May P2P Lending News
May was a very busy month for the team here at Harmoney, and, as always, full of some pretty interesting industry relevant reading. Here's our selection of the best of the month:
Truths of Marketplace Lending
An article on the Orchard Blog took a look this month at the long-term trends that have powered this industry over the past several years, which are no less true today than they were in the very beginning.
- Unbundling - The internet is taking entire industries apart and putting them back together in smarter ways. Consumers are no longer forced to handle all of their finances with a single provider (i.e. bank) who offers a limited range of options. The amount of time and effort it takes to shop amongst technology companies who offer innovative products and provide better customer experiences has never been easier.
- Billions Served - The leading p2p lenders are serving billions of people around the world so they can no longer be considered small “tech startups.” They are major providers of financial services and they’re become an increasingly important part of people’s financial lives.
- Stability of Consumer Credit - For the past 3 decades, charge-off rates on consumer debt have hovered around 2-3% annually in the US. Even in the deepest recession caused by the global financial crisis, defaults peaked at just over 6%. Consumer credit has proven to be one of the most stable asset classes, providing investors with attractive returns and ample of opportunity for diversification.
- New vs. Legacy Technology - New lenders have an advantage over traditional lenders is in their ability to apply new technologies to their business and innovate quickly. Traditional lenders have the burden of maintaining legacy infrastructure and must embark on multi-year, multi-million dollar IT re-engineering projects.
- Transparency and Trust - In any market, new entrants must put in significant effort into gaining the trust and credibility of their customers. The unprecedented levels of transparency offered by online lenders has helped investors feel comfortable putting their hard earned money to work on p2p lending platforms.
3 Predictions from LendingRobot CEO
Crowdfund Insider interviewed Emmanuel Marot, CEO of LendingRobot to share his views on the p2p/marketplace lending industry. For those of you who don’t know, LendingRobot is a Fintech company that provides powerful tools for smaller investors to deploy their capital on a few of the largest p2p platforms. Similar to Orchard who focuses primarily on institutional investors, they’re mission is to empower small investors to create a diversified portfolio of loans in an automated process. The interview covered a wide range of topics, but we’ve included his top 3 predictions for our industry this year.
- Regulators will finally take a clearer stance on peer-to-peer lending.
- Borrowing and Lending will be increasingly done on a mobile device.
- Marketplaces will start relying on radically new risk-assessment methods.
Lend Academy Podcast
For those of you who prefer to listen to your news sometimes, you’ve got to check out the Lend Academy podcast. This month’s discussion is with Brian Weinstein of Blue Elephant - one of our Institutional Lenders, who funded the first ever loan on our Marketplace. We recommend you listen to the most recent podcast (and many other past episodes available in their archives) to gain a better understanding how institutional investors are thinking the current market conditions.
Until next month!