B2B Loans Introduced at Isepankur

wiseclerk 2 Comments

IsePankur, the Estonian P2P banking site, this recently added three innovations to their platform:

  1. Loan auctions that end immediately when the loan request is 100 percent funded
  2. Business accounts enabling Business-to-Business, Consumer-to-Business and Business-to-Consumer lending and borrowing
  3. An arbitrage court that will be in charge of solving disagreements coming from the loans, incl. defaulting loans

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.

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P2P Lending for Small Businesses Reaches France

eKwiti 1 Comment

Finally! We all long waited for a genuine P2P lending service in France.

FriendsClear launched on February the first a platform that enables small businesses to advertise their projects and ask for a loan up to 15,000 Euro.

Lenders can then apply for the loan for an amount between 1,000 and 3,000 Euro. If a project is validated, once it receives enough loans propositions.

The rates are fixed to 5% for the lender and 6.25% for the borrower. The spread finances the platform and their Bank partner: Crédit Agricole.

To ensure the seriousness of the projects, it costs 15 Euro to advertise a project. Most of the project information is only available to registered lenders.

To launch this service, FriendsClear organized a project contest. After the public vote (over 10000 votes), a jury will choose the best project between the five finalists. The winner will be rewarded by a prize of 10,000 Euro.

This enables serious business growth for the small startup FriendsClear. In order to support it, they recently raised new funds and it seems that they are looking for new co-workers on this project – but I couln’t find precise information on their recruitment needs.

This is very encouraging sign for finance 2.0 in France, and we believe that more will follow soon, from other actors but also from FriendsClear, which have many projects for the future (P2P for individuals, open a branch in another European country).

An interview of Friendsclear founder Jean-Christophe Capelli [in French]

Bigcarrots – P2C Lending in the UK

wiseclerk 1 Comment

Bigcarrots.com wants to bring business and lenders together. Peculiar name, isn’t it? Images from Bugs Bunny cartoons floated on my mind. Positive indeed – but not at all related to finance.

Bigcarrots applies the concept of peer to peer lending to funding companies. Lenders can lend in chunks of 25 GBP, and a company can apply for unsecured loans of up to 25,000 GBP for 3 to 36 months loan terms. Lenders even have the possibility to exit early by reselling portfolios on a reseller platform.

The level of information provided on the website is low, the FAQ is short. For example their is no description how the risk assessment of applying companies is done by Bigcarrots. The About section gives little information on the background of Bigcarrots. I used the contact form to ask for more information, but did not receive an answer.

The Innovation Process at Banks and why Neglecting P2P Lending Is Rational Behaviour For Bank Managers

wiseclerk 2 Comments

I finished reading “Innovation and the Future Proof Bank” (available at Amazon.com, Amazon UK and Amazon.de). The author James Gardner publishes the Bankervision blog, which I am a long time reader of.

Gardner defines categories of incremental, revolutionary and breakthrough innovations and further differentiates between disruptive and sustaining innovation. The book discusses innovation theories and models. Many examples and case studies are given. While the topic is innovation in banks, I felt that much of it applies to innovation in large companies that are incumbents in other industries, too.

An innovation team will evolve through 5 capacity stages: Inventing, Championing, Managing, Futurecasting and Venturing.

Gardner propagates Futurecasting as a method to assess trends from a strategic perspective. By building scenarios the innovator creates descriptive images of possible future impact of trends in combination with the banks approach on it.

Gardner uses p2p lending as an example in many chapters. E.g. in chapter 4.4 he creates analysis possible scenarios in a futurecast on p2p lending.
If you want to understand why so many banks currently ignore p2p lending as a trend the book offers some interesting arguments. However the other example often cited, Paypal, shows what happens, if banks wait too long without reacting.

The book contains a wealth of information, thoughts and examples. Too much to cope with in this short review. I enjoyed reading it and highly recommend this book to anyone interest in fostering innovation, the innovation process and how banks could react to an ever faster changing business environment.
Buy your copy at Amazon.com, Amazon UK or Amazon.de.

