P2P Lending Archives - Page 6 of 7

Virgin Money P2P Lending on the Cover of Fortune Small Business

By Jim Bruene Posted on November 26, 2007
Categories: Loans & Credit, P2P Lending, Small Business, Virgin Money

Jeff Bezos may have grabbed the cover of Newsweek for the latest high-tech gadget, the Amazon Kindle, but that's old hat for him. The bigger news in online banking circles is Richard Branson gracing the cover of the December/January issue of Fortune Small Business (click on the inset to read the magazine online). His smiling mug is shown tossing hundred-dollar bills out of a teller cage.

The reason: Virgin Money USA (previously Circle Lending) is one of six new products/services the magazine included in its annual "The Next Little Thing for 2008" series. To be part of the article, the innovation must be coming from a "small business," although I'm not sure Virgin qualifies as small anymore.

The 1.5 page story discusses the Business Builder "friends and family" loans that Virgin will administer for a one-time cost of $199 to $299 plus $9 per payment. The company says it plans to offer a business loan product later in 2008 or 2009 that will match outside money to the original friends and family loan, provided it's been paid on time.

Could 2008 be the year of person-to-person lending? Given Branson's track record, there's a good chance the relatively unknown service will take off next year.

Note:

1. According to my recollection.

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Virgin Money USA Launches in Boston/NYC Today

By Jim Bruene Posted on October 15, 2007
Categories: Loans & Credit, P2P Lending, Virgin Money

Ever since Virgin bought CircleLending for $50 million earlier this year (previous coverage here), I've been looking forward to its launch. We hoped they might launch at our FINOVATE conference two weeks ago, but we lost out to the Mortgage Banker's Association's 94th Annual Conference in Boston, where Sir Richard Branson delivered the opening keynote a few hours ago.

According to today's NY Times, Sir Richard himself will hand out red "dollars" today in Boston's Copley Square while mere mortals will be doing the same in Manhattan.

We now have answers to several questions about the new venture:

Will Circle Lending's product, person-to-person loan administration and servicing, live on?
Answer: Yes, in fact it looks identical, but with much more marketing pizzazz.
Will the Circle Lending product be extended into a person-to-person loan marketplace like Prosper and LendingClub?
Answer: Not yet, but I still expect that to happen.
Will Virgin Money use person-to-person lending as an entry point for a full line of financial services?
Answer: Not yet, but there has to be more coming.
Will Virgin Money bring the hip U.K. direct-banking vibe to the United States?
Answer: Yes, the website is very progressive by U.S. banking standards (see screenshot below). I haven't seen any other media efforts yet. However, the current homepage design is marred by an annoying Flash display that is a real turnoff even on a broadband connection. Once you get off the homepage, the rest of the website is excellent.

According to today's Boston Globe, the company currently employs 30 in Waltham, Mass., a headcount that will double the over the next year as it introduces more services. The only new service disclosed so far is student loans, an obvious fit with the friends and family real estate, business, and personal loans offered today. We'll be following Virgin Money USA closely and will include an in-depth analysis in an upcoming Online Banking Report on person-to-person lending (2006 report is here).

Virgin Money USA homepage (15 Oct 2007)

Goodbye page at CircleLending.com (15 Oct 2007)

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Geezeo iWants Facebook Users

By Jim Bruene Posted on September 26, 2007
Categories: Epayments, Facebook, Geezeo, P2P Lending, PayPal, Personal Financial Management

I check Facebook about once or twice per week to see what new financial apps have been posted. So far the ones we've looked at include (see previous coverage here):

Lending Club's P2P marketplace
Prosper's Fantasy Banker
PayPal
Wesabe
Buxfer
TD Bank's Split It
Obopay's BillMonk

The latest entrant, iWant from online personal finance specialist Geezeo (see screenshot below). iWant is an application that allows Facebook users to share with friends their wants and needs, such as "buy an iPhone" or post more goal-oriented items such as, "pay off my student loans" or "throw a graduation party." And Geezeo ties it up nicely by tapping PayPal's API to facilitate "contributions" to the financial goals. It's also integrated into Geezeo's online personal finance application so users can track their goal progress in real time. ChipIn offers similar payment functionality in its Facebook app (previous coverage here).

I wonder if Geezeo will make a P2P lending play here? If Geezeo's software included a repayment option, the iWant "donors" could easily become iWant "lenders" and a whole new market might open up.

If you are attending our upcoming FINOVATE conference next week in New York, you'll be able to ask co-founders Peter Glyman and Shawn Ward yourself. We are fortunate to have not only Geezeo, but two other early Facebook innovators, Prosper and Lending Club on the DEMO stage. If you can't make the event, check our website in two weeks for full length videos of each DEMO.

