CrossLend was founded in 2014 by Oliver Schimek, Marie Louise Seelig and Daniel Schlotter. CrossLend is an unsecured consumer lending platform, which will from the outset be open to investors from Germany, Spain and the UK. We must assume that the platform’s borrowers will hail from a much broader range of countries. The Berlin based startup has plans to ultimately create a unified European marketplace.
The plan is to connect investors in low interest rate geographies to borrowers from high interest rate countries – and to provide a better deal to both parties. Indeed the company has made no bones of the fact that its long-term strategy includes facilitating borrowing and investing across the globe. The platform’s cross-border model is made possible through its strategic partnership with the German bank biw AG.
CrossLend’s focus appears to be on refinancing existing consumer debt, at preferable interest rates. The platform’s capacity to offer favourable terms to borrowers stems from its “intelligent proprietary scoring technology”, which will presumably incorporate a wide range of big data in assessing potential lending opportunities.
From a practical standpoint, CrossLend is advertising annual returns of up to 14.08%. The platform does not follow standard UK P2P protocol. In order to invest, one must first open an account with the platform's partner bank biw AG, using an online form.
CrossLend employs a loan rating system that is not dissimilar to the Funding Circle risk-band model. CrossLend’s risk classes range from A (lowest risk) to HR (highest risk). There are 8 different risk bands in total. The platform’s technology interface allows investors to manage and monitor their investments in minute detail. CrossLend uses filters to aid investors in structuring portfolios to suit their risk appetite.
Those investors allocate funds to CrossLend Securities SA Notes. CrossLend purchases Borrower Payment Contingent Notes in euros from a number of different countries, and we must assume that these notes are then collected together into separate CrossLend Securities SA Notes – bundles of debt that each carry specific risk characteristics.
The onus is to diversify funds is on the platform’s investors, who may subscribe to notes for as little as €25. Interestingly, the CrossLend website is wholly geared towards investors. The company appears to be keeping origination operations offline for the time being.
There seems to be something of an obsession with cross-border activity among developing European P2P platforms. Lendico CEO Dominik Steinkuehler stated in February that “international cross-border lending is a vital precondition needed for the long-term success of online marketplaces”. The platform then launched in Brazil via a partnership with Banco BMG in July. The Estonia-based Bondora recently raised $5m for the express purpose of expanding its cross-border lending model. Of course, running a cross border operation is a tricky business – as demonstrated when Lendico opted to withdraw private investment opportunities in Spain, Poland and South Africa in March, citing a lack of quality loan requests.
One of the foremost challenges of the cross-border model is regulation. CrossLend will doubtless be heartened by the recent actions of the EU’s economic and monetary affairs committee, which called in June for a CMU (Capital Markets Union) led support plan for the alternative finance market in Europe. Supporting cross-border investment was a clear point of emphasis within the proposed plan. Regulatory harmony across EU markets would make life a lot easier for the nascent CrossLend platform.