Interview with Julia Kurnia, Director Zidisha.org

wiseclerk

Last week I published a short overview on the new p2p microfinance service Zidisha.org. Now Julia Kurnia, Director and Founder of Zidisha.org answers my questions.

P2P-Banking.com: What is Zidisha about?

Julia Kurnia: Zidisha uses internet and mobile phone technology to connect entrepreneurs in the world’s most isolated, impoverished areas with the international P2P lending market.  Zidisha supplies the key services needed to overcome the geographic barrier between lenders and borrowers – local credit history verification, low-cost electronic money transfers, independent tracking of borrower performance history – then gets out of the way and lets lenders and entrepreneurs interact directly.  Zidisha’s philosophy is similar to that of eBay, which really advanced the opportunities of small entrepreneurs in the US by supplying a regulated venue in which business growth is limited only by entrepreneurs’ own creativity and track record of responsible conduct.

P2P lending has vast untapped potential to open up better economic opportunities for motivated people in low-income countries.  Africa in particular is home to a growing class of entrepreneurs who, while economically disadvantaged, are computer-literate and have verifiable credit histories with local microfinance institutions – all of which can be tapped to supply many of the communication and record-keeping services traditionally performed by local banks and microfinance institutions.  Zidisha is designed to serve this type of borrower.  In this sense, it is complementary to services such as Kiva and MyC4, which allow more marginalized borrowers without computer access to fund loans via local intermediary microfinance organizations.

P2P-Banking.com: How do African Entrepreneurs react to the possibility of posting a loan application online and getting it funded by strangers?

Julia Kurnia: I think this is best answered by Ms. Ndeye Sarr, a lady in West Africa who single-handedly supports a family of five sewing clothing by hand.  She is raising a loan on Zidisha to buy an electronic sewing machine, which will allow her to meet client demand faster and grow her business to where she can support her household comfortably and keep her kids in school through college.  Last week Ms. Sarr stopped by a local cybercafé to check on the progress of her loan application and upload some photos of the traditional clothing she produces, and she posted the following comment:

“I have just visited the Zidisha website, and see that the lenders are still continuing to support me, so that I can really start up a proper business activity. I would like to thank all those who are helping to finance my enterprise. I’m so happy to see that people on the other side of the world are willing to lend a hand to those who do not have the resources to earn their own honest living.“  (translated from the original French) Continue reading →

Polish P2P Lending Site Monetto Goes Under

Michal Kisiel

In e-mail newsletter sent to its users on January 20th the operator of Polish peer-to-peer lending site Monetto.pl informed that the website will be accessible only until the end of February. Lenders are urged to update the loan contracts and to change the number of bank account set up for repayments. Monetto will no longer intermediate in processing repayments and loans should be repaid to lenders’ accounts directly.

Monetto was one of the early entrants to Polish social lending market. The company was financially backed by venture capital fund IIF. From the beginning the market was plagued by the influx of unfair borrowers, partly due to the insufficient verification procedures. Lukasz Banach, CEO of Prender Ltd. – the company behind Monetto project, reflected in the interview for finnovation.pl in September 2009, that what attracted crooks might be higher (than on other P2P lending markets in Poland) initial limit of loan amount. He also said: “In USA, UK (also Germany) there are central, accessible and trustworthy databases of credit history. As long as there is no such thing in Poland, I don’t believe that social lending will be successful here. When this barrier is removed, the percentage of bad debts on P2P markets will fall down significantly. ”

Things started to get worse in the end of 2008, when VC investor decided to stop financing the project. Since January of 2009 Monetto was in “coma” – there were no new loan listings, repayments were forwarded to lenders infrequently and there were significant problems with customer service. The investors made an effort to sell the service (although it was never announced officially) but no interested buyer was found.

The announcement is viewed by many as the last act of the drama which lasted far too long. In few articles that were published in press, the negative consequences for the credibility of social lending model in Poland are stressed. In other opinions there is a little bit of optimistic tone – failure of Monetto shows that market weeds out the weaker and less secure players.