Finishing off the morning here at LendIt Europe, we take a dive into a new frontier: Property Investing. John Corey, of Property Fortress, moderated the panel discussion with participants Christian Faes, of LendInvest; John Goodall, of Landbay; Luke Jooste, of Funding Circle; Stuart Law, of Assetz Capital; and Graham Wellesley, of Wellesley & Co.
Our panelists easily handled Corey’s first question regarding the potential risk of allowing consumers to make lending decisions, especially since the 2008 crisis proved established banks’ struggle with the same. Each guest speaker described the extensive underwriting procedures their firms perform before loans are posted to the platform. Transparency is key, and investors can view an individual borrower’s financial history before lending. Many of our panelists’ firms retain 5% of each loan, leaving them financially liable in the event of default. Law (Assetz Capital) emphasized that loans are priced for risk, liquidity does not change anything.
Corey followed up with another tough question for the panel when he argued that no banker in 2007 would have considered his/her credit underwriting procedures flawed. Aren’t these the bankers now working at P2P lending firms? Faes (LendInvest) explained that both P2P platforms and banks are learning from the mistakes that led to the financial crisis. Furthermore, online lending is about using technology to give consumers a better experience, most notably a quicker route to financing relative to banks who can take weeks to write mortgages. LendInvest can fund a loan in two weeks. Graham chimed in that P2P platforms represent an investment opportunity. His firm, Wellesley & Co. offers the greatest diversification possible to provide higher returns than a bank deposit can do. Goodall (Landbay) echoed this sentiment later when asked what differentiates P2P platforms from banks: “Speed,” he replied simply. “It’s hard to understand why banks can’t get it right.”