Customer participation at the heart of P2P Lending

Why suggestions from you are the key to constant improvement.

participation

(This is an excerpt from a full post published on the P2PMoney blog)

Back in November, I wrote a post about how P2P finance fits into the model of collaborative consumption – otherwise known as the sharing economy for the blog over at P2PMoney.

I made the point that collaborative finance didn’t necessarily need to equal ethical finance, social lending or any other type of ‘do-gooding’. Whilst some of the by-products of crowdlending might very well be good for the wider world (local lending for instance), most investors are in it for the returns, for the chance to make their cash work harder than it would do left in a straightforward deposit account. And that’s absolutely fine.

That doesn’t, however, break the link between P2P finance and the sharing economy. One thing that unites most of the new peer industries that have popped up over the last few years is participation. Peer based businesses need people to participate, whether that’s using someone else’s couch as a bed for the night, sharing a car or borrowing a Boris bike or participating in P2P finance.

By participating, I mean more than simply transacting. After all, transactions happen 24/7 in banks around the world. Participation is about contributing something more to the project, connecting with fellow users or participants and actively trying to make the overall experience more efficient and rewarding for everyone involved.

To read the rest of this article, visit the p2pmoney blog and to start crowdlending with FundingKnight, register as an investor or borrower via the FundingKnight website.

P2P online auctions… how rational are you?

waiting for the hammer to fall

If you haven’t already visited http://www.p2pmoney.co.uk you should put it top of you P2P to-do list.  It’s an independent website dedicated to comparing UK peer to peer lenders and keeping avid fans happy with a pretty steady torrent of news and updates.

I’ve been lucky enough to get the opportunity to contribute a few guest blogs over on the P2pmoney blog and this week’s is P2P Online Auctions: Waiting for the hammer to fall.

It’s a short piece about how irrational people can potentially get when overcome with the frenzy of auctions – and designed to coincide with our first loan auction on the FundingKnight P2P Loan platform.

If you’re interested in how auctions can mess with your minds head over for a look.

The Low-Down on Business Investment

I am lucky enough in my work environment to encounter lots of people starting new projects, creating new businesses and generating ideas for future developments. A creative environment will foster and nurture these progressions like no other. Start-ups are springing up all over and I don’t believe there has ever been such an exciting period in independent business growth as the one we are experiencing now. Exciting times eh?

So while I am continually inspired by new ideas, I am slightly lacking in the fundamental knowledge of how these things work, how start-ups are funded and what opportunities are out there for newbies like me.

One of the key factors I have been learning about of late (thanks to the FundingKnight blog post Crowdlending vs. crowdfunding…what’s the difference and what does it matter? amongst others) is the difference between debt and equity for businesses.

To the uninitiated here’s a brief definition as far as I can see. Crowdlending is a means to borrow money, get a business loan and get a cash injection for a viable new business plan or proposed expansion. Within this borrowers would also set up a repayment plan.

Investors providing the money for loans will receive a return higher than that of an average high street bank savings account. They will have no say or input into how the business is run, what they produce or its end results. Its very cut and dry.

Crowdfunding on the other hand is, as I now understand it, equity based (I’m learning! It’s fun! Join me!). Which means you invest in a project or business that you like and believe in or something that simply catches your interest or passions. In return lenders have a vested interest in something they admire and also have a stake or share in the business or project which essentially means they have a say in how it is run and how it will develop in the future. Money is invested with no strict repayment plans as you would with a business loan.

So now the differences have been established in my head it is beginning to make sense. In reality if I was looking to borrow some money for a fabulous business I would want a business loan, looking to crowdlending and a formalised repayment set-up. Why? Because as a small business with big ideas and plans I would want someone to lend me money without having to contend with another person’s potentially different agenda.

Loans from crowdlending companies such as FundingKnight are invaluable and can truly change the innovative business landscape around us as we leave the creative forces at large in the world to keep coming up with the big ideas, whilst still providing investors with solid returns on their money. It all adds up to me plus don’t forget about the warm and fuzzy glow that comes included, free of charge, to anyone who wants in. Now where do I sign up?

