Australia

Key Take-Aways from the Society One P2P Lending App

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Societyone, an Australian p2p lending service, presented a mobile app at Finovate Asia. Previous apps offered by p2p lending services either optimised the display of website data for the mobile interface or offered basic bidding functions for investors. This one goes far beyond that. It promises the borrower a loan application and funding within 3 minutes.

To do this Societyone implemented the following steps:

  1. Only a few fields are required in the application (that is not a revolution but rather common sense and already used in many online application processes for loans)
  2. The borrower allows the app to retrieve transaction data from the past 3 months directly and automatically from the bank account he links
  3. The borrower allows the app to access his credit history data
  4. Like other p2p lending services Societyone offers lenders an automatic bidding feature that bids directly if a new loan request matches the desired parameters
  5. From the information in 2. and 3. Societyone calculates the maximum loan amount which the borrower has capacity to repay. From the information in 4. Societyone can determine which maximum loan amount could be instantly filled by existing automatic bids. Both information combined result in a maximum approved loan amount which is displayed to the borrower
  6. The borrower now enters the loan amount he wants and immediately Societyone displays which lenders fund his loan (in the example in the video 12 persons fund the loan)
  7. If the borrower confirms the loan applications the money is transferred to his bank account.

If you look further than whether there is a need by consumers to apply for loans from mobile devices rather than PCs there are a some very interesting key take-aways from this App. Continue reading →

Australian Lending Hub aims at real-time verification

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Lending Hub – an australian p2p lending site, which says it will launch in August or September 2008, has set an ambiguous aim: processing borrowing and lending applications in real time.

The Lending Hub system will check and process a borrowing application within less than a minute (assuming you have a traceable credit history and have provided all required information). Now instead of waiting at a bank or searching for your nearest branch we’ll be able to process your details in less time than it takes to grab a coffee!

If we require any physical documents (e.g. payslips or bank account statements) you can upload a scan directly to your Lending Hub account. No need to mail us anything (unless you really want to of course).

As do most p2p lending services, Lending Hub will not charge a fee for early repayment of loans, which it says is an advantage over most other lending services in Australia.

Lendinghub will be regulated under the Uniform Consumer Credit Code legislation.

You can also read a guest article by Ivan Martelli, Director of Lending Hub

Overview of Lending Hub

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Guest article, by Ivan Mantelli, Director Lending Hub 

Lending Hub is a p2p lending and borrowing platform for small to mid-sized personal loans with a core focus upon developing the site around communities, groups, friends and networks. The objective of the Lending Hub platform is to match individuals with surplus funds who are not active lenders with ordinary people who need funds. The site will be driven by the decisions of the users rather than a collective investment scheme (such as Zopa's initial model).

Lending Hub is a private Australian company based in Sydney. I am the Managing Director and have a varied background in SME management, investment banking and corporate strategy. My first venture was an education business which I started whilst completing a Bachelor of Science in Pharmacology at the University of NSW, following 4 years of growth I sold the education business and studied corporate finance with a Master of Finance at the University of Technology Sydney and quickly moved into investment banking gaining experience in corporate takeovers and mergers at the height of the private equity boom in Australia. My latest role includes strategy and planning for a large digital media company. Our other shareholders all have a hands-on role and bring additional experience in transactional banking, capital raising and project management.

The expected launch date is early 2008 and the market strategy will be to focus upon key categories of borrowers with decent credit ratings that fall just outside of the attention of the big five banks which in Australia are traditionally focused upon a small subset of the borrowing population and offer a product that is not tailored to individual depositors or borrowers. Initially social lending sites will attract a large number of these customers that are not well served by the major institutions and then over time the social lending platforms will begin to attract mainstream customers as this form of borrowing (and lending) becomes more commonplace.

Our major milestones will initially be site development and rolling out a number of user features to build a solid base of tools and to make the user experience extremely friendly and useful to them. At this stage we will focus upon the Australian market which generates at least AU$80 billion a year in personal loans (Australian Bureau of Statistics) rather than looking to other markets which have different regularity systems and also different consumer preferences and needs.

The Australian market is likely to have a handful of hopeful peer to peer lending entrants in 2008 including iGrin and Peermint and potentially other larger sites. Continue reading →

iGrin – First p2p lending site in Australia launched

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Earlier this month the first Australian p2p lending service iGrin.com.au quietly launched. Here is what Phil Hopper, iGrin's CEO told me, when I contacted him about iGrin's goals: 'We set out with the intention of being Australia's first and best P2P banking community. To date we have intentionally kept a low profile whilst we have gone about proving our business model and ensuring compliance with the Australian regulatory environment. The team behind iGrin has predominantly come from the banking industry and brings with it a wealth of product development, technology and lending experience. We have been impressed with the advances made in P2P lending overseas and are looking forward to applying these to the local Australian market and enabling everyday Australians to get great rates and great returns.'

Browsing the site, the main parameters are:

  • Borrower fees are 1% (for AA to D credit grades) or 2% (HR) or 90 AUS$ (whichever is greater) 
  • Lender fees are 0.5 to 1.5% annual loan servicing fee (depending on credit grade)
  • Loans are possible for amounts from 2000 to 25000 AUS$ (approx 22000 US$)
  • Lenders can invest from as little as 100 AUS$ to a maximum of 25000 AUS$
  • There is a bididng process, where the borrower sets the initial (maximum) interest rate he is will to pay and lenders bid down the rate (like at Prosper.com) 
  • Currently all loans are for a term of 3 years
  • The way the Australian credit rating works, simply appling (whether successful or not) for a loan may impact one's credit grade

A feature that differs from other p2p lending platforms is the 'Member direct loan' iGrin offers:

A service that iGrin provides to allow members to offer a loan direct to an individual. We will then undertake all of the transfer of funds and ongoing payments on behalf of the members. This is a great way for family or friends who wish to lend money to each other to have a third party (iGrin) manage all of the repayments and transfer of funds on their behalf. A formal contract is put in place between the two parties. It can also be a great way for someone to improve his or her credit rating. 

While a family and friends loan is possible on other p2p lending services too, it is noteworthy that iGrin charges lower fees for Member direct loans than for normal loans.

Excerpts of answers to other questions I asked Phil Hopper, CEO of iGrin.com.au:

P2P-Banking.com: Which background does the management have?

iGrin.com.au:  … The founders have over 50 years experience in Banking and Finance. The original founder and CEO is Phil Hopper who has a strong background in Banking and Technology most recently at the Commonwealth Bank of Australia and prior to that at Macquarie Bank. Continue reading →