banks

P2P Lending Service Moneyauction Wins Savings Bank as Lender

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In Korea, p2p lending service Moneyauction became so attractive for lenders that it won a Savings Bank as a lender. A company spokesman told P2P-Banking.com that the bank evaluated the repayment rate of borrowers on the p2p lending site and found it to be better compared to the rate of it’s own existing customer base even though the p2p borrowers credit scores are lower than the credit scores of their customers. Other financial institutions have expressed interest in utilising Moneyauction or entering cooperations.

Moneyauction is advancing in it’s product development. In March it released the new ‘Automatic portfolio lending’ feature as well as support for mobile bidding via smartphones. Lenders can now bid on loans using smart phones like the iPhone (see picture).

(Source: company management)

Smava Enters Marketing Partnership with Cortal Consors Bank

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Smava has entered a marketing cooperation with Cortal Consors bank. Cortal Consors will promote Smava as a new asset class to it’s customer. Smava will pay Cortal Consors referral fees for referred lenders and borrowers.

Newsworthy is that this is the first marketing deal a bank has entered in with a p2p lending service. The implications of the deal itself are rather unspectacular as the information is buried deep inside the Cortal Consors website where few are likely to see it.

In other news Smava has redesigned the website and changed the slogan a couple of days ago. The former slogan was “Kredite von Mensch zu Mensch” which roughly translates to “Loans from human to human”. The new slogan is “Direkt Kredit” (engl. “direct loan(s)”). The motivation of this change according to Smava was to enhance the message that loans are direct, easy, and competitive. Smava says borrowers had wrong associations with the old slogan, thinking that long negotiations with individual lenders would be necessary.

Published feedback by users (lenders) on the new slogan critisizes that the new slogan resembles those of impersonal financial institutions – an image that p2p lending services aimed to differentiate themselves from.

Could Social Networks be the Next P2P Lending Players?

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Most of the discussion so far was whether p2p lending is or could become disruptive – threatening the bank’s core business. So it was fast moving internet startups versus the incumbents which were often viewed as not very innovative.

As for social networks, the thoughts centered on how available social networks data could be used to improve the process of p2p lending service. See my article ‘For Debate: Can Data From Social Networks be Used to Reduce Risks in P2P Lending‘. Lending Club in fact aqknowledged in January that it already uses some social network data in it’s process.

Now there is an interesting speculation on the Finextra blog (read the comments, too) whether Facebook could compete with the banks and might enter p2p lending in this course. This is an interesting thought. But  the main argument is that Facebook has a large number of users and if only a fraction of them would use financial services  they could gain a huge customer base. With that argument you could argue that Facebook could compete in any industry. Just pick one you like.

And while cross border p2p lending would be fascinating the downside as we already now is that regulation differs widely between national markets. But Facebook could have the size to tackle a task like this. The real question is: Do they plan to?

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

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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.

Gartner: P2P lending will be 5 billion US$ in 2013

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Gartner forecasts p2p lending volume to read 5 billion US$ outstanding loan volume in 2013.

Consumers who lose their jobs can’t get loans to cover periods of unemployment; businesses that encounter trouble due to low demand can’t get credit lines to see them through to recovery. Furthermore, banks are more interested in recapitalising than in lending. Growth in P2P lending will be driven by investors seeking higher returns and borrowers shunning (or being shunned by) banks. Gartner recommends that financial services providers investigate how to partner and collaborate in adding P2P to their existing offerings rather than building their own P2P lending networks.

An earlier forecast of Gartner from Feb. 2008 overestimated the impact that p2p lending will have on bank lending in 2010 – at least in my view – but 2010 is not over yet.

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

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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)