Banks will be harmed by unbundling, allowing innovative startups using innovation to offer select services better. Fred Wilson explicitly mentions Lending Club, Funding Circle and Auxmoney (which are portfolio companies of Union Square Ventures).
trends
The Shift Towards User Centric Finance
(via TheBankwatch)
Review of My P2P Lending Predictions For 2010
In January 2010 I wrote down my predictions for p2p lending trends in 2010. Now let’s see how good my crystal ball was. The black text is my original prediction, with the review added in green and yellow.
More competition and entering more national markets (probability 100%)
This is a fairly easy bet. There are many, especially European markets, where no p2p lending service is operating yet. Even accounting for the fact that laws and regulation in some national markets make it hard or impossible to establish a service, there is still plenty of room. Looking at an individual country, it is much harder to tell. I still wonder that there are no competitors to Zopa in the British market (yet).
As expected this was an easy bet to win. Plenty of new p2p lending companies launched. Zopa got 4 new competitors in the UK (Ratesetter, Fundingcircle, Quakle and Yes-Secure). 3 companies launched in Finland. FairPlace started in Brazil.
More products (probability 100%)
Currently nearly all p2p lending platforms only offer one product: unsecured, fixed term loans. The differences are more in the details of loan funding (bidding, no bidding, markets, listings) but not in the offered product. In 2010 we will see additional products (e.g. secured loans).
Ratesetter introduced rolling monthly loans with variable interest rates. (Note: variable interest rates were one of my predictions for 2008 – I was a bit early on that one). Money360 tries p2p mortgages. CommunityLend might be up to something really interesting with FinanceIt. Some smaller enhancements to the existing product were developed too (e.g. cars as collateral).
A bank will acquire an existing p2p lending service (probability <25%)
While last year’s prediction was that there is the first bank experimenting with p2p lending (and there was), 2010 might see a bank (or other financial institution) buying a running p2p lending service.Buying will be much faster, cheaper and risk-less than if the bank tries to build a new service.
Did not happen. An interesting development was the decision of a Korean Savings Bank to act as a lender on MoneyAuction. Continue reading
P2P Lending Trends to Watch in 2010
I always enjoy speculating what p2p lending developments might happen in the year to come and then look back in December to see how I did. I don’t dare call it forecast, because these are just my personal guesses, though in some cases it’s an educated guess based on what I know individual p2p lending services are working on at the moment.
More competition and entering more national markets (probability 100%)
This is a fairly easy bet. There are many, especially European markets, where no p2p lending service is operating yet. Even accounting for the fact that laws and regulation in some national markets make it hard or impossible to establish a service, there is still plenty of room. Looking at an individual country, it is much harder to tell. I still wonder that there are no competitors to Zopa in the British market (yet).
More products (probability 100%)
Currently nearly all p2p lending platforms only offer one product: unsecured, fixed term loans. The differences are more in the details of loan funding (bidding, no bidding, markets, listings) but not in the offered product. In 2010 we will see additional products (e.g. secured loans).
A bank will acquire an existing p2p lending service (probability <25%)
While last year’s prediction was that there is the first bank experimenting with p2p lending (and there was), 2010 might see a bank (or other financial institution) buying a running p2p lending service.
Buying will be much faster, cheaper and risk-less than if the bank tries to build a new service.
Which P2P Lending Developments Happened in 2009 as Forecasted?
In January I published my predictions for p2p lending trends in 2009. Now let’s see how good my crystal ball was. The black text is my original prediction, with the review added in green and yellow.
More competition and entering more national markets (probability 100%)
In many markets multiple p2p lending services will compete for the attention of lenders and borrowers. In other markets, where there is no national p2p lending service active yet (e.g. Canada, New Zealand), p2p lending will be introduced by the launch of a service. Possible candidates include Communitylend and Nexx.
It is hard to predict when the dormant US players (e.g. Prosper, Loanio) will overcome the regulatory hurdles and if that step is lasting.
The British market which has (compared to other markets) rather low regulatory barriers so far is dominated by a single player - Zopa. I wonder if we’ll see the launch of a competitor there.
Multiple new services launched in 2009, e.g. Aqush in Japan, Sobralaen in Estonia, Uppspretta in Iceland as well as ill-fated Pertuity Direct in the US. Prosper reopened. The mentioned Communitylend and Nexx did not make it so far, though it looks like Communitylend missed a launch in 2009 only by weeks. No competition in Britain for Zopa yet.
Boom of social lending services/p2p microfinance (probability 100%)
2008 saw the launch of Babyloan, Veecus and Wokai. Kiva funded more the 1 million US$ new loans in a single week in the end of December. The steep growth of Kiva, MyC4 and other services will continue and new p2p microfinance platforms will launch.
Kiva continued it’s enormous growth and popularity. Vittana and United Prosperity launched. For MYC4 it was a hard year with decreasing loan volumes. Continue reading
Year-End Review of Peer to Peer Lending in 2009
As the end of 2009 approaches here is a selection of main news and developments covered by P2P-Banking.com:
- January: Smava expands into Poland (interview); Pertuity Direct launched; German Smava raises fees; total global p2p lending loan volume is about 740 million US$
- February: Sobralaen launches in Estonia (later renamed Isepankur)
- March: Lending Club receives 12M US$ in VC funding and introduces self-directed IRA; Dutch p2p lending service Boober fails
- April: Aqush launches friends and family loans in Japan; Prosper very briefly reopens
- May: Vittana launch; IOU Central files SEC registration to open in the US; United Prosperity launches with a loan guarantee microfinance model
- June: Spanish bank Caja Navarra experiments with own p2p lending platform; my article ‘For Debate: A Flaw in Current P2P Lending Models?‘ gets quite some email feedback; Kiva launches with loans to US businesses; Loanio SEC filing; Zopa prospers in the UK; P2P Lending Services in Germany get a boost by media coverage; Kiva enacts currency risk coverage changes
- July: Prosper reopens with SEC approval and starts secondary market
- August: Blogs discus whether p2p lending is or will become disruptive; Pertuity Direct closes after only 7 month of operations
- September: Smava Poland interview; the article ‘P2P Lending Technology – Make or Buy‘ is one of the most-read and the most commented article in 2009
- October: Moneyauction booms in Korea
- November: Kiva surpasses 100 million US$ in loans; Prosper and MYC4 have problems with non-payments/defaults; Virgin Money exits US p2p lending market
- MYC4 reduces staff
Off to new shores (Photo credit: Nattu)