Some of Europes largest online lenders have started to grapple with the idea of potentially becoming a bank; Funding Circle says it has no plans to do so, Zopa on the other hand says they are becoming a bank; other online lenders like YOUnited Credit in France and Raize in Portugal have thought about becoming a bank but thus far see the flexibility of not being a bank as an advantage; the banking market overall is going through quite the change and the definition of a bank is sure to be examined. Source.
Funding Circle lead originations for the month of September followed by Zopa and RateSetter; many other originators across Europe are included in the list. Source
The marketing initiative coincides with the firm's recent rebranding announcement and is part of the company's "Made to Do More" campaign; it is spending GBP12 million ($15.51 million) across media and specialist channels with a focus on business borrower and capital investor awareness; the firm has been a market leader in investment deals in 2017 recently announcing a partnership with Aegon and reporting a $100 million fundraising in January. Source
AltFi reports on recent developments affecting the marketplace lending industry; discusses challenges at RateSetter and platform changes at Zopa and Funding Circle; also notes that UK regulators may be seeking increased transparency through new regulations; argues against criticism that platforms are struggling for borrowers and shows origination volume growth since 2005. Source
UK small business lender Funding Circle formed a strategic partnership with the Dutch financial services firm Aegon; Aegon will look to fund about $205 million worth of loans in the first twelve months and then steadily increase that amount for the next three years; the deal helps to ease the gap left by the European Investment Bank who pulled back a $129 million commitment in the wake of the Brexit vote; Funding Circle CEO and Co-Founder Samir Desai explained to AltFi: "This partnership is validation of the attractive risk-adjusted returns that are being generated to investors by lending through Funding Circle. We hope our joint programme with Aegon will develop to deliver increased lending to UK small businesses over the coming years." Source
During a keynote panel at LendIt Europe Funding Circle CEO Samir Desai wondered if incumbent banks who build fintechs are attempting to pull a fast one on customers; the discussion talked about banks building fintech platforms and delivering better customer experiences; they also touched upon some misconceptions in online lending and the main customer lead channels. Source.
Funding Circle announced they passed the milestone last year; CEO and Founder Samir Desai stated, “We were pleased with the result for the group. Overall we improved our loss margin. The UK business became cashflow positive in Q4 of 2016 and continues to generate positive cashflow in the first half of the year.” he added, "As we've said many a time, we believe that our business should be a public company as well because that fits with our values of transparency and being open, and allows us to take our service to more and more people as well."
Other highlights include:
- Operating expenses rose by 43% to £103.1 million;
- Losses dipped by 3% to £35.7 million thanks partly to a foreign exchange boost;
- £1 billion lent last year;
- Loans outstanding rose by 61% to £1.37 billion;
The platform currently works with approximately 1,000 brokers; source reports it is focusing its efforts on brokers using the platform regularly with a new master broker system for inactive intermediaries; Funding Circle is requiring brokers to make at least one introduction to the platform per quarter. Source
UK Small business lender Funding Circle attempts to simplify the investment process by removing manual bidding in favor of a two tiered autobid process; the two autobid accounts will be: balanced with a targeted return of 7.5% and conservative with a targeted return of 4.8%; UK Managing Director James Meekings tells AltFi: "These changes will make lending at Funding Circle simpler, better, fairer. We want to create a level playing field for all investors and ensure everyone has the same opportunity to lend to UK businesses."; the changes were in response to individual investors "gaming" the system and not allowing the passive investors access to higher return loans which are very popular; according to AltFi this is a trend in in the industry with other platforms, including Zopa in May, moving to this process. Source
Funding Circle has rebranded with a new website and logo; the rebranding is centered around a focus on expansion and growth; in regards to the rebranding, Chief Marketing Officer Darryl Bowman said, "We are hugely passionate about helping thousands more businesses and investors across the world and today's rebrand is the next step on this journey."; since launching the firm has facilitated loans to 32,000 businesses and estimates it has helped support the creation of approximately 80,000 jobs. Source