Archive for the ‘p2p lending’ Category
CGA Canada produced their 2010 report Canadians debts. Most of us quietly assess ourselves against others and against the average as one way to judge success in achieving our financial goals. This report provides a window into the financial lives of Canadians and it is freely available.
Credit (excluding mortgages) all through the last three years has been increasing and at much higher rates than the US.
Drilling deeper we see that 77% of this debt is in loan products with floating (Line of Credit) or high rates (credit cards) and therefore essentially no amortization. We know that if the minimum payment is regularly made on those products they will take over 30 years to repay in full, no matter the amount outstanding. This is hardly a recipe for reducing debt.
The CGA worry about three future risks for Canadians.
1. Decline in income
2. Asset price shock
3. interest rate shock
At CommunityLend we want to help in any way we can with transparent prices and products designed to reduce debt while also providing some protection from the risks mentioned in this report.
Link to email we just sent out to subscribers – copy below
It is hard to believe that it’s been 30 days since the official launch of the CommunityLend peer-to-peer lending service. It took us a while to get here and now time is flying by.
As part of our commitment to keep our community apprised of our progress we’re starting the CommunityLend newsletter this month.
Early Activity is Positive.
Since our official launch in February, our first 30 days has seen a great deal of activity at the CommunityLend website. With almost no marketing during this period, we have already:
- Received over 28,000 unique visitors to our website
- Registered over 450 new members
- Received over $700,000 in Loan Demand, and
- Posted more than $70,000 in Loan Requests meeting our strict borrower criteria
Early lenders are actively bidding on loan requests and a good number more, both individual and institutional, are in the process of setting up their lending accounts.
We’ve still got a ways to go before we really "change the rules of lending" but the first month has us pointed in the right direction.
Early Feedback Has Proved Invaluable
When we started CommunityLend, we stated that our service would be based on the needs of our customers. During the first 30 days, we received some very valuable feedback from customers on things that they liked and didn’t like about the overall experience. We couldn’t be happier. Based on this feedback, we’ve already made two significant changes to the site and have many more coming. We’ve just launched a new borrower process which we expect to be clearer and faster for new borrowers and we have launched a new homepage with easier navigational features. Please keep that feedback coming in!
In the Press
The CommunityLend market launch continues to attract significant media interest and we appreciate such a positive market response to what we’re building. Here are few examples in case you missed them.
Share The Wealth
Please feel free to “share the wealth” and forward our newsletter to others who you feel could benefit from CommunityLend.
Promotion Reminder – Fees Waived Until April 30, 2010
We continue to run a great early lender and borrower promotion, so there’s never been a better time to sign up!
It’s already free to register as a borrower or lender at CommunityLend and to help make your decision to join us even easier, from now until April 30th, 2010, CommunityLend is offering a special incentive to both borrowers and lenders!
We will rebate back ourBorrower Adminstration Fee for any borrower loan that closes between March 18th and April 30th, 2010.
We will rebate back ourLender Annual Adminstration Fee for all closed Loans in which a lender participates before April 30th, 2010 for a subsequent period of six months from the closing date of each Loan. Click here for more details.
You can find us on:
John Greenwood wrote about us on the front page of the Financial Post (National Post) today.
This quote captures the essence of what we hope to offer Canadians at CommunityLend. Its nice that it came from the Harvard Business Review, and sorry we can’t provide the full article which is subscription only.
It is only a matter of time before these digital systems close the arbitrage enjoyed by large banks, which lend at up to 15% interest but pay only about 5% on capital. Why do business with a bank when your network’s lending and savings interest rates are both 7%.
To grasp the power of such a system, imagine your local credit union with the membership and social networking capabilities of MySpace.
A simple concept worth reflecting on, for us, and for Banks. Whatever the interest rates are in Canada, the reality is that a large spread exists between loan rates, and deposit rates. The facts are clear, and, the costs that Banks’ must cover are real.
At its essence CommunityLend would like to offer a better way for everyone to share in that spread by providing a simple and efficient service.
We think its a powerful concept. What do you think?
As we move towards launch, one of the things we watch carefully is consumer confidence and reactions to moves in the financial markets. We believe in the opportunity for P2P Lending, and that in fact the transparency brought about through P2P Lending offers a win – win for consumers and financial services.
Let me explain …. first off, looking at consumer confidence, while these statistics are American, and we certainly hope that Canadians will not have the same degree of change, our economies tend to operate closely.
The Conference Board Consumer Confidence Index, which had declined sharply in February, fell further in March.
More interesting is examining the cause of the drop. Recently the Toronto Star ran this piece by NY Professor and economist Joseph Stiglitz, which summarised for me anyhow, the crux of the matter.
They thought that financial innovations could somehow turn bad mortgages into good securities, meriting AAA ratings.
It seemed too good to be true – and it was. Worse, banks failed to understand the first principle of risk management: diversification only works when risks are not correlated, and macro-shocks (such as those that affect housing prices or borrowers’ ability to repay) affect the probability of default for all mortgages.
My own take, that I have written about, is that the technical mechanics of interbank investments (Asset Backed Commercial Paper, ABCP) have overtaken basic common sense. Rule #1 has always been to know your customer, and … for the customer to know you. This transparency has been lost in many ways.
The promise of P2P Lending is being re-defined
One promise, for me at least, for social lending lies in the return to better transparency between those who lend (invest) and those who borrow. That transparency offers something beyond just rates, and insight into the financial service.
Consumers consider the protections they have within the regulatory environment, especially here in Canada. Until recently P2P lending has been held up as a web 2.0 replacement for traditional financial services. This is too simple an argument.
Regulation is a fact, and probably desired (within reason) by most people. If P2P Lending is to evolve as a sustainable business that addresses the needs of all parties, then the local country regulation is a component that has to be built into the model.
Web 2.0 has to meet reality!
At CommunityLend our vision is to build a long term sustainable service that puts consumers first, and that includes ensuring their rights and obligations are addressed within Canadian regulations. We won’t be picking on anyone in the current credit mess, not even Banks. Rather we hope to offer some insight, opportunity for conversation, and benefit to consumers, particularly users of our service. Our role is to offer a sustainable service, and largely stay out of the way where possible. We will present opportunities for qualified lenders and borrowers, that are as transparent as we can, and offer value in the eyes of the consumer.
Thoughts and comments welcome.