Peer-to-Peer Platforms

on the rebuildingsociety.com blog

30th Oct, 2017

Fin vs. Tech

Is it the “fin” or the “tech” that is the key to developing the future of online lending?

“FinTech” is one of the biggest buzz words in finance and technology. Online lending platforms are just one of the many different types of companies at the forefront driving the industry. Given the buzz, it’s not surprising that every company with any finance-related technology is attempting to rebrand themselves as a FinTech company, trying to enjoy some of the limelight and investment on offer. With so many companies trying to dress themselves up as FinTech companies, it is difficult to truly understand or identify what a FinTech company really is, and often difficult to distinguish between true FinTech companies, financial services companies that have technology, and technology companies that are dipping their toes into financial services. We wonder: will it be the “fin” or the “tech” that really has the biggest impact on the development of the industry, specifically within the world of online lending?

Open-source

The financial services industry, in the traditional sense, is an industry that has long been able to rest on its laurels. In doing so, they have neglected to truly take into account the changing needs and habits of their consumers. This has created an opportunity for companies that have dared to think differently; leading to the creation of P2P lending, crowdfunding and money transfer platforms. The ability of these companies to understand consumer needs and meet them, using new technology, has seen many of them grow very quickly. Perhaps more importantly, it has also seen consumers think differently about how they manage their finances.

Whilst the creative technological solutions have been key to the creation and initial growth of the FinTech industry, the most significant development of this revolution has been the change in the mindset of consumers, spurred by the advances brought about by technology. Now more than ever, people are openly engaging with one another about the management of their finances; whether it be about who they have a mortgage with, the best and easiest ways of transferring funds to a different currency, or how to make the most out of one’s savings. Not only are consumers now engaging with one another; they are also more actively engaging with their financial services providers. Even more importantly, they are demanding better services and products from them. Consumers are getting excited about finance.

Traditional finance companies may continue to develop new financial products, and deliver and enhance them through new technologies, but if they fail to consider the new engagement of their consumers, these products are unlikely to be successful.

For example, online lending has become a success story, not because of the advent of a new financial product, but rather through making an old, in-demand financial services product more accessible to consumers. Of course, these companies would not long survive if the “fin” part of the product was neglected. If a company failed to observe good credit risk decisioning processes and poor lending practices, for example, these products – and with it the companies – would fail.

One could argue that whilst “tech” may be driving the FinTech industry, it could not operate without experience of the “fin.” It is likely that the biggest driver of the future of FinTech, specifically within the online lending market, will be, for the first time, the consumer, as they have become both the lenders and the borrowers.

Many online lending platforms may have already come and gone, but online lending is still arguably in its infancy. The products on offer and the types of loans available through these platforms still very closely resemble the more traditional loan types, with the online accessibility and speed of access being the main differentiators. Only over the last two years has the UK seen newer products such as the Innovative Finance ISA come to the market; yet even these mirror older financial concepts.

The fact that consumers hold the power to more significantly influence the financial products available to them, along with the ever-evolving way in which they are delivered, will surely lead to an extremely interesting period of financial services development. Changes in dynamic will lead to other changes, which will not only pose new challenges for FinTech companies and the financial sector as a whole, but will also likely raise some very interesting questions and challenges for the regulators of these markets around the world.


02nd Oct, 2017

Presenting Platforms in Minsk

Following his visit to Lithuania and appearance at the 6th ECN Crowdfunding Conference, our founder and Managing Director, Daniel Rajkumar, will be speaking at the CrowdConference in Minsk.

Scheduled to take place on the 20th and 21st of this month in the Belarusian capital, the event is the third international conference of its kind. The aim of the two-day conference is to hold presentations and discussions related to various fields of financial technology, in order to identify and strengthen the potential of Belarus.

Daniel will be in the company of other speakers from around the world, including a Darden Graduate School of Business professor from the USA, the Application Director of Germany-based company BigChainDB, a member of the Department of Strategic Technologies Microsoft from Russia, and adopted Italian co-founder of revolutionary startup, ELSE Corp.

Daniel’s 30-minute presentation will offer advice on launching a P2P lending platform on a budget. He will offer advice regarding how to understand what you need, how to prepare for launch, and how to coordinate the launch of the company itself.

If you speak Russian and would like to find out more, please visit the CrowdConference website.


15th Jul, 2014

Ratesetter’s Rated Loans Sets Precedent

Recently, Ratesetter became the first platform worldwide to be independently risk-rated.

It has been awarded a rating of 1 by the research agency, FE, which means it is considered low risk and investors can expect a steady return on their cash.

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14th Nov, 2013

Lending Club Valued at $2.3bn as P2P Grabs Investors’ Imagination

Lending Club has recently attracted a $57m injection, valuing the business at a cool (or eye-watering) $2.3bn as it prepares for an initial public offering.

It’s the latest in a series of investments in p2p platforms both in the UK and US. Funding Knight recently received £1.5m for 20%, while Funding Circle continues to receive VC funding.

Banks and institutional investors are taking an increasing interest in the sector, which has made a profound impression on the business and personal finance markets.

With reform abound in the UK and US and more countries across the world getting to grips with the positive potential of the sector, now really is the time to get involved and become one of the early adopters.

