The Bankwatch

Tracking the consumer evolution of financial services

Pertuity Direct introduce a differentiated model to US P2P lending

I had the opportunity to speak today with the good folks at Pertuity Direct, Kim Muhota, Lisa Lough. and Independent Trustee Charlie Schliebs (details below).  These are interesting times in P2P Lending and financial services in general so its refreshing to chat with some people who have a model, are live and keen to make a difference with their differentiated model.

Kim came up with the idea several years ago while at business school and left PNC to form the company.  He brought a dual focus on getting the regulatory package right alongside a smooth and simple customer experience.  He recognised the need for more simplicity and borrower concerns on privacy, and tried to incorporate solutions to those concerns in the Pertuity Direct model.

Borrowers enter the process and are guided through to having their loan approved.  Kim says the target audience of young tech savvy people will find an intuitive and straightforward design.  Pertuity Direct under the guidance of their own Chief Risk Officer conduct loan underwriting following their own credit policies, approve the loan and allocate the interest rate.  In this model the lender is Pertuity Direct.

On the lender side their are funds set up as separate organisations, regulated under the Investment Company Act of 1940.    There are two funds with one dealing with loans of FICO 660 – 720, while the other is 720 and above.  From the conversation I took it that there is a clear focus on prime borrowers and risk management.  The loans are bundled and sold to the funds who then sell units to investors.  Charlie pointed out that there is no restriction or qualification required on the investors who purchase those units, which differentiates Pertuity from the Lending Club model, and possibly from the Prosper model (Prosper is not approved as yet).  The responsibility of the trustees is fiduciary responsibility to purchasers of units in the fund.

Clearly the credit policy and FICO cut offs are designed to minimise risk, but in the event of collections, standard practices are followed by Pertuity Direct.

They expect the customer base will be types that would be comfortable shopping online, probably use etrade or Schwabb, and broadly fall in the self directed category of individual investor.

Kim’s views the market opportunity as large.  He sees Pertuity Direct as the ideal hybrid between Capital Markets, traditional lenders and P2P lenders, bringing a scalable lower cost platform that institutionalises the lending /P2P process.  It also brings the social aspect by introducing Pertuity Bucks that lenders can allocate to borrowers, and which reduce the borrowers costs. 

He describes this opportunity as a “game changer” bringing a “next generation social lending platform, that allows borrowers and lenders to come together in a community environment, but with the backing of traditional financial services practices”.

The company is described as “well capitalised” and licensed to operate in 35 states.

I came away from this conversation impressed with the grasp of their market and of their opportunity.  Their approach to the securities issues that surround P2P Lending is unique in the marketplace.  I follow banking and P2P lending closely professionally through this blog, and Pertuity Direct appear to have a model that is differentiated.

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In conducting this interview, I spoke with:

Kim Muhota, CEO & Founder

Lisa Lough, SVP Marketing

Charles A. Schliebs, Independent Board Member, National Retail Fund

As the founder, Kim has a solid background in financial services having been with PNC Bank in various positions including Line of Business Head, Strategy & M&A. 

Lisa has been with Pertuity since July and brings a background of marketing from etrade financial, CapitalOne, and MCI Worldcom. 

Charlie is one of the Independent Trustees of the National Retail Funds and brings experience as an international Securities Lawyer, and VC experience.

[disclosure:  I have an interest in CommunityLend a social lending company in Canada]

Written by Colin Henderson

February 9, 2009 at 16:41

Posted in Social Lending

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  1. […] the headline as it invites people to a smarter way to do mutually responsible banking? No wonder The Bankwatch recommends Pertuity and their slightly differentiated model. In an era where banks and financial institutions […]


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