Gaining depth and breadth
By Rhydian Lewis | Wed 17 Dec 14
By Rhydian Lewis | Wed 17 Dec 14
According to NESTA, RateSetter outgrew our exciting and burgeoning peer-to-peer sector by a factor of around 2 to 1 (219% vs 107%).
The more people who join the RateSetter marketplace and the broader the participation, the stronger the market gets - which benefits everyone. It's the same approach that has made eBay the huge success it is. The scale and diversity provides the stability for the market to thrive.
Our job is to fuel the diversity of the RateSetter marketplace to consistently provide our lenders with opportunities that deliver the returns they expect at the low risk they have become accustomed to and our borrowers with a source of reliable funding at competitive rates. For example, we were the first platform to create a partnership with a major mobile phone company giffgaff (part of O2) which took a long time to set up and get right but is proving extremely successful and taking peer-to-peer finance to a broader audience.
As we approach the end of 2014 - a year in which more has been lent through RateSetter than any other peer-to-peer platform in the UK - RateSetter lenders now have over £265m of loans to RateSetter borrowers. One of our finance team here recently produced some bar charts below which illustrate the way our marketplace is deepening and broadening - as you can see, we are diversifying on both sides.
Evolution of our offering
On the borrowing side, we have been seeing more business-orientated loans. This is a natural evolution from our lending to individuals because for sole traders, self-employed individuals and small businesses the finances of the individual and the business are closely intertwined. This area of lending - to parts of the economy others aren't reaching - has been supported by funding from the British Business Bank who set strict criteria for who can be lent to and under what circumstances (but then lend on exactly the same terms as everyone else: an important principle for RateSetter).
At the moment the majority of this commercial lending is to the individual but over the last six months we have invested to ensure we have the right people and infrastructure to underwrite loans to limited companies as well. We are doing this prudently and step-by-step - as we do with everything.
This cautious, gradual approach sees us have criteria that are every bit as stringent as traditional lenders - if not more. The same goes for the lending to individuals with security against property which we first spoke about back in 2013. We know this because we have hired experts in the different fields of lending to help build our policy, processes and methodology - experts with over 25 years of experience. Our belief is that experience is as crucial as the many checks and balances we have put in place.
On the lending side, we are seeing institutions - such as the British Business Bank and EagleWood - small businesses, charities and livery companies lending alongside our ten of thousands of individuals. We encourage this breadth and think it is healthy - we are big believers in an open and fair market with a diverse group of lenders all lending on the same terms.
A healthy ecosystem
We believe diversification of lenders and borrowers is important to the health of our ecosystem. Our role at RateSetter is to work to grow the marketplace and seek to deliver great returns for our lenders, great loans for our borrowers and great service for both of them.
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