MYC4 Chickens Out – Closes Forum

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P2P microfinance platform MYC4 has closed its discussion forum. Links to the forum have been removed from main navigation.

The official explanation on the blog says: “The forum was originally created to ignite a dialog among the investors.  We haven’t seen all that many sparks recently. Most of the posts on the forum in the last year have been either investors asking specific questions to MYC4 or MYC4 communicating news to the investors. Not much dialog.

We decided to try something different, so we created a blog.

… You can still write questions to the Partners on the forum. But the other topics have been frozen. You can find all the old posts there, but you can’t write any new ones.”

It seems weird to argue that a forum is replaced by a blog because a forum is not fit for dialog. My impression is that the MYC4 forum had 3 aspects which can have caused the removal:

  1. Lenders pinpointed things that were not working properly on MYC4 (e.g. default levels, certain processes, provider quality). They kept track on the results following up earlier announcements of MYC4 on measures taken.
  2. In many cases answers by MYC4 did not satisfy the persons asking. This negative customer experience became publicly visible through the forums, possibly deterring new lenders.
  3. Possibly answering questions in the forums tied up to much staff time (but I would expect that the same questions are now send via email, therefore closing the forums does not change this issue)

So I do feel that MYC4, a company that at it’s launch trumpeted utmost transparency goals, chickened out. They no longer want to discuss and face customer demands and criticism in public, but rather elected to replace it with a blog, which is much more a one-way-communication channel.

Everyone is invited to continue the discussion on the MYC4 forum here on Wiseclerk.com.

Continue reading →

Zopa Rapid Return Secondary Market

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One of the disadvantages for lenders in many p2p lending markets is that money lent cannot be withdrawn early during loan terms.

Zopa UK now introduces a secondary market called ‘Rapid Returns’, which allows lenders to cash out on all or selected market loans early. To do this a lender simply selects all or specific markets to ‘sell’ his loans.

For each of these loans, the system looks for other lenders offering to the same market at the same or a lower interest rate. Where a match can be found, each loan is then permanently transferred to the lowest bidding lender in that market. The winning lender will then earn the interest rate that the previous lender was getting on that loan, even if they offered at a lower rate. The lender receives the total outstanding capital on the loan from the offered funds of the winning lender.

Zopa deducts a 1% admin fee from the transferred capital.

There are some limitations: Loans made through ‘Zopa Listings’ are not eligible. Also excluded are loans where the borrower ever has missed a repayment. Some more restrictions apply.

And of course there needs to be a matching lender offer with a rate low enough.

Asked why lenders can not bid on loans on offer – thereby buying at a discount or premium – a Zopa employee explains:
“What you describe here is a true secondary market which …, we are not regulated to provide. I hope all will become clear when the full functionality is available in the next couple of weeks.

Our overarching rule when developing Rapid Return has been that it should allow lenders who want to exit some of their cash to do that. It is not designed to tinker with a loan book – in particular we wanted to avoid a scenario in which an experienced lender could cash out of some loans at the expense of an inexperienced lender.
As a final note on the ‘never missed a repayment rule’ – we started development with this rule as ‘not currently in arrears and hasn’t missed a repayment in the least three months’ but when we looked at the proportion of the total loan book for each, there’s a negligible difference. It’s therefore much clearer and fairer to go with the former.”

Currently Rapid Returns is only collecting offers on the buying lender’s side, letting lenders amend their bid offers to include Rapid Return loans. The feature will actually go live in a couple of weeks. Then selling lenders can mark their loan books for sale.

I expect that the Rapid Returns feature will further boost Zopa’s growth in the British market. Congratulations.

Quakle – Exotic Newcomer in Britain’s P2P Lending

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Quakle.co.uk launched in summer as a rare bird in p2p lending. Instead of using credit rating data to gauge the borrowers Quakle set out to base its rating on social connections tied online. Quote from then: “The trustworthiness of the borrowers is assessed by the lenders only. Quakle believes that social bonds strengthen confidence and make borrowers more likely to repay. In addition we are convinced that getting dozens of people to trust you is, at least, as much difficult as building yourself a high credit score. It is then the responsibility of a lender to choose whether to lend money to borrowers who are active members of user groups and have a good social rating.”

Recently Quakle reconsidered and adapted its approach. Now the site uses Experian data to credit score the borrowers. Director Josselyn Digny told P2P-Banking.com: “We changed the information collected on borrowers after we’ve got some feedback from lenders and potential lenders that they would not lend out money to borrowers if their credit history was not reviewed at all“.

A recent press release phrases the new message: “Quakle, the online peer-to-peer lending community, allows people to lend money to each other in a friendly and structured way, while cutting out the banks. Quakle credit checks its borrowers but is different from other peer-to-peer lending websites in that members also have a ‘reputation score’. This score is based on their individual behaviour and that of any group they may be part of within the site. This peer group system encourages people to be financially responsible.”

The company still suffers from a shortage of lenders and offers a 30 GBP reward on first bid for new lenders as registration incentive. Furthermore there are no fees for lenders. Continue reading →

Smava Subsidized Loan Promotion Ends With Little Success

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Smava in the time from September, 15th 2010 to October, 15th 2010 offered subsidized loans to new customers (borrowers). The offer was limited to loan amounts up to 2,500 Euro and only available for 36 months loan terms.

Eligible borrowers could take out a loan at an APR of 2.99%. Since lenders received “normal” rates (typically between 5 and 13% nominal depending on credit grades) Smava subsidizes the difference. Over the duration of 36 months this will cost Smava about 150 to 300 Euro per loan.

According to Wiseclerk stats about 150 loans with a total volume of 350,000 Euro closed at the reduced rate.

Reasons for this marketing promo

Smava did not comment about the motives behind this offer. While the resulting CPO of this offer is higher then with other marketing channels, Smava could have speculated that the press picks the special offer and that the traffic from the generated press coverage leads to additional loan requests that are not eligible for the offer. Furthermore the rate of 2.99% APR could place Smava prominently ranked on loan price comparison sites.

Results

In my opinion this offer had low success. Judging by economic facts it might be considered a failure. Little additional press coverage was generated by this special offer. The total loan volume funded per month did not rise compared to previous months. The offer might aid the positive image of the Smava brand though.