Lendico Launches P2P Lending in Spain

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German p2p lending service Lendico will launch tomorrow in the Spanish market. ‘Spain is an attractive market with great potential due to the credit crunch since 2007,’ says CEO Dominik Steinkühler. Maximum possible loan amount is 25,000 EUR, offered at between 6.29% and 25% APR.

‘Lendico poses a direct threat to the comfortable position of traditional banks in the market. From the beginning Lendico was developed as a digital alternative to the banks,’ says Steinkühler.

The safeguards and regulations are similar to those of any bank. Lendico is a member of the National Association of Financial Credit (ASNEF) Establishments and works directly with Equifax for risk management and control of delinquency.

As reported earlier, all registered Lendico lenders, not just Spanish residents, will be able to lend.

Spain is the first international market Lendico expands into after launching in Germany in December 2013. While some functions are operated from the Berlin head office there is also an office in Madrid there. And Lendico says the team in Madrid is working on launching the service in South America.

International P2P Lending Services – Loan Volumes January 2014

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In January especially Zopa, Ratesetter and Isepankur showed strong growth over the previous month. New addition to the table is the Dutch service Geldvoorelkaar, which launched in Dec. 2010 after 1.5 years of development.  The CEO Martijn van Schelven told P2P-Banking.com, that Geldvoorelkaar was checked and approved by the Dutch Central Bank (DNB). 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 January 2014. 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.

A Visit with Lendico

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Last week I flew to Berlin to visit Lendico and met the management. Lendico is the third entrant in the German p2p lending space and launched in December 2013. The fact that they are financed by Rocket Internet, the venture capital arm of the Samwer brothers, attracted additional attention to their launch.

International Expansion

A major topic in our conversation was the known plan of Lendico to offer the p2p lending service in multiple European countries. While Lendico would disclose neither which countries they target next nor details on the timeline they stated that additional countries will be live within the next 6 months. Lendico will manage major functions centrally from the Berlin office and use national offices for some functions of operations.

I learned that Lendico will allow cross-border lending like Isepankur, meaning a German lender that registered could not lend only to German borrowers but also to borrowers resident in any market that Lendico opens to.
Challenging issues to be dealt with are multiple currencies and different credit rating systems in different countries. For the later Lendico aims to simplifiy this for lenders by translating ratings in Lendico score classes A to E that will be used in all markets.

Prompted by my question Lendico CEO Dominik Steinkühler said that in the long run there is a high propability that there will be one large European p2p lending market rather than many fragmented national ones.

Competition

Currently Lendico sees Auxmoney as main competitor. Asked whether he expects the fast growing UK p2p lending services to expand internationally Steinkühler told me that he sees no signs for this as these players seem quite satisfied with growing in the UK market. Continue reading →

P2P Lending Service Lending Works Launches

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P2P lending service Lending Works launched today. The service says its unique selling proposition is that it offers lenders actual insurance and thereby more protection than the provision funds scheme major UK competitors like Zopa and Ratesetter do offer. Reading the fine print, there is insurance, but capped at 10% bad debt, which should be sufficient in the current market situation: ‘The Lending Works Shield provides cover of up to 10% of all Lending Works loans and so provides a market leading 17 times cover‘ [compared to a stated 0.58% industry wide personal loan borrower default rate]. Lending Works is open to UK residents with a UK bank account.

I also noted that Lending Works allows lenders the option to exit their investment prior to the loan duration if they accept a fee of 0.6% (or 20 GBP) whichever is greater.

Available loan terms range from 1 to 5 years.

Lending Works says it has raised 3.5 million GBP prior to launch.

Zopa Promotional Offer: Rate Promise

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Today Zopa announced yet another promotional offer for lenders: Rate Promise. In this limited time offer Zopa promises lenders that ‘… the money you lend within the Offer Period, for up to 5 years, will earn an average return of 5% over the lifetime of those loans.‘ That is after fees. The offer is valid from January 9th till Feb. 3rd. Actually for some lenders this will mean even higher guaranteed returns – see full T&C of the Rate Promise here.

I think Zopa’s repeated promotional offers (cash backs and now rate promise) are signals that Zopa feels the impact of the p2p lending competition which entice Zopa’s customers with models that seem more appealing (there has been a lot of discussion that with the introduction of Safeguard Zopa became much less transparent) or could yield higher returns. In terms of p2p lending loan volume originated per month the main competitors are certainly gaining ground on Zopa.

While this is a (nearly) no risk offer for those lenders managaing to invest during the promotion duration, users on the Zopa Talk board do wonder what longtime impact this has for Zopa. And rightly so as Zopa will have to cover any shortcomings from its fee margin. Done repeatedly it will effectively result in an unlisted fee decrease.

I am sure it will fulfill the probable short term goal: increase funds on offer and originations in January.