The alternative finance space is no stranger to new entrants – but if there is one sub-sector that has suffered from a slight shortage of fresh faces it’s the consumer lending space. That was until the recent launch of Lending Works – a new platform with a strong emphasis on investor protection. Entering the same world as the seasoned p2p giants Zopa and RateSetter is no mean feat. AltFi caught up with Nick Harding – Founder and Director of Lending Works – for the inside scoop on the young platform.
Can you give us a very brief explanation of how the platform works?
Lending Works is a peer-to-peer lender which matches shrewd lenders with thoroughly underwritten borrowers, so both receive a much better deal.
In order to protect our lenders we provide market leading threefold protection which includes the Lending Works Shield. The Shield insures against borrower defaults, cybercrime and fraud. No other peer-to-peer lender offers this.
Why did you want to launch a p2p platform of your own? Did you see a gap in the market?
Our number one priority is protecting our lenders’ money and we believe that the Lending Works Shield has been a significant step forward in fulfilling that objective. Lending Works is the first peer-to-peer lender globally to have insured against the risks of borrower default, fraud and cybercrime. This makes us unique in the peer-to-peer market.
The gap in the broader financial services market is widely documented. We are able to offer great interest rates that are fair for both lenders and borrowers, an easy to use website and product coupled with market leading lender protection. We are confident that this offering will enable us to take a fair share of the current personal loans market.
What have been the major challenges of entering the p2p consumer space?
Creating Lending Works has been an incredibly rewarding an enjoyable journey. We have made some great connections, have lots of great partners and we are growing rapidly. That said, there have been some tough moments as with all new businesses.
One of the most challenging – and time-consuming - areas for us was the creation of the Lending Works Shield. Because no one else had done this, there was no established route to market and insurance companies had never dealt with something like this before. We had to build detailed financial models, policies and processes that satisfied insurers’ due diligence teams, which of course was a very serious undertaking. And of course putting a highly experienced team of professionals in place, as well as building relationships with our professional partners, has taken a lot of time.
How is Lending Works equipped to overcome those challenges?
As with every successful business, Lending Works’ employees have been absolutely key to overcoming those challenges and to our success in general. We have a fantastic team, who have a great balance of vast amounts of banking and financial services experience, a hard working mentality and the ability to be agile and innovative. We credit our people with every success we achieve.
Where do you see the platform at the end of the year?
We have a number of objectives that we are determined to achieve by the end of the year, many of them much sooner:
1) Customers - To have thousands of happy customers who enjoy using Lending Works much more than their current provider. To achieve this we will focus on our customer journey, how we interact with customers and where we get our customers from.
2) Targets - We believe in doing what we say we will. That includes our philosophical targets as well as our financial targets. We are highly focused on meeting our targets, including keeping our customers happy, our default rate very low and creating a high quality loan book.
3) Partnerships - We have a number of key partnerships which we are focusing on, one of which is our institutional lending channel. We believe that all partnerships should be handled with care and so we will ensure that all of our partnerships benefit all of our customers, but of course allow us to grow in a controlled and structured way.
There've been many promising developments in the p2p space lately (FCA regulation, ISA inclusion, Bank referral buzz, etc.). What excites you the most and why?
The FCA regulation of peer-to-peer lending is a fantastic step forward for the industry, as is ISA inclusion. Protecting customers, giving them a transparent service and of course allowing them to benefit from tax-free returns are all very exciting developments.
Most exciting for Lending Works though are the basics. Whilst government and regulatory developments are great, we can only control what is in our domain. That means growing a large and high quality loan book, forming beneficial partnerships with a range of targets and ultimately delivering upon what we have targeted ourselves to achieve.