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Excellent Debate on P2P Lending across Blogs


If you are interested, there is an excellent debate on P2P Lending going on over a few blogs now. The general theme is whether P2P Lending (otherwise known as Social Lending) will make a difference to Banks.

It began here with this post at Zopa.

The problem is that unlike so many other far healthier industries, the banks have no effective competition. Microsoft is kept in check by Apple and increasingly Google. Warner, EMI and Sony are battling it out with the digital download phenomena. Tesco has to watch out for Sainsburys, M&S and Waitrose. Even the BBC has to keep something of an eye on ITV and Channel 4.

Banks don’t have the self-righting mechanism of genuine competition. It’s become a cosy club where customers are simply the supplier of money for banks to punt in their casino operations, politely called ‘investment banking’

Then James ex of Lloyds kicked in at Bankervision.

If Zopa were to have a material effect on bank lending, and its competitive differentiation is price, it will not win. It does not have pockets deep enough to win a price war with a major bank, let along the whole market. This much is simple market forces at play. The only reason this isn’t happening now is that, as Martin says, Zopa is not having a material effect on the market at present.

Then ‘always up for an argument’ Chris Skinner ratcheted up the volume here. [disclaimer – I am 100% with Chris on this one]

The real point is that, assuming there is a need for these new businesses which I believe there is, the only thing that undermines their business model is access to ongoing capital to get to the point of success. This is the challenge of any new business, and this is the real challenge to these new entrants: can they fund the business long enough to be successful?

Luckily there are plenty of financers out there who do believe in these new businesses however to fund them through their fledgling beginnings, including Red McCoombs for SmartyPig and Zopa’s investors range from Bessemer Venture Partners and Balderton Capital to the Rowland Family.

Even so, in Zopa’s case where they are creating a new market in P2P lending, the issue and challenge has always been getting enough people placing money into Zopa to enable them to meet the demands of those who want to borrow. Without funders, there is no marketplace.

So the challenge is to maintain investment and manage operating costs long enough during this start-up phase to get to the tipping point of growth. And, based upon a 40% increase in total loans just in the last year, maybe that tipping point has finally arrived.

And now the debate has made the FT blog

But what we at Money Matters want to know is whether UK individuals who have used Zopa have got a good deal. At the start of the year, Matthew Vincent wrote a piece about a new online auction site for fixed-term deposits – and although he found that online lending exchanges such as Zopa were offering higher rates of interest, he suggested that these rates could come down as the number of lenders using Zopa increased.

… and the House of Commons through Tom Watson MP blog.

I wrote to the Chancellor in front of me but essentially I suggested three things:

1. Change the tax regime so that people who make loans – investors – can aggregate their total ‘wins’ and ‘losses’ for the purposes of tax. So, if you make 10 loans and nine of them fail, you should be allowed to offset them again the tenth loan that made you money.
2. Consider allowing people to use P2P within their ISA allowances.
3. Bring P2P within the remit of the small loans guarantee scheme. It is this area that I think could have a great impact in the small business sector. If people are prepared to bet their own cash on a business, then they are likely to conduct as much, if not more due diligence on the company as any bank. And when the banks make silly, greedy, short term risk averse decisions, groups of small private investors can step in.

Relevance to Bankwatch:
Thats a lot of debate for something that doesn’t matter.

[another disclaimer; I am involved with CommunityLend in Canada, a P2P Lending company]

Written by Colin Henderson

August 24, 2009 at 20:14

LendingClub announces some new trend results


Lending Club are announcing today some new numbers that show they are gaining traction since their relaunch following SEC approval.  There is no-one else to compare them to now, but the trend is positive, and getting more so all the time.