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FINOVATE 2007 Lineup: The Lending Innovators

By Jim Bruene Posted on August 27, 2007
Categories: Finovate, Lending Club, Loans & Credit, Mortgagebot, P2P Lending, Prosper

As we enter the final week of summer, we will begin showcasing the companies that will be DEMOing new products and services at our inaugural conference FINOVATE 2007. See here for the complete lineup.

Person-to-person lending
P2P lending has grabbed headlines around the world since it launched in the the United Kingdom in March 2005 by Zopa. We are pleased to have on the FINOVATE agenda the two leading U.S. providers: Prosper, the brain-child of E-Loan founder Chris Larsen, and Lending Club, which launched its exchange on the Facebook platform just three months ago.

Both companies received significant cash infusions this summer and we're looking forward to seeing what enhancements the lenders will showcase at FINOVATE 2007.

Lending Club received a significant $10.3 million first round last week (blog entry here). Since the company's launch of Facebook three months ago today, it has closed 134 loans averaging approximately $5,600 for a total of $750,000 in originations.

In June, Prosper, the winner of an OBR Best of the Web award last year (note 1), secured a $20 million third round bringing total funding to $40 million (previous post here). The company now has more than 380,000 members and has funded nearly 14,000 loans totally $80 million. Since inception, Prosper has posted more than 168,000 loan listings from more than 75,000 borrowers.

Mortgage lending
Here's a bit of trivia for Monday afternoon (or Tuesday morning if you read NetBanker via email): What was the first profitable banking website? And no, this is not a trick question with the answer being "none" or "no one knows" (see note 1).

The answer: Bank of America in 1994, or at least that's what an exec told the audience at the first conference on Internet banking held in the summer of 1995. Practically before anyone outside of academia or Silicon Valley had heard of the Web, BofA was using it to produce mortgage leads in the lucrative California market. I can clearly remember the woman who ran BofA's website saying, "mortgage leads are already more than covering the bank's costs (of its website)." Of course, that was in the days when a website cost less than a couple billboards.

We've been writing about online mortgage lending since that first 1995 conference. One of our favorite lending platforms, winner of the second mortgage-related OBR Best of the Web award in 2001, is MortgageBot. The company was also named to last year's INC 500 list of the nation's fastest growing private companies producing a 560% revenue increase during the YE 2002 through YE 2005 period.

At FINOVATE 2007, MortgageBot will take the stage to show a radical new approach to mortgage shopping that its been testing for some time now. We can't release the details yet, but we were luck enough to get a sneak peek on Friday and were very impressed!

Note:

1. Our sister publication, Online Banking Report (OBR), typically names 6 or 7 companies as "Best of the Web" during the course of each year. It is earned by launching a product or service that significantly "raises the bar" in online delivery of retail banking and lending products.

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Zopa’s International Expansion

By Jim Bruene Posted on August 25, 2007
Categories: Loans & Credit, P2P Lending, Zopa

I think I understand Zopa’s delayed U.S. launch a bit better now. Apparently, the company is looking to expand not just in the U.S. but in Asia as well (along with the previously announced Italian licensee).

Here’s a quote from a recent blog entry

“…we have had over 100 different teams in over 40 countries get in touch with with us, looking to launch a version of Zopa locally. These have ranged in distance from France to New Zealand, and included countries as diverse as Brazil, Mexico, Canada, India, Japan, Korea, Taiwan, Australia, South Africa, Ghana, Turkey, Spain, Germany, The Netherlands, Poland, Slovakia, Lithuania and Romania.”

We’ve seen that interest at Online Banking Report as well. Our Feb. 2006 report on Prosper and P2P lending was our best selling issue of all time. We’re planning an update later this year, hopefully with an analysis of Zopa’s U.S. version, which the company still says is coming this year.

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Lending Club’s YouTube Contest Off to a Slow Start

By Jim Bruene Posted on July 30, 2007
Categories: Advertising & Promotion, Lending Club, P2P Lending, YouTube

Update July 30: I don't know if it was me or YouTube's search function (probably the former), but I missed at least six other entrants into the Lending Club contest. While I'm still surprised there are so few — as of 11 AM Pacific today, there are 10 total entrants here — that's MUCH better than three. What's more important: several are approriate and relatively clever. The current leader here, and probable winner, has nearly 5,000 views and will be hard to catch. Another thing I missed, the company DID put the contest in its blog here. I apologize for the errors.

Start-up, P2P lender Lending Club is sponsoring a user-generated video contest on YouTube. The most popular video wins $5,000, and in addition to its blog, the contest is also discussed in the lender's Facebook Group (screenshot below). Despite this exposure, the contest doesn't seem to be widely known. We read about it last week on a P2P lending blog called Prosper Lending Review.

