Tag: Market Place Lending

Sydney Angels funds QPay $570k to steal millennial students from banks

Australia’s first ever student marketplace app, QPay, has raised $570,000 from a series of high profile investors, including Sydney Angels and the Sydney Angels Sidecar Fund 2, to break into student banking through the release of a student-targeted QPay MasterCard.

QPay aims to use the QPay MasterCard to capture the largest cluster of millennial consumers at the point when they’re most likely to begin making serious financial decisions – when enrolled in tertiary education.

“University is the time when life decisions start to become quite future-focussed, especially regarding our finances,” said Andrew Clapham, Co-Founder of QPay.

“We might be weighing up the amount of student debt we can responsibly accrue, and what return we might expect to receive career-wise. We could be trying to save for a deposit on a property, and wondering the best place to deposit our cash. Or, we might simply be getting a handle on our first experience with budgeting outside of Mum and Dad’s house.

“Whatever the case, university is a crucial turning point for financial decision-making. And the thousands of student transactions occurring on our app each month have allowed us to develop a financial product that perfectly suits the financial behaviour of this group.

“Given that universities arguably comprise the largest cluster of millennials anywhere in Australia, we see this as our first step towards becoming the next challenger bank for millennials,” said Andrew Clapham.

QPay is already used by more than 150,000 students across all major Australian and UK universities, including the University of Sydney, Melbourne, and Queensland, and the University of Oxford and Cambridge. The QPay MasterCard will build on the financial behaviour of these students by uniquely tailoring the rewards it offers every time the card is used for a purchase.

“If you’re a frequent coffee drinker, expect a free coffee from your local coffee shop, or if you regularly shop from a certain store, your next purchase may come with a 50% discount,” continued Andrew Clapham.

“Students are always looking for affordability and convenience – the best deal for the least amount of effort – which is why QPay is being so strongly embraced across all of these universities,” concluded Andrew Clapham.

QPay is backed by a Corporate Authorised Representative with an AFSL license, and the waiting list for the MasterCard has already grown to 4,305 students, far exceeding the initial goal of 2,000 cards.

This proof of concept was a key attraction for QPay’s prestigious investors, which include the head of Royal Bank of Scotland’s Australian arm, Andrew Chick, world-renowned leadership consultant, Charles Carnegie, and prominent angel investor, Rayn Ong.

“QPay’s viral acquisition strategies have created a high level of adoption and engagement even at this early stage,” said Rayn Ong, lead investor and non-executive director of QPay. “It makes sense to take it one step further by bundling relevant deals into the MasterCard offering.”.

QPay received $400,000 from Sydney Angels in 2016 in its first funding round, and has since performed over $11 million transactions for university students – a number which is projected to double by the end of 2018.

The original idea came when the co-founders were students, and realised there was no single access point for student needs such as second-hand textbooks, timetabling, accommodation, student organisations, and campus events.

Liberty Buys MoneyPlace

From Australian Broker.

Non-bank lender Liberty has acquired marketplace lender MoneyPlace in a push towards personal lending.

The move will see Liberty merging its existing personal loan product with that of MoneyPlace, which will remain an independent brand and continue to be managed by an entrepreneurial leadership team.

Liberty said there will be no impact or change to its existing personal loan customers.

Chief executive James Boyle said Liberty will help build on MoneyPlace’s recent initiative of launching its broker channel with aggregators.

“Brokers are very important to MoneyPlace and over the past six months the business has had tremendous success launching its broker channel with aggregators,” said Boyle.

MoneyPlace’s next phase of growth involves expanding its distribution nationally through accredited brokers.

“We’ll work with the MoneyPlace team to leverage the power and reach of the broader broker distribution network,” said Boyle.

MoneyPlace connects investors with creditworthy borrowers seeking unsecured personal loans between $5,000 and $45,000 for three to five year terms. Last year, Auswide took a controlling interest in it for a total of $14.0m. Australian Broker understands that Auswide has sold its stake in MoneyPlace into the deal with Liberty.

MoneyPlace chief executive, Stuart Stoyan, said the marketplace lender is well positioned to scale up and gain a meaningful share of Australia’s $100 billion consumer lending market.

“More borrowers view personal loans as a way to achieve their financial goals and brokers have an opportunity to engage consumers on their needs. A personal loan might be useful to replace a high interest credit card, cover the costs of a major life event or consolidate debt in order to be ‘mortgage ready’,” said Stoyan.

MoneyPlace’s proprietary technology uses 10,000 data points to give consumers a personalised interest rate. Once approved, the funds are available within 24 hours.

 

Behind the 500% increase in small businesses using marketplace lending

From SmartCompany.

The number of small business customers signing onto loans through marketplace lenders has increased more than 500% over the past year, but experts say scrutiny must be put on the alternative finance sector now to ensure smaller operators get the best deal.

The Australian Securities and Investments Commission (ASIC) released its 2017 survey of marketplace lending practices this week, crunching the numbers of 12 key lenders in Australia. Marketplace lending covers a range of models, including peer-to-peer systems and other structures where investors put up funds on which they get returns when consumers and businesses borrow.

In 2015-16, ASIC’s survey of the sector put the total value of loans through this kind of model at $156 million, but that figure has doubled over the past year to now sit at $300 million. Total borrowers for the year jumped from 7,448 last year to 18,746 this year.

The pool of small business borrowers through these schemes has historically been small, but over the past 12 months there was a 509% increase, from 33 SME borrowers in 2015-16 to 201 in 2016-17. Seventy-seven percent of these business loans carried interest rates of between 12% and 16%.

Business customers borrowed $47 million through marketplace lending platforms in 2017, compared with $26 million in the year prior, according to the report.

The numbers come as regulators and Australia’s Small Business Ombudsman continue to focus on the challenges SMEs are currently experiencing when applying for finance from the big banks. In an era where property is hard to secure in Australia, Kate Carnell has told SmartCompany young business owners face big challenges ahead when applying for a bank business loan.

While options like marketplace lending provide an alternative to small businesses, Carnell has raised concerns that these models don’t always make it clear what businesses are signing up for.

The small business and fintech communities have started discussions to address these concerns, with Carnell, Fintech Australia chief executive Danielle Szetho and independent banking consultant and founder of thabankdoctor.org, Neil Slonim, holding a roundtable on the issue of transparency in SME lending this week.

Slonim tells SmartCompany that while the pool of business borrowers using marketplace lending is still very small, conversations must be had about it and alternative finance models more broadly.

“The main thing businesses need to understand is that borrowing through one of these models is different from borrowing through a bank,” he says.

The larger lenders have less room to move on their loan terms and are often “more transparent” when it comes to fees than their newer fintech competitors, Slonim says, while alternative lenders can find it “difficult to convey the true cost” of a loan.

He says it’s important to find a balance when discussing these concerns with fintech companies, because areas like marketplace lending will be valuable for small businesses into the future.

“It’s a really important sector, it needs to be encouraged, but there does need to be more self regulation and the regulators. In particular, ASIC will come in if they’re not satisfied there’s progression [on regulation],” he says.

These discussions will be a long-term process, with the Small Business Ombudsman, Fintech Australia and thebankdoctor.org planning on releasing a report in February 2018 with recommendations for establishing guidelines for interest rates and fees from alternative lenders.