQ, all of the new lender products will be available for the IF-ISA.
Lending Club announced the result for the 4th quarter of 2015 today. I added the results document here:
(Source Lending Club).
Lending Club reported the results for the 3rd quarter today.
Financial Highlights are:
“We had another spectacular quarter, with revenue growth re-accelerating from 98% to 104%, and EBITDA jumping 181% year-over-year to reach 18.4% margin ,” said Lending Club founder and CEO Renaud Laplanche. “With over 1.2 million customers, continuously high customer satisfaction, strong credit performance, increased marketing efficiency and lower customer acquisition costs, we are continuing to observe tremendous network effects and benefits of scale. Our results this quarter combined with our raised Q4 outlook lead us to forecast a near doubling of revenue again this year and look toward 2016 with high confidence.”
Lending Club opened to retail investors in nine new states, bringing investor base, which is very sticky, to over 100,000.
Small business loans grew in line with expectations.
Traditional banks do not benefit from network effects. Lending Club on the other hand does benefit strongly from network effects. All these dynamics lead to lower acquisition costs and higher margins.
From the Q&A of the earning call:
Source: Lending Club Continue reading
Today Lending Club announced that it opens to investors from Texas and Arizona. Lending Club is now open to retail investors from 30 US states.
“We are delighted to announce the addition of two key states today, which we believe will help drive more individual investors to our platform,” said Lending Club CEO Renaud Laplanche. “Our marketplace gives investors unprecedented access to consumer credit as an asset class, and empowers investors to diversify their investment across hundreds or thousands of loans. We are thrilled to be able to bring this access to investors in Texas and Arizona and appreciate the work done by the state regulators that allowed this to happen.”
When was the last time you stood in a long line outside your bank branch, patiently waiting to deposit money into your savings account? Imagining a scene like that seems ridiculous at a time with near-zero interest rates in an increasingly large number of developed countries.
But there where you would least expect it, in the Fintech world of fast-moving bits, some startups actually are imposing measures to throttle influx of investor money in order to balance it with borrower demand. Welcome to p2p lending (short for peer-to-peer lending). The sector is experiencing tremendous growth rates. With attractive yields for investors some platforms struggle to acquire new borrowers fast enough for loan demand to match the ever-rising available investor demand.
One challenging factor is deeply ingrained in the business model of p2p lending marketplaces: once a new investor is onboarded and found the product satisfactory, he is most likely to stay a customer for years to come and reinvest repayments received and maybe the interest also. On the other hand the majority of borrowers are one-time customers. They take out a loan typically just once. While it may take years for the borrower to repay that loan, in most instances there is no repeat business for the marketplaces. So the marketplaces have to constantly fire on all marketing cylinders to win new borrowers in order to keep up and grow loan origination volume.
This has sparked some outside of the box thinking, e.g. the partnership of Ratesetter with CommuterClub to win their loan volume, which is in fact mostly repeat business.
Winning investors has been relatively easy for many of the p2p lending services in the recent past. Investors are attracted typically through press articles or word of mouth. One UK CEO told me he never spent a marketing penny ever to acquire investors.
But what happens on the marketplace, when there are so many investors waiting to invest their money in loans, but loans are in short supply?
The UK p2p lending sector is eagerly awaiting the sector to become eligible for the new ISA wrapper. Inclusion into the popular tax-efficient wrapper will attract an avalanche of new investor money to the platforms.
“That’s going to be a challenge for the industry,†said Giles Andrews, CEO of Zopa. “Once the dates are worked out, the industry will need to plan for that together, and we may have to do something we have never done before, which is to limit the supply of money. It’s not good to have people’s money lying around [awaiting new borrowers] or to lower standards of borrowers.â€[1]
So there is some speculation that UK p2p lending services could impose temporary limits on new investments.
The investor viewpoint
The aim of the investor is to lend the deposited money easy and speedy into those loans that match his selected criteria/risk appetite. Idle cash earns no interest and will impact yields achieved (aka cash drag).
For the retail investor none of the above mentioned mechanisms are ideal. The “fastest bidder wins†scenario means he would either have to sit in front of the computer most of the time or be lucky to be logged in just as new loans arrive. The queuing mechanisms are disliked as they can prove to be very slow in lending out the funds and can be perceived as nontransparent (see the lengthy and numerous forum discussions on the Zopa queuing mechanism). Underbidding in auctions does provide the chance to lend fast, but at the risk of setting the interest rate too low and this requires a strategy and can also be time consuming.
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