Right now, it looks like someone's going to make off with an easy $5k. The contest, which began July 17, and ends on Aug. 10, has only two entrants posted on YouTube, at least using the correct tab "Lending Club." One is recorded so softly, you cannot understand a word of it, another features a guy reading website copy on his couch, and the last one is a dubbed-over 1-minute clip from the Hound of the Baskervilles. I don't want to skew the results by linking to them. Trust me, you don't need to watch them.

And since the winner is the video with the most cumulative plays on Aug. 10, new entrants have less than 2 weeks to rack up more than the 2,000 views of the current leader.

A few lessons from this effort:

Lesson #1: While the contest is a great idea to generate low-cost buzz, and perfect for a Facebook-based app like Lending Club, the lesson here is that you need to run it longer so the contest can create its own viral momentum. Three and a half-weeks just isn't enough time for the word to get out to enough creative types and for them to get something interesting recorded, uploaded, and for it to catch on with YouTube viewers. In contrast, see our coverage of Intuit's TurboTax Rap which generated more than one million YouTube views (previous coverage here).

Lesson #2: Lending Club was apparently testing the power of FaceBook groups, creating a special one just for the contest called, "Lending Club Contest — Win $5,000." The lender did not mention the contest (see update above) on its website. But unfortunately, the Facebook club has only 57 members after two weeks and doesn't appear to have the horsepower to spike enough word-of-mouth buzz on its own. I'm sure they will do it differently next time.

Lesson #3: You might want to include a clause in the contest rules stating that videos containing pirated content or profanity, are unintelligible or not understandable, are not allowed. That would eliminate all three current entrants. Here's the official rules posted at Facebook.

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Prosper Borrower Seeks "iMoney for iPhone"

By Jim Bruene Posted on June 7, 2007
Categories: P2P Lending, Prosper, Search Engine Marketing

When researching my earlier post, 10 Ways for Banks to Leverage Apple iPhone Hysteria, I happened to search for "iphone loans" at Google (see results below). Not really expecting to find anything, I was shocked to see the first result pointing me to a recent loan listing at Prosper (see inset, full listing here).

Unless this is a stealth PR ploy from Apple (doubtful), the enterprising NY waitress who posted this Prosper loan request, is riding the iPhone wave to nail down decent terms on a $1,000 loan, which she says will be used to buy the phone.

Julestar01, who by the way has a great future in marketing ahead of her, used the eye-catching graphic above along with the killer title, iMoney for the iPhone. After being highly recommended by the leader of her Prosper Apple User Group, including his/her first bid for the full grand at 13.20%, the loan is now fully funded at 12.55% with more than seven days remaining. It has already attracting 20 bidders causing the rate to fall 20 basis points even as I wrote this post. I'm sure there will be many copy-cat requests after the success of this one.

It does provide another way for a bank to leverage the iPhone hype: jump in and fund this loan, then you can say you are the first bank to make an iPhone loan.

Another fascinating observation, and the real reason for this post: Prosper, not Apple, or AT&T, or even Citibank, has the number one organic link on Google for "iPhone loans" at absolutely zero cost. That's the first-mover advantage at work.

Page 1 Google search results for "iphone loans"
(10:00 AM PDT, 7 June, 2007, from Seattle IP)

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New Person-to-Person Lender Loanio Readies for Launch

By Jim Bruene Posted on June 1, 2007
Categories: Loanio, Loans & Credit, P2P Lending

Just as the dust was clearing from the latest social lending launch, Lending Club, which opened on Facebook exactly one week ago (coverage here), we received word of another P2P lending exchange Loanio. The founder is revealing little about the new company at this point, but you can see from its logo and tagline, People Lending to People, what market it has its eyes on.

Loanio's one-page website allows you to enter your email address for future notifications. We'll be covering all six North American P2P lenders (see note) in an upcoming update to last year's Online Banking Report on the market for P2P loans. (Hint: we will publish a longer-term forecast which will show more robust opportunities past the 2006-2011 period we looked at in our last report.)

Note:

Right now the North American market consists of five pure P2P lenders:

Prosper (US, launched Feb. 2006)
Zopa (UK, but coming to the US in 2007)
Lending Club (US, launched 25 May, 2007)
Community Lend (Canada, not launched)
Loanio (US, not launched)

Plus, P2P loan servicer:

CircleLending (now owned by Virgin USA, launched 2001)

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New Person-to-Person Lender, Lending Club, Hopes Facebook Linkage Allows it to Prosper

By Jim Bruene Posted on May 25, 2007
Categories: Facebook, Lending Club, Loans & Credit, P2P Lending, Prosper

Just as we are putting the finishing touches on our latest Online Banking Report, which looks at the intersection of personal finance and social networks, a new person-to-person lender launches. And how do they plan to gain traction? Through tight integration with Facebook, the second-largest social network. So we are holding the presses, and adding this important new development to our upcoming report.

