By Ryan Weeks on 14th March 2017
Banking app Revolut teams up with Lending Works, also planning marketplace lending platform of its own.
Revolut, the digital-only bank with over half a million users, has announced a partnership with consumer peer-to-peer lending platform Lending Works. Revolut users can now apply for credit via the app, and can gain access to funding within minutes.
In partnering with Lending Works, Revolut claims to have become the first company to approve and pay out peer-to-peer loans instantly. Applicants will be asked to identify how much money they require (with loans ranging between £500 and £5,000), their monthly income and residential status. Lending Works will also use Revolut’s customer data to help drive the decision process.
The two firms believe they are significantly undercutting bank rates. Loans made to Revolut users will carry a representative APR of 9.9 per cent, less than half of what the high street banks charge on consumer loans, according to a recent survey of five UK banks.
“The fact that anyone can now apply for credit from anywhere in the world in two minutes, get the money instantly and spend it with a Revolut card without fees in any currency is mind-blowing,” said Revolut’s Founder and CEO Nikolay Storonsky.
Lending Works is a consumer lending peer-to-peer platform, and a member of the industry body, the Peer-to-Peer Finance Association. The firm is best-known for having introduced insurance cover into the peer-to-peer lending process, covering its investors against certain default risks. The firm has lent a little under £50m to consumers since launching in 2014, according to AltFi Data.
Some may wonder whether Lending Works – which is a great deal smaller than its consumer lending rivals Zopa and RateSetter – will be able to keep pace with whatever demand arises from Revolut’s user base of 530,000 Europeans. But CEO Nick Harding tells us that the firm is well supplied on the capital side. In addition to the recent launch of its Innovative Finance ISA, Lending Works also has relationships in place with a number of heavyweight institutional investors.
As it scales, Revolut's plan is to work with other financial services providers to roll out the services that a bank would typically provide to customers. We are told that Lending Works won the role of credit supplier over other peer-to-peer lenders thanks to its ability to tailor its model to suit Revolut.
Harding tells us that Lending Works is keen on “deep integrations”. He’s happy for Lending Works to be used – by a range of financial institutions – as a kind of behind-the-scenes, software-as-a-service facility. Revolut users will not have to leave the app in order to access credit via the Lending Works partnership. Harding said that the new partnership “breaks ground within personal finance”.
“We identify strongly with Revolut’s commitment to making financial services fairer and more efficient for consumers, and the fact that they have chosen our platform to deliver instant credit represents a gratifying seal of approval of the innovative technologies we use,” he said.
The app-bank Revolut certainly has a lot of plates spinning. After beginning life as a fee-free money exchange tool, the firm made a splash in February with the launch of a new current account offering. It then announced a partnership with property investment channel Bricklane.com, allowing its users easy access to the website's Property ISA.
News that the firm is also looking to launch an online lending marketplace of its own is something of a revelation. The app says that this will exist “amongst its own user base” – which is reminiscent of how Hargreaves Lansdown was said to be structuring its peer-to-peer offering (although this has not yet materialised).
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.