P2P lending volumes grew further in November. Prosper points out that the slight decline was to be expected due to less origination days in this month. Looks like Funding Circle and Ratesetter are catching up on Zopa in Britain. I do monitor development of p2p lending figures 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. Next month I expect to add figures for two more services to the table.
Table: P2P Lending Volumes in November 2013. Source: own research Note that volumes have been converted from local currency to US$ for the sake of comparison. Some figures are estimates/approximations.
Notice to p2p lending services not listed: If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.
Daric will enter the US p2p lending market. I conducted an interview with CEO Greg Ryan in summer. I am publishing it now, as he has notified me that Daric will launch soon.
What is Daric about?
At Daric, our vision is to provide a platform to serve people that have capital and people that need it in an efficient, friendly, and easy to use way. We believe that being a Silicon Valley based internet platform, we can leverage new technologies to increase transparency in the financial system, use algorithms and automation to help both lenders and borrowers make better financial decisions, and increase access to capital for the community as a whole.
What are the three main advantages for lenders?
1. We have placed a great emphasis on the user experience and user interface of our platform (applies to both lenders and borrowers).
2. The ability to monetize hard assets (we will go into greater detail after we have established our cash based system).
3. Providing another platform for p2p lenders to deploy their capital on. By spreading out their capital on several platforms (Daric, Lending Club, Prosper, etc.), we can provide lenders with proper diversification which therefore reduces risk.
What are the three main advantages for borrowers?
1. We have placed a great emphasis on the user experience and user interface of our platform (applies to both lenders and borrowers).
2. We want to expand beyond the debt consolidation model currently used by the industry leaders.
3. Daric provides another source of capital for borrowers that need it. Borrowers greatly benefit by numerous sources of capital.
Which marketing channels will you use to attract lenders and borrowers? Can you share the projected acquisition costs per customer?
Daric intends to acquire both lenders and borrowers through internet based marketing initiatives. However, we feel the most powerful way to acquire users is through word of mouth. If we provide great value and service to both our lenders and borrowers, we hope they will tell their friends about us. There is no marketing tool that is more powerful than a positive referral from someone you know and trust. Continue reading →
P2P lending volumes grew strongly in October. I do monitor development of p2p lending figures 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.
Table: P2P Lending Volumes in October 2013. Source: own research Note that volumes have been converted from local currency to US$ for the sake of comparison. Some figures are estimates/approximations.
Notice to p2p lending services not listed: If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.
UK p2p lending service Funding Circle which facilitates loans to businesses has raised 37 million US$. Funding Circle, launched in 2010, has raised a total of 58 million US$ venture capital now. The series C funding round was led by new investor Accel Partners, with participation from Ribbit Capital (another new investor) and Union Square Ventures and Index Ventures.
Funding Circle also announced that it will merge with smaller US service Endurance Lending Network. Launched in 2011, the Endurance Lending Network has carved out a niche working with fast food joint franchisees but is not releasing its loan volumes, although they are understood to be considerably lower than Funding Circle’s. Funding Circle says that, combined with its back-end technology platform, Endurance’s established team of around 15 employees with experience of the US market will help it crack America. The entire Endurance team will stay on at the firm, which will re-brand as Funding Circle as it targets what the Small Business Administration estimates is a $100 billion funding shortfall in the US economy.
In the US, the model will be modified says Samir Desai, CEO of unding Circle: lending will only be open to accredited investors. This is partly because of regulatory issues.
This is a very big step as it is the first merger of large p2p lending service and at the same time the first international merger. Funding Circle will be able to target a huge market.
I have been following and using Zidisha for years. Today I am glad to be able to publish another interview with Julia Kurnia, Director and Founder of Zidisha Microfinance. An earlier interview conducted 2011 is here.
Zidisha celebrates its fourth birthday. What is the current status?
Four years ago, Zidisha launched as the first direct P2P lending platform to bridge the international wealth divide: We linked economically disadvantaged individuals in some of the world’s poorest places directly with individual lenders and allowed them to transact each other directly.
This went against conventional wisdom because it had always been assumed that this demographic could not use web-based services and needed local organizations to serve as a go-between. For example Kiva, which pioneered online fundraising for microfinance, contracts with intermediaries in each country to manage the loans and communicate with lenders on the borrowers’ behalf. Before Zidisha, nobody had attempted to connect people in developing countries to the international P2P lending market.
What we have learned in the past four years is that direct P2P lending across the international wealth divide is not only possible, but that the benefits are even greater than that of domestic P2P lending services. Banking services in developing countries are so inefficient that borrowers routinely pay interest rates of 50% or more, if they can access loans at all. With Zidisha, borrowers pay a transaction fee of 5% and can then choose to offer interest of 0% to 15% to lenders.
We’ve funded over 3,000 loans in the past four years, and so far their repayment rates are a bit better than those of small business loans in the United States. To date, 90% of the loans that are due to have been repaid have been repaid with interest, 5% are repaying late, 2% have been forgiven by lenders who opted out of repayments and 3% have been written off due to default or catastrophe suffered by the borrower.
Compared to p2p lending services Zidisha’s growth/loan figures are moderate. What reasons do you see for this difference?
The moderate pace of growth is mainly due to the fact that we are pioneering something that has never been tried before: a P2P lending community that connects people directly, without any intermediaries, across previously impregnable barriers of location, social group and culture. There is no precedent for this, no established best practice to follow. So we are scaling slowly, and continuously adjusting our lending model in response to experience.
How difficult is it to enter a new country to allow more borrowers to use Zidisha?
That varies a great deal, depending on the ease with which we can integrate with local money transfer services in each country. In Kenya, we use the M-PESA mobile banking service to send the loans directly to our members’ cell phones, and that is really an ideal solution.
We do not have brick-and-mortar offices or employees in borrowers’ countries; all of our application review and payment transfer services are provided remotely over the internet. Volunteers – both international interns and local community members – frequently visit borrowers and offer information sessions, but they do not manage loan transactions in the way traditional loan officers would. So once we are able to open a cost-effective electronic payment channel, that is really all we need to enter a new country.
Is the currency risk an important factor in Zidisha’s operations?
At Zidisha, lenders assume currency risk: they can lose money if the borrower’s currency depreciates against theirs over the course of the loan. One would expect that this would cause lending volume and interest rates to rise and fall in response to exchange rate fluctuations, but this had not happened for the most part. I think the reason is that lenders consider participation in Zidisha to be a philanthropic activity. They pay more attention to the social impact of the loans than the financial returns.
P2P lending volumes grew again in September. Lending Club originated more than 200 million US$ in loans in one month. I do monitor development of p2p lending figures 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. This time I added Folk2Folk to the table.
Table: P2P Lending Volumes in September 2013. Source: own research Note that volumes have been converted from local currency to US$ for the sake of comparision. Some figures are estimates/approximations.
Notice to p2p lending services not listed: If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.
