communication

What’s Up at Collateral?

wiseclerk 3 Comments

Update Feb 28th, 10:50pm: according to a message recieved by affected investors, Collateral (UK) Ltd is going into administration

Or rather, why is Collateral down? A question concerned investors have been speculating on for over 36 hours now, since the website of UK p2p lending platform Collateral went down around 7pm two days ago and is showing a maintenance message. Investors criticize that there was no pre-announcement of this maintenance and worse that Collateral seemed to have ceased all communications to investors and did not react to any phone or email messages.

With no communications from the platform whatsoever investors wondered what to do. Some investors reported the incident to ActionFraud squad of the police while another contacted the FCA to voice his concern and seek advice.

This morning Collateral sent out this email to investors: ‘An update is being prepared and will be emailed to all lenders later today. Thanks for your patience, The Collateral Team‘.

So while at the time of writing of this article it is unclear what’s up at Collateral, this event does present two general questions in my view:

1) How should a p2p lending platform communicate in a crisis?

In my view not communicating at all is the worst choice. As investors pointed out, even if the nature of the crisis prevented communication through own website or email, then the platform could have elected to leave a message via the Twitter or Facebook channel. While that would have not reached all investors, it would have been better than silence.

2) What can concerned investors actually do to react, if the platform is seemingly unreachable/unresponding over a longer period of time?

The discussions amongst investors show great frustration on this point. And the questions is, how helpful any of the discussed measures really would be. The main suggestions were trying alternative phone contacts (calling management directly), visiting office in person, reporting to authorities (police, FCA), alerting the press.

From this incident I would say there is little investors can do to force an immediate reaction.

Regardless what was happening and what the outcome will be, my opinion is that this will tarnish the reputation of Collateral and that investors might try to withdraw (part) of their funds, once the platform is operational again.

Collateral maintenace message

Open rebellion of lenders in Prosper forums

wiseclerk 1 Comment

Note: Most of the following is an observation of lenders opinions voiced in the Prosper forums (with sources given). The opinions voiced in the cited threads are the opinions of the individual lenders who posted them.

Looking into the lender section at the Prosper.com forums part of the posting lenders seem to be in open rebellion. Titles of threads from the last two days include "FLASH:Prosper bans $100.000 lender", "Prosper Mng. Living Under a Rock", "Shooting the Messenger", "What happens if Prosper goes under?", "I am done lending on Prosper", "Hello Prosper Moderator", "Lender's WHO are DONE with Prosper", "My letter to Prosper", "Open letter to John Witchel" 

Topics include lack of communication from prosper, failure to adress process problems, banning lenders, closing threads, … .

Posts call for "Class Action Lawsuit", informing Venture Capital firms who funded Prosper about the situation as the lenders posting see it and the call for withrawing funds.

One main cause for the unrest are the low ROIs large long term lenders are experiencing. This post says there are 203 lenders which have loans over 6 month old and more the 25K invested. For these the post says the average estimated ROI is 1.91%.

The result is that some long time lenders churn Prosper.com and stopped investing, while new lenders continue to pour in money.

As the following chart shows the count of lenders who have bid within the last 30 days stalls since April. 


(Source)

A few lenders now express their very legative opinion on Prosper prominently in their signature in every post they make in the Prosper forums. Example

As lenders have started to make fun of Prosper employees or using avatars to create the appearance of beeing a prosper moderator without any apparent reaction of Prosper in their own forums, users start to speculate if Prosper will be forced to close the forums to avoid the negative publicity.

Communication approaches of P2P lending services

wiseclerk 2 Comments

Today I will take a look at the communication approaches of Prosper, Lendingclub, Zopa and Smava. Since it is hard to judge the individual customer support these companies offer, the focus of this post is on the mass communication channels. To communicate their services to the lenders and borrowers the services can use the website's FAQ/tutorials, a forum, blog(s) and newsletter(s).

Prosper.com
Prosper has very detailed FAQs, which leave no aspect open. There are tutorials, videos and webinars. The Prosper forums are very active. While Prosper announce changes to the service in detail (here), the policy usually seems not to comment on individual users questions (except for the bug report section). Prosper seems to rely on users to communicate and educate each other in the forums. There has been criticism about censorship and deleted posts in the forums which led some users to set up an prosper independent forum.
As far as I can tell Prosper has no blog of its own, but there is a personal blog of the CTO John Witchel. But it is not very active and will probably not be found by the average Prosper user.

Zopa
The Zopa FAQs are detailed, too. The Zopa Forum is quite active with Zopa staff members responding to posts and questions. Zopa has a company blog which has a leisurely tone and often is offtopic. In my opinion it could get more informative for lenders or borrowers.
The same applies to the newsletters Zopa sends out.

Smava
Smava maintains a very detailed and good FAQ. The Smava forum is pretty quite, but Smava staff usually is responsive to user questions. There is no blog. Smava is only 3 month old and so far there have been only 2 or 3 newsletters, which were mainly a summary of developments.

Lendingclub
Lendingclub communicates very different from the others. Mainly it relies on it's blog which is in fact directly on the Lendingclub.com homepage. The blog is very active with up to 2 or 3 posts per day. Not only does it explain details of the lendingclub service but also has general advice on personal finance, e.g. on obtaining and maintaining good credit. Lendingclub has lots of guest authors contributing to the blog. The FAQ are somewhat hidden and only available to logged in users (unless you know the direct link). The information, when located, is detailed (e.g. states). As far as I am aware there is no Lendingclub forum.

My impression is that Prosper and Smava communicate in a style that appears more corporate and 'old fashioned' always pondering what information can be released and what for. Prosper has occasionaly received rather aggresive feedback of users, citing them of being non-responsive to the wishes of their users.  Zopa has a more buddying tone – hey take it easy. Lendingclub sounds educational to borrowers, aiming to help them by supplying them information. On the other hand Lendingclub's approach seems a little marketing driven, because their approach gains them search engine and blog visibility.