LendingClub

53% growth in quarterly loan originations, from $5,374,850 in Q4 2008 to $8,239,950 in Q1 2009

From January 1st  to May 31st 2009:

  • 60% growth in total loans issued by Lending Club, from $25M to $40M
  • 70% growth in total Lending Club membership from 82,000 to 140,000
  • 72% growth in loan applications, from $212M to $365M
  • The average net annualized return earned by Lending Club investors grew from 9.05% as of December 18, 2008 (as reported by analyst firm Javelin Research) to 9.73% as of May 31, 2009

Written by Colin Henderson

June 9, 2009 at 09:01

Posted in Social Lending

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.

______________________________________________

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

Comment on “Beyond the age of leverage: new banks must arise” | Niall Ferguson


Niall Ferguson nails the ultimate irony in the world today.  Every government is set on increasing debt as a means to solve the current crisis, however the reality is that they are potentially sending good money after bad, and not addressing the core issue. (emphasis mine)

Beyond the age of leverage: new banks must arise | ft.com

Call it the Great Repression. The reality being repressed is that the western world is suffering a crisis of excessive indebtedness. Many governments are too highly leveraged, as are many corporations. More importantly, households are groaning under unprecedented debt burdens. Worst of all are the banks. The best evidence that we are in denial about this is the widespread belief that the crisis can be overcome by creating yet more debt.

He goes on to offer specific ideas on how the great deleveraging could manifest:

  • bank debt write offs with terms designed to give banks time to sort themselves out within a fixed time – he proposes 10 years.

“There are precedents for such drastic action, notably the response to the Swedish banking crisis of the early 1990s. The critical point is to avoid the nightmare of a state-dominated financial sector. The last thing America needs is to have all its banks run like the rail company Amtrak or, worse, the Internal Revenue Service. State life-support for moribund dinosaur banks is an expedient designed to avert the disaster of a generalised banking extinction not a belated victory for socialism. It should not and must not impede the formation of new banks by the private sector. So recapitalisation must be a once-only event, with no enduring government guarantees or subsidies. There should be a clear timetable for “reprivatisation” within, say, 10 years.”

  • “The second step we need to take is a generalised conversion of American mortgages to lower interest rates and longer maturities.”  He goes on to highlight systemic changes to debt and terms of debt contracts over the last 150 years that were used as vehicles to bring the economy back in line.

Point for economists and Keynes.  Ferguson says:

Today’s born-again Keynesians seem to have forgotten that their prescription of a deficit-financed fiscal stimulus stood the best chance of working in a more or less closed economy. But this is a globalised world, where unco-ordinated profligacy by national governments is more likely to generate bond market and currency market volatility than a return to growth.

Relevance to Bankwatch:

All in all another thoughtful piece directed at broad based solutions that deleverage the world.  His argument that the approach of all world governments to borrow and create government based stimulus is not directed at the problem crisis symptoms, and sounds common sense.  When asset values have collapsed in the world by 40 – 50% and debt remained unchanged, how is more debt a solution?

It strikes me there is an opportunity here for banks’ to consider new and innovative products that alter terms, conditions and rates of existing debt that relieves pressure as suggested in Fergusons 2nd point above.  I would add that not just ‘New banks must arise” per Ferguson’s title, but that financial alternatives must arise too.

Prosper issues their revised S-1/A – December 5th, 2008


Prosper Marketplace Inc. have issued their new S-1/A seeking approval from the SEC.

S-1/A

At first glance it is similar to the first one, but includes a primary (loans originated on Prosper) and a secondary market (lenders seeking liquidity of earlier investments)

We will issue the Notes in series. Each series will correspond to a single consumer loan originated through our person-to-person online credit auction platform or a previously-funded single consumer loan offered for sale on our platform by one of our financial institution members. In this prospectus, we refer to these consumer loans generally as “borrower loans” and we refer to previously-funded consumer loans listed on our platform by one of our financial institution members as “previously-funded loans.” We refer to the borrower loan upon which a series of Notes is dependent for payment as the “corresponding borrower loan” for the series.

Written by Colin Henderson

December 5, 2008 at 16:59

Social Lending is maturing | web 2.0 meets reality


The recent headlines are getting much coverage in blogs and lender forums.  Words such as “troubles”, “suspend”  and “halt operations” all characterise the situation as dire for p2p lending.

