Moneyauction – Booming P2P Lending Service in Korea

wiseclerk

Moneyauction, a Korean p2p lending company, says it is “the No. 2 [website] in Korea’s non-bank area, but the number 1 website in the finance area”. And it has impressive figures to prove it. Between June 01th, 2007 and Sep. 15th the loan amount applied was 56.6 million US$.

Moneyauction partnered with telecommunication carrier Korea Telecom and offers a mobile service allowing borrowers to apply for and lenders to bid on loans via their cell phone.

In 3 months Moneyauction plans to launch a secondary market (called ‘Divided bond trading’). A spokesman told P2P-Banking.com that he expects this new feature to boost the transaction volume.

(Source: company management)

Swiss Private Banker: P2P Lending a Threat to Bank Balance Sheets

wiseclerk

In an video interview in June, Konrad Hummler, managing partner at Swiss Bank Wegelin & Co, states how he sees p2p lending as a threat to banks.
P2P lending services could replace vital functions of banks. He says government influenced major banks are to inefficient. Established institutions will use calls for regulation to protect their business against newcomers.

(The interview is in German language)

A P2P Lending Service in a Cooperative Banking World

eKwiti 1 Comment

The main specificity of the French banking landscape is the important credit union culture. France has a strong history in cooperative banking, which gave birth to today’s important French banks as Credit Mutuel for example.

Will this history have an impact on the P2P lending development in France?

It’s interesting to notice, that the first P2P lending service in France, FriendsClear, just inked a partnership with one of these cooperative banks: Credit Agricole, a former farmer cooperative which evolved into one of the main modern global banking players.

At the end of this year, thanks to this partnership and the bank license, FriendsClearwill be able to open a genuine crowdfunding P2P service for very small businesses. I will come back in a later post on the details of this partnership and how the service will be provided; I just wanted to underline the specificity of the French Banking landscape and the credit union culture for P2P lending.

For FriendsClear’s Founder, Jean-Christophe Capelli, it makes no doubt that it has a strong positive impact. “I see a very bright future for P2P lending around the world, but especially in France, where we have a cooperative banking culture” he declares, and French banks seem intrigued even interested in this new practice. “It reminds them of their origin, when farmers got together to help one of them buy a plough or a youngster to settle. With P2P lending we are in very similar model, which has probably been neglected over time. It reminds them of their values of solidarity.”

Thus, about the actual #bankbloggerfight between James Gardner and Chris Skinner to know whether P2P lending is disruptive for the banking industry, Jean-Christophe sees it very differently in France: “it is reflecting their own image, where they have arrived, and whether they are still relying on their founding values. In this case, the disruption will much more be on the image they want to send out, on their marketing, and further on their DNA.”

Having contacted several French banks to build this partnership, Jean-Christophe noticed a strong interest in P2P lending: “the innovation manager of a big bank, showed me the strategic road map for 2012 and they targeted a strong presence in P2P lending”.

FriendsClear doesn’t fear competition, though, quite the contrary, they’re looking for it: “the most important part in our business today, is to spread the word. You don’t wake up in the morning, thinking, I’m going to take a P2P credit. The way to approach finance should evolve, and we need to get away from the idea that the best way to manage money is to take a revolving card. If there were a couple of other serious P2P services, we could reach a far more important part of the French population and let the usage evolve more quickly”.

For the moment, the only competitors to FriendsClear would be banks. But they are actually not targeting the same population, and that is probably why banks will want to get into P2P lending to access this new fringe of the market: “if the Credit Agricole has been so keen on working with us, it’s because they realized that, with their current offer, the very small businesses were not addressed. With P2P lending, they see a way of enlarging their offer to this population.”

Even if France is very late in providing a genuine P2P service, the specificity of the French culture could accelerate the market penetration.

The author lives in France and reports as a guest blogger on french p2p lending trends for P2P-Banking.com. Also posted in ekwiti

CommunityLend Approaching Launch in Canada?

wiseclerk 2 Comments

Microlending.ca reports that CommunityLend may be ready to launch soon as it cleared another registration hurdle. A legal document published at the Ontario Securities Commission site gives lots of details on CommunityLend’s p2p lending plans.

It also reveals that p2p lending in Canada will (at least initially) be restricted to accredited investors (high wealth individuals).

See Dan’s articleat Microlending.ca for a review of the document.

P2P Lending Technology – Make or Buy

wiseclerk 32 Comments

The core ingredient a new P2P Lending company needs is a platform to operate on. The importance of the quality of the software used for the success of the business is high. Not only does interaction with the customer nearly exclusively take place via the interface the website offers, but ideally most processes that are to be conducted are built into the software.

Examples for these are interfaces to external suppliers of credit ratings, accounting functionalities and interaction with necessary bank accounts, possibly document input and handling functions (e.g. income verification).

Unlike other web 2.0 startups p2p lending companies cannot launch on a rudimentally developed platform and eliminate bugs and improve functions on the fly in beta. Customer expectations regarding security, correctness and reporting functionalities are rightly high when it comes to handling their money. The expectations of the users are set by the trustworthiness of online banking services.
Another factor is – depending on market – the regulation authority that might require proof for the reliability of the platform/processes

The management team has the choice between:

  • Developing the software inhouse
  • Hiring an external contractor to program the platform according to specifications made
  • Buying a tested and proven source code and use that as start for future development
  • Outsource the task to a whitelabel provider who provides the technical platform and future release improvements

Developing the software inhouse

The advantage is that the software can very specifically reflect the ideas and needs of the company’s founders. The disadvantage is the high risk to miscalculate time or budget needed.

Costs when starting from scratch are high. It has taken the p2p lending companies on average a year to develop their platforms. The SEC filings of US p2p lending companies reveal figures on software development costs.

Furthermore quality and performance issues might be underestimated requiring rework. Continue reading →