We'll have much more on it later, but if you are curious now, login to Facebook and check out Lending Club (the easiest way is to login via the link at the top of the Lending Club homepage). Or read Colin Henderson's great analysis here.

Last year, Facebook developers created a proof-of-concept personal finance app, originally called Facebank, then changed to MoochSpot (see previous coverage here). That effort was designed to show how third parties could leverage the Facebook API to create new services. It didn't take long for someone to take the bait. Within a few weeks, BillMonk created an interface to Facebook to support their expensing tracking service, now owned by Obopay. Buxfer also supports login via Facebook's username/password (post here), but does not link into the social network as yet.

But Lending Club is the first to leverage the Facebook interface to support actual financial transactions, in this case lending/borrowing. The company is modeled after Prosper. Lending Club timed its launch to coincide with the Facebook developer's meeting and launch of Facebook Platform.

We'll be testing it during the next few days and will report back on whether its a challenge to mainstream lending, or merely blog fodder. Given the rising power of social networks, my guess is the former.

LendingClub homepage from outside Facebook

LendingClub homepage from inside Facebook

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Virgin Money to Enter U.S. Market Through Acquisition of CircleLending

By Jim Bruene Posted on May 17, 2007
Categories: Mortgage, Refi & Home Equity, P2P Lending, Prosper, Virgin Money, Zopa

This is a very interesting bit of news today. Virgin Group PLC, the high-flying UK-based company run by Richard Branson, says it will be using Waltham, MA-based CircleLending to enter the U.S. financial services market. Virgin's financial services are marketed under the Virgin Money brand in the UK (see screenshot below) and several other markets.

If you take a broad view, CircleLending was the first pure peer-to-peer lender in the U.S., five years before Prosper got its start (see previous coverage here). However, CircleLending has historically limited its involvement to servicing loans made between family members, not brokering the deals or vetting the applicants like Prosper and Zopa.

However, from the sounds of it, that will be changing under the new majority ownership by Virgin USA. According to Asheesh Advani, CEO/Founder of CircleLending:

"(CircleLending will be the) launching pad to brand Virgin in the U.S. in financial services"

According to the American Banker article here, the new venture's first product, sold under the Virgin name, will be a direct mortgage that blends "friends and family" funds with capital from a financial institution and/or the secondary market. They also said they will have a credit card and are looking at student loans.

It will be interesting to see how they use peer-to-peer finance in its efforts. Anthony Marino, Virgin USA's SVP Corporate Development told American Banker:

"(the CircleLending platform) provides a broad opportunity to address consumer needs, and the Virgin brand allows us to bring a unique tone of voice to the market,"

And,

"We are … building a major, Virgin-branded financial services company in the U.S."

Analysis
These are not new concepts, but with the Virgin marketing muscle behind them and the integration of peer-to-peer tools, the newcomer could carve out a significant niche in the massive U.S. mortgage lending business. The new entity could also leverage the CircleLending platform to compete directly with Prosper and Zopa in the U.S. and importing the resulting product into the UK to compete with Zopa there.

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Prosper Advertising on BankRate.com

By Jim Bruene Posted on May 11, 2007
Categories: Advertising & Promotion, P2P Lending, Prosper

After posting yesterday about the apparent traffic spike at Prosper (here),* I ran across this ad this morning at BankRate.com (here). Prosper’s excellent landing page is shown at the end of the post.

I’ve seen Prosper advertising a bit on Google (here), but this takes the lender’s marketing to a whole new, and expensive, level. At BankRate, a site littered with 5% APY come-on’s, this orange 12% rate offer will attract a lot of attention. But given the typical acquisition costs of $100+ for advertising at BankRate, it will be tough for this to pan out from an ROI perspective. With Prosper’s 1% loan fee plus 0.5% servicing charge, it would take roughly $7,000 in lending volume per new customer to break even in the first year, if acquisition costs average $100.

But after visiting with Prosper’s founder, Chris Larsen, at the recent Net.Finance conference, I have a renewed respect for what they are doing. We’re working on a Prosper 2.0 report, as a followup to last year’s initial look at person-to-person lending (here).

Prosper landing page after clicking through the above BankRate.com banner ad

* Compete told me they are looking closer at the data to see if there were any anomalies in the latest estimates for Prosper.com traffic.

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