Loanio suspends operations

Prosper in violation of SEC; Loanio to halt operations

I would take a different view [disclaimer;  I am active with CommunityLend, a social lending company in Canada].

Social Lending / P2P lending is a disruptive influence to traditional financial services and that is a good thing.  Disruption infrequently comes from within – existing participants within an industry have little incentive or desire to promote radical change.  Such change can only introduce new risk and different results that will cannibalize their current state, and shareholders will no likely understand that either.  The better approach is to make tweaks to the status quo.

“You never change things by fighting the existing reality.  To change something, build a new model that makes the existing model obsolete” – Buckminster Fuller.

Having said that, there is little doubt that the world of financial services requires innovation, and people are expecting that.  People (consumers)also have a certain tolerance for risk associated with their financial services.  It is their money, and while risk tolerances vary amongst people, there is a range of high and low risk acceptance that accommodates all rational people. 

Social lending was produced by the confluence of technology capability, and peoples readiness to adapt and adopt new tools.  Within the industry there has been constant debate about the degree of regulation, and even the nature of regulation that ought to apply, or not. 

If we return to the disruption theme, would a rational person expect industry disruption to include elimination of regulation that is designed to protect people and ensure the appropriate risks are identified and understood?

Web 2.0 meets reality:

Web 2.0 has had something of a free ride to date, and that has been discussed at length.  All the talk of business models and gathering eyeballs for advertising does not change the simple reality that advertising is not a business model.  A business model requires people to buy things from people who sell things. [apologies to Austin Hill who said something similar at StartupEmpire recently].

Web 2.0 tools offer ways to fundamentally shift the way things work to a different model, and financial services is a definite candidate.  There is much that could be improved about financial services, where innovation is not often seen.  Many of the other uses of Web 2.0 are informational,  recreational, or small transaction based. 

The creation of a new system for lending that empowers borrowers is a welcome thing.  The creation of a new system that offers new classes of investments is also a welcome thing.

If we did a survey of borrowers and investors, and asked them whether they would consider participating in a new service when there are no rules, fallbacks or protection of any description it is doubtful such a model would stand up to that test, and it is equally unlikely it would develop the scale or scope to be called industry disruption.

There are over 60 p2p lending companies in 18 countries around the world.  At present, to the best of my knowledge there is regulation in Australia, Canada, US and Holland.  The nature of the regulation in the first three are securities regimes.  Holland is slightly different.  As for other countries, the question has to be asked, as to whether regulators are merely waiting in the wings or have actively decided to stand back.

In any event, the course is clear for US and Canada, and while web purists will not like what they see, it is worthwhile to take a deep breath and consider the alternatives.  The degree of regulation is certainly something that can be debated, but not whether there ought to be regulation.  Disruption is a difficult thing, and does not always follow a linear path.  The key is that is continues to move forward, and as we look at LendingClub, this can and will happen.

The stage is being set for a strong and legitimate industry in Canada, and US around the concept of social lending.

UPDATE:  Techcrunch have a summary and some interesting comments.

Written by Colin Henderson

November 26, 2008 at 13:37

The promise of social lending – one that stretches the known financial framework


This has been a weird week for social lending, but an email conversation with the always clear thinking Ron brought it into perspective.  Ron asked if the new model is in fact simpler – brilliant question.

New Approach Puts Secondary Market to Work in P-to-P | American Banker [note:  access to full story requires registration]

Edward Woods, a senior analyst for Celent, a Boston market research unit of Marsh & McLennan Cos., said the model Lending Club and Prosper have chosen is the one most likely to thrive as this market matures.

“You’ll see fewer experiments” along the lines of what Zopa tried in the United States, he said. “I think the simpler, the better.”

Simpler is usually better, but hardly ever happens.  The original concept  of everyone lending to everyone is not going to happen.  The reason though is not what everyone expected. 