Crowdlending and the banks of the future

back to the future dashboard

Photo

When it comes to crowdlending or peer to peer finance, there is lots of talk about alternative finance, or new finance.  For the time being, that’s exactly what peer to business lending is – a new way of lending and borrowing money.  But what does the future hold?  Is it simply a flash in the plan or is crowdlending part of a wider disruption to the financial status quo that will change the face of banking and finance forever?

Brett King certainly thinks that the entire financial sector is ripe for some serious change.  He’s the man behind movenbank, a new entrant in the US who claim not to be “your typical bank” and who are setting out to launch “a banking experience that is fair, fresh, fast and maybe even fun:)”.

Amongst other things, movenbank are promising:

  • No hidden fees – placing transparency centre stage
  • No plastic – they believe that the future of payments lies with mobile phones and mobile wallets, after all, “when was the last time you were able to see your current account balance on your plastic card?”
  • No paper – application forms, statements and recepits will be online.

He’s also the author of Bank 2.0 and now the newly published Bank 3.0.

We’ll be reporting back on Bank 3.0 once our new copy has winged its way to FundingKnight towers but in the meantime, here’s a snippet from Bank 2.0 that explains better than most why technology and innovation are guaranteed to change the way we live… and bank.

How long do you think it took Facebook to attract 50 million users?  The answer’s not long… in the time that’s elapsed since their launch back in 2004, Facebook has amassed more than 500 million users, rather dwarfing the 50 million users that has historically been considered the point at which something ‘goes mass market’.

It used to be the case that new ideas or new products took time to bed in and become popular.  Now, the speed of technological change and development, coupled with the global connectivity of social networks means that things get adopted into daily life far more quickly.

It took over 70 years for aeroplanes to become a mass market commodity, but now innovations such as the iPod or Facebook reach critical mass almost in the blink of an eye.

Why will that change the way we lend and borrow money?

Well, because it can do nothing but change it.

By 2020 all customers will have grown up being “digital natives” well used to social networking and online transactions.  Already customers value mobile capability and online security and already people expect more personalized, more valuable communications from brands than they used to get from large mass advertising campaign on TV or billboards.

Banking has got to change from a one size fits all (unless you are extremely wealthy) model to a state where customers feel like they are genuine participants in their own financial futures and can make well informed, individual decisions rather than being shoehorned into products that don’t’ speak to their personal circumstances.

Mainstream banks used to see online banking as a way to cut costs and move customers to remote channels… now that couldn’t be further from the reality of what online finance means.

Rather than put space between a brand and its customers, online finance makes it easier to communicate and faster to do business.

Rather than hive customers off into remote channels, online finance provides better value for customers and new ways of doing everything from personal banking to foreign exchange.

Rather than keeping customers apart, it has brought them together in one big global network that can share opinions and provoke customer groundswell in an instant.

New finance is already here, in the guise of new high street banks like Metro Bank, in new entrants like The Currency Cloud who offer low cost, cross border payments and in the new wave of peer to business lenders like FuningKnight, Funding Circle or Thin Cats.

Whether or not such innovations have a long term place in finance is pretty much decided, the bigger question that we will have to wait to understand is just how mainstream banks will make the shift to a new financial order.

After all, as Brett King points out, “The future, in may ways, has already begun.  The only question remaining is how you will make the journey?”

Want to read more about new finance or financial innovation?  Try out some more posts from the FundingKnight blog that we’ve picked out below or, to start you own new finance journey why not sign up to become a FundingKnight lender?  There’s no pressure to lend and no fees if you do… so what’s stopping you taking the next step of your own financial journey?

 

Crowdlending, crowdfunding and what will happen to bank lending?

 

Crowdlending: Just one part of a sharing economy

 

Business finance: A load of shylocks or simply a sector dying to change

 

New finance is the future… FundingKnight makes the Huffington Post