LeWeb : Money and the sharing economy
A panel discussion nominally about money in the sharing economy, but actually more about peer-to-peer lending.
Chaired by Nina Dos Santos, News Anchor & Correspondent, CNN World Business Today
- Samir Desai, Co-Founder & CEO, Funding Circle
- Raffael Johnen, Co-Founder & CEO, Auxmoney.com
- Renaud Laplanche, CEO, Lending Club
Samir Desai: Business has trebled in the last year. £10m is being lent per month. $109m in total since launch.
Raffael Johnen: We facilitate lending between individuals. We bring borrowers and investors together for loans €1000 to €20,000. Borrowers can put things like their car up as collateral.
Renaud Laplanche: We have also trebled our lending. We expect to get to $2bn in lending.
How can you guarantee that your platform will guarantee that people will get their money back?
Raffael: We don’t. Our average return is between 6% and 7%. We go after the borrower if there’s a problem.
Samir: We lend to established businesses, which have been trading for two years. We have rigours testing procedures, and underwriters. Because business lending is political, we’ve started seeing the UK government lending money through Funding Circle. This could end up as 20% of the market. 70% of customers would come to us in preference to a bank. This sort of product better meets the needs of businesses – half of applications are made outside working hours.
Raffael: Asking for regulation of our industry might be a good thing – it gives us a stamp of approval. We’d like government support In Germany as weil, to help support new businesses.
Samir: We’ve been lobbying for regulation. We have succeeded, and will be regulated from next year. It gives credibility and lets people see its a serious thing.
Renaud: We fall under existing legislation. We have worked very hard to be the good guys of financial services. The regulator sees that and realises we make credit more affordable for US families.
Samir: We’re in a generational shift in financial serves. Before 2007/8 nobody had really come in and disrupted banks. Now, there are low levels of trust in banks, and the internet is really coming to financial services for the first time.
Do investors know which companies they invest it, and can they help them succeed?
Samir: Yes. You can go in and look at the companies, and pick and choose, if you want. A lot of lenders like to lend in their local areas. I don’t think it’s about anonymity, it’s about transparency.
Renaud: Our transparency is in stark contrast to the financial instruments that caused the 2008 crash. All our companies have perfect asset:liability matching at 1:1 – there’s no leveraging.
Raffael: We are built on technology from the group up. Banks come from a different base. It’s difficult for them to get away from branches.
*Bitcoin: are people trading in virtual currencies because they’ve lost faith in others? *
Renauld: It needs more stability to really grow. You can’t have a currency with 20 to 30% volatility.
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