Internet allows lots of things to happen easily, but once you get into finance, you are dealing with peoples money, and that automatically fall within some type of regulatory framework.  The reason is simple – anarchistic finance will always fail because it will automatically re-centre within a small group that can trust each other.  But we want social lending to be relatively freely available.  This tension between the simplistic desires of the masses – “why can’t we just do it, because internet makes it possible” – conflicts with the other simplistic desire for protection of ones money – ‘how can the government allow my money to be at risk?”.

Ron also asked if the new model as we see it evolve, and it will evolve, is even p2p anymore.  Sensible securities law and regulation requires that investors are protected from unscrupulous and criminal offers.  Going back to an anarchist model, the unfortunate reality is that without a proper framework confidence will be eliminated as the extent of the bad will always overweigh the good.  The current credit crisis is proof of that concept.

We need the tension between business and regulation.  Management of that tension is a joint responsibility of government with their regulation powers, and business to continually open up new possibilities that people want.  If we leave it to one or the other we gain nothing.  What we are seeing with LendingClub, Prosper, and CommunityLend are examples of business working with the regulatory powers to extend the thinking into the possibilities that internet provides.

Relevance to Bankwatch:

Internet offers such potential and possibility by connecting people in a trusted yet open framework that surely something better can exist. 

This is the promise of social lending – one that stretches the known financial framework, yet offers the protections and knowledge that informed users of financial services deserve.

 

Written by Colin Henderson

October 17, 2008 at 00:30

Posted in Canada, Social Lending, US

The nature of social capital and trust in banking and financial services


I have enjoyed a re-read of Bowling Alone during a recent vacation.  Its a fascinating book written very academically, so not an easy read.  Tons of statistics.  However the concepts that it explores are relevant and interesting for Banks.  For me it helped to sort out differences between Banks and others, and the nature of trust.  It helped me better understand social capital.

What is especially interesting and relevant for our times is that it was written in 1999.  This book predated the dot com crash, and predated the rise of social networks, yet it nailed the much of the direction of internet that we have witnessed through the twentyfirst century to date.

It does that because it takes a sweeping century wide view of social progress, and lays out the possible reasons for the shifts in a quite objective and analytical manner.

The basic premise is that the fabric of US society has altered dramatically in the last 1/3 of the twentieth century, and people are significantly less civically engaged than in the first 2/3.

We care less <here> about civic engagement, but more about the underpinnings of that shift.  In the discussion Putman talks about social capital, and the shifts in that capital.

I see relevance here for Banks to understand their customers from a perspective that normal segmentation will not pick up.  First some definitions that the book uses, then discussion.  I am keeping this deliberately relatively brief, and if you want to delve deeper, then 540 pages await you!  Worth the read if you care about this stuff.

First some definitions, which you can skim, then the discussion.

Definitions [from “Bowling Alone]:

Social Capital:

“How does social capital work?
The term social capital emphasizes not just warm and cuddly feelings, but a wide variety of quite specific benefits that flow from the trust, reciprocity, information, and cooperation associated with social networks. Social capital creates value for the people who are connected and – at least sometimes – for bystanders as well.

Social capital works through multiple channels:
– Information flows (e.g. learning about jobs, learning about candidates running for office, exchanging ideas at college, etc.) depend on social capital.

Social networks are important in all our lives, often for finding jobs, more often for finding a helping hand, companionship, or a shoulder to cry on.  [Fischer]”

Bonding Capital:

… inward looking and tend to reinforce exclusive identities and homogeneous groups.  eg fraternal organisations, church based womens groups, fashionable country clubs, ethnic enclaves, start up financing groups, etc. [sociological superglue]

Bridging Capital:

Bridging networks, by contrast are better for linkage to external assets and for information diffusion.  .. when seeking jobs, political allies the weak ties that link me to distant acquaintances who move in different circles from mine, are actually more valuable than the strong ties that link me to relatives and intimate friends, whose sociological niche is very like my own.   [sociological WD-40]

Thick trust:

Social trust embedded in personal relations embedded in personal relations that are strong frequent and nested in wider networks.