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28th Aug, 2013

The Crowdfunding and Peer-to-Peer Arguments Heat Up

There has been more high profile coverage of the crowdfunding and peer-to-peer lending industries recently as politicians, regulators and industry advocates have all been busily declaring their concerns and ambitions for these fledgling, yet potentially hugely influential industries.

Crowdfunding is either seen as the biggest scandal of a generation in the making or the biggest positive transformation to hit the business funding market, probably since the internet. Unsurprisingly, those in favour want light touch regulation, those in opposition want the tightest possible regulation to prevent abuse of the process to protect the consumer, and to protect the standing of the high street banks in British society.

But has the argument really moved on? Probably not, the difference now is where these arguments are taking place. National newspapers are now the battle ground, rather than the comments section of a far-flung website visited by ten people a month.

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30th Apr, 2013

Funding Circle Breaks £100m Small Business Loans Barrier

The UK SME business loan market has seen a phenomenal transformation in the past two and a half years, thanks in no small part to the ambition, skill and marketing power of Funding Circle. It has passed the £100m milestone and lends over £1m a week now.

Funding Circle has done much to bring the market into the consciousness of business owners across the UK and its successful penetration of the commercial finance broker market has enabled it to scale rapidly. Support from credible new players like ThinCats.com, Assetz, Funding Knight and rebuildingsociety.com has pushed momentum forward and helped to spread the word.

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09th Apr, 2013

Becoming a private money lender

Becoming a private money lender is not something many people would have considered as a means of generating income several years ago.

The internet coupled with advances in payment and ID technology has changed all of that – you can lend money to other people and businesses without leaving your computer.

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22nd Mar, 2013

rebuildingsociety.com at the Great British Private Investor Summit

On 19 March, rebuildingsociety.com’s MD, Daniel Rajkumar, was invited to talk to a gathering of the UK’s private investors about ‘a new asset class’ called peer-to-peer lending.

Alongside Giles Andrews of Zopa (right) and Kevin Caley of ThinCats (left) in a panel discussion hosted by George Whitehead of Octopus Investments, the panel explained how private investors could make fast, reliable returns through lending to individuals and businesses.

A show of hands revealed that around a quarter of the audience were already involved in the sector, so for around 150 private investors, this was their chance to learn about new ways to make their money grow.

“The theme from the day was that investors are looking for an exit, liquidity, the right level of information to make an investment decision and communication with their investment. Peer-to-business lending offers all of this up front”, said Dan.

Much talk on the day centred around the budget, and Dan believes many attendees will be happy with announcements made by George Osborne, especially the SEIS extension, where SEIS investors can input £100,000 in a single tax year which can be spread over a number of companies. Investors are entitled to receive up to 50% tax relief in the tax year the investment is made.

Of course, there’s still a big risk for investors in start-up businesses that they will never get their money back.

Returns through peer-to-business lending will never be the ‘10 times investment’ quoted in business angel circles, but it is an emerging asset class where savvy lenders are earning returns after tax deductions and defaults of over 10 per cent.

Dan said: “This industry is relatively young and would benefit from the guidance of experienced private investors to make it a better industry, so it’s encouraging to know more investors are now suitably informed. And as the statistics show, they would benefit financially from being involved too”.


11th Jan, 2013

An alternative to Funding Circle is a good thing for peer-to-business lending

Businesses and consumers are increasingly driven by ethical decisions. In the aftermath of a financial crisis which has exposed the worst aspects of financial services, it’s time for everyone in the UK to look at how they use their money to make sure it is going to good use, rather than supporting reckless speculation.

Peer-to-business lending does this. With the dual benefits of loans for growing UK SMEs and above average returns for individuals, it is curing two of the most noticeable after effects of the crisis.

The market leader is undoubtedly Funding Circle, which has done much to raise the profile of the market and should be congratulated for it, but there is another way to connect businesses and individuals which goes further than transaction.

We facilitate relationships between businesses and their lenders by encouraging lenders to go the extra mile and earn their interest by simply helping out businesses where they can. Examples of this are:

  • Following the borrower on Twitter and retweeting messages
  • Making a LinkedIn introduction to a potential client
  • Suggesting a candidate for a job opportunity
  • Becoming a mystery shopper and offering feedback

The advantage for the lender in doing this is they’re helping the business to grow and they’re more likely to have their bids accepted by the borrower in the future as a way of saying thank-you when the borrower refinances.

We’re passionate about rebuilding society by changing attitudes and habits towards money and ultimately making it all go further.

We put our money into supporting Positive Money because we believe in their values.


19th Oct, 2012

Challenger brands shaking up financial services

Tesco might be the biggest supermarket in the UK, but it’s still a minnow in the mortgage lending world. But that hasn’t stopped it offering a range of products this week that will excite borrowers, including rates of 1.99 per cent for 60 per cent loan to value customers.

It just illustrates that meeting the needs of consumers doesn’t have to be the preserve of the established brands. Tesco, as a new entrant, is nimbler, with no legacy overheads that have to be factored into deals and a system custom built for mortgage lending, so it’s able to offer attractive products and win business from longer-standing providers.

There are similarities with the peer-to-peer and peer-to-business lending markets too.

(more…)


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