Marketlend boss talks Oz, the competitive landscape and international expansion.
Last year, AltFi interviewed Marketplace’s CEO Leo Tyndall in April and in June. As part of the build up to the AltFi Australasia Summit 2016, taking place in Sydney next February 29th, I caught up with Leo again, to learn more about the current shape of his business and about the status of the peer-to-peer lending space in Australia.
Leo has been at the helm of Marketlend since launching the platform back in 2014. Before entering the alternative finance space, he was the Head of Capital Markets Asia Pacific for UniCredit - one of the largest banks by assets in Europe – where he developed an extensive knowledge of the financial services sector.
In December 2014, he decided to set up Marketlend – a peer-to-peer lender platform – with the help of Paul Roffey, former investment banker. Marketlend was conceived as a business peer-to-peer lender, offering loans to businesses in the form of working capital, traditional business loans and commercial property finance. Its offering includes three products: a debtor finance product, an invoice financing solution and a trade finance service. In the case of invoice financing, loans are secured by a personal property interest over the borrower’s company and the platform owns the supplies as it pays for them; in the case of the debtor finance offering, they are secured against the borrower’s accounts receivable.
According to Leo, marketplace lending presented a unique opportunity to generate profit and more crucially to give customers direct access to fresh injections of capital, hence the creation of a robust online lending alternative that cuts out the “middleman” and puts investors and borrowers in direct relationship.
“Now investors and borrowers can enjoy the benefits of a marketplace that gives them the freedom and the confidence to do business in a safe and secure environment but more importantly on their own terms without the banks. It’s simply the way of the future.”
Marketlend is reportedly the first Australian online peer-to-peer lender to combine insurance and margin protection with direct lending. Marketlend’s borrower and loan grading assessment systems are supported by carefully structured insurance and loss protection policies. The insurance has been arranged to mitigate default risks through the establishment of strict credit control procedures from the application process through to the collection of debt on a default.
Apart from insurance, a Loss Reserve is established to protect investors from possible losses. Marketlend uses its own money to provide for the initial loss protection. Additionally, a portion of the borrower margin is kept to protect investors from any loss, and held in a loss reserve. Finally, the company is keen on highlighting that it invests in every loan offered to investors – showing that is has “skin in the game”. This may be the only platform in the world to combine an element of insurance, with a provision fund structure, on top of a skin-in-the-game lending model.
“We believe in the robust nature of our investment evaluation service. As such, we commit to pay losses before any Marketlend investor has to cover a loss. As they say, we have skin in the game”.
When asked about the competitive landscape down under, Leo asserted that, as MarketLend’s products are trade credit related, the real competitors for them are lenders in the trade finance space. The majority of these competitors are either banks or finance companies with credit card solutions, rather than the other peer-to-peer or marketplace lenders, such as Thincats, SocietyOne and the like.
Leo weighed in:
“Our niche product of direct access to the capital markets, diversity in funding, complete administration processing, and lower finance costs than most factoring or finance companies enables us to carve a niche market share.”
However, Leo admitted that the presence of a growing number of peer-to-peer lending platforms is beneficial to the whole industry, since SMEs are increasingly aware that nowadays banks are not the only route to funding.
“The recent influx of business lenders in the Australian finance space has definitely made it more competitive. We estimate it is between 20-30 new entrants. We think it actually helps us, as small to medium enterprises are now realizing that there are other solutions than banks for finance. We see that our biggest hurdle is getting the message out there that there is a solution and it is marketplace lending. […] “
Moving onto international expansion, Leo considers MarketLend’s ability to fund Australian corporates in debtor finance arrangements an attractive solution not only locally, but also globally. Initially, the platform is considering an expansion into Oceania and the rest of Asia. Once accomplished, Leo may size up the possibility of moving into Europe and perhaps the US.
Beyond the debtor finance offering, major improvements to the platform are in the pipeline. Leo expects to expand the trading platform for Marketlend investors. Furthermore, Leo touched on being willing to offer MarketLend’s customizable risk assessment tool to all investor on all platforms, in order to enable them use it to determine the attractiveness of prospective investments.
In summary, Marketlend operates in a very profitable niche market and has ambitious plans for enhancing the offering and expanding overseas in the future. Watch this platform closely.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.