Thin Trust

Social trust that exists beyond thick trust.  e.g. an acquaintance at the coffee shop, or at work.  Think trust rest implicitly on some background of shared social networks and expectations of reciprocity.  A standing decision to give most people – even those whom one does not know from direct experience – the benefit of the doubt.

the test: “Generally speaking, would you say that most people can be trusted, or that you can’t nbe to careful in dealing with other people” – this taps feelings about .. thin trust.

Discussion:

Putnam discusses throughout the continual balance between legal trust constituted by law and order and civil law versus the thin trust that exists around us all.  This goes to reputation of people, of groups of cities, and of countries.  Generally he concludes that thin trust is less now than 30 years ago, and there are many drivers attributed to that including television, lack of personal time, commuting separation of home location and work location etc etc.  In any event people feel less engaged and are less engaged.

However what he notes and is interesting is that people still respond to social capital despite the disincentives in our modern life.  He notes in particular the potential of internet and information technology to dramatically improve the opportunities for social capital.  [note book written in 1999].

Whether we look at social lending, or social networks like Facebook, there is much discussion and optimism on topics of ‘friends’, and levering social capital in simple and convenient ways.  It is interesting to look at those two examples plus traditional banking.

What struck me the most is that these examples are largely based today on different kinds of trust.  Facebook is all about thick trust for the most part.  Exceptions are those that choose to gather lots of friends, and in those cases I would argue not even thin trust exists, but it may be somewhat developable.

Social Lending has thin trust established between the lender and the social lending service.  There is also thin trust established between the borrower and the lending service.  These thin trusts are based on trading of confidential information, between the borrower or lender and the service.  By accepting that role as the trust broker, the social lending service is able to allow the creation of a new thin trust to exist between the lender and the borrower that could not have otherwise existed.

Its clear that all social lenders are not the same, and the securities regulatory environment hinders the development of a  broad development of thin trust by imposing other rules that obscure the underlying benefits, nonetheless this is the promise of social lending and social finance in general.

Traditional banks have no such level of social trust that can be created.  Each relationship is unique and between the customer and the bank as an organisation.  Particularly in lending, that is managed through brokers or different personal lenders each time, the relationship is defined by gathering and validation of information each time.  One of the complaints I frequently heard in my banking career was the lack of continuity in the branch, and the lack of long term relationships being built with the bankers.

Lastly looking at the bridging vs bonding, then similar patterns emerge.  FaceBook is about bonding capital, based on thick trust.

Banks have neither bonding nor bridging.  Social Lenders are to various degrees creating hybrid elements of bridging capital, and although the users are anonymous to each other, they get to know each other by user name identifiers.

Relevance to Bankwatch:

The book helped me at least to differentiate the fundamentals of the model between banks and social lenders, and between social lenders and FaceBook.  The difference is in the type of trust that forms the basis of them  FaceBook is thick trust, and I would argue a bad place to establish a business.  The old adage of doing business directly with friends (real friends) is a bad idea, prone to future disaster for the friendship.

Banks I would argue have neither thin nor think trust.  They are based on legal relationships.

Social lenders, at least, have the opportunity to lever trust, albeit thin trust that could not otherwise exist without the social lending service, and establish some bridging capital.  Bridging capital is the more powerful capital in terms of impacts on people and society.

Written by Colin Henderson

August 26, 2008 at 11:34

Posted in Social Lending

Platform vs market logic, applied to P2P Lending


Back from vacation, and thinking about all kinds of stuff.  Long post on Social Capital coming, but meantime, and kind of related <in my mind> Umair does a nice job of discussing the merits of platforms and markets.  It is an important distinction, and his final quote here explains what caught my eye.

What Apple Knows That Facebook Doesn’t – Umair Haque

This conclusion also helps us answer another critical question on the minds of today’s investors, entrepreneurs, and would-be revolutionaries: when will today’s crop of startups start making serious cash? The answer: when they shift from platform logic to market logic.

He finishes by asking which players are being held back by platform thinking?  I worry about P2P Lending being held back back by that thinking, but feel a little better after going through this exercise.  First the background:

Platform logic vs market logic

Platform thinking; is based on consistent sets of principles including these taken from the book Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation (Hardcover) that “drive success”.

1. Determine the scope of the firm
2. Design product technology strategically
3. Shape relationships with external complementors
4. Optimize internal organizational structures

The book was written in 2002, and the examples are interesting in that context.

Platforms are all about creating a monolithic enterprise that determines its own fate by being consistent and strong to the outside world.  Platforms are about convenience, including external and internal relationships, and products designed to dominate the space.  Platforms are about scale.  Think Microsoft, IBM, Intel, and in banking, Bank of America, Barclays, or HSBC. 

It sounds and feels very insular and inwardly focussed.

Market thinking;  is all about customers and offering something of value, for value.  Its about oferring something for sale that people want.  Market thinking will, as Umair says, “alter the basis of competition”.  This requires a structural shift and is designed to catch the competition wrong footed, not as platforms would, merely look to dominate, using corporate shock and awe.

P2P Lending is generally following a market logic approach

P2P Lending is in its infancy, so its hard to consider any of the players are market dominating at this early stage.

The three market attributes that Umair discusses are interesting though, to explore which, if any of the current players are exemplifying those attributes.

Markets alter the basis of competition
P2P Lending could be said to alter the basis of competition.  The interest rates and the customer processes vary, but generally they do achieve that. 

Markets cause strategic domino effect
Is there a strategic domino effect?  This will be based on scale, and as yet we are not seeing a shift in banking as a result of P2P Lending.  Or are we?  Banks are seeking ways to enter the space and test the waters, by becoming lenders in some P2P Lending companies.  P2P Lenders are springing up around the world, with the latest count being over 30.

Yet, there is somthing holding back the ‘domino effect’.  That is regulation.  The one thing that prohibits the domino effect is regulation.  I am living that with CommunityLend, and Lending Club have filed their revised S-1 in the US.  Once we start to see regulataory approvals in place, how will the picture change?

However many are not considering, or dealing with the regulations.  Is that a good thing or a bad thing?  Regulation, and the ability to have P2P Lending be seen as a friend of safety and security will ultimately be a key factor.  Borrowing and investing are matters of finance that are all the more important to everyone concerned, following the major ball-drop by Banks’ lately.

Markets atomise the value chain
This is where existing players see their processes and products chopped into tiny pieces and taken over by new entrants who see better ways to manage things.  P2P Lenders are doing a good job at this aspect. 

 

So it seems that P2P Lenders are pretty good on 1. and 3. but not quite so much on 2. yet.  Umair uses FaceBook and Apple to compare the platform to market approach.  He speaks of FB signing deals with incumbents <Microsoft> and thus failing on 2. 

What of P2P Lenders allowing Banks to participate in their services?  On reflection I think this is not the same as selling out to incumbents.  Rather it is requiring incumbents to adapt to the new model if they wish to participate, and places them on the same playing field as the others in the P2P market. 

However the regulation impact is still troubling and whether enough P2P lenders will be able to see it through to establish the domino effect is key. 

Time will tell.

Written by Colin Henderson

August 23, 2008 at 03:00

LendingClub file revised S-1; suggests progress being made


LendingClub has filed a revised S-1 with the SEC. This suggests progress, and will be as a result of comments on the original S-1. Comments from the SEC are not public until final approvals.

I need to review the copy to figure out the changes and updates. More tomorrow.

www.sec.gov

As filed with the Securities and Exchange Commission on August 1, 2008

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LendingClub Corporation

Written by Colin Henderson

August 4, 2008 at 23:51

Posted in Social Lending

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