Australia's growing P2P lending space just got bigger
New Aussie fintech lender doesn't want the banks eating all the cheese.
Australian online money lending – what’s called marketplace lending – hardly lacks for members. Today marketplace lending, an industry that barely existed five years ago, has almost as many players as banking itself.
“I think it’s just evolution,” says Adam Sutherland, CEO of OurMoneyMarket, in conversation with AltFi.
“When we did our first capital raise we were asked: ‘is the market crowded?’ But I think that’s just technology having its effect. You can just as easily turn the argument on its head and ask: why aren’t there more?
“At the end of the day if you’re a borrower you care most about the experience being easy and getting a good rate.”
OurMoneyMarket is a Sydney-based fintech startup and one of the newest entrants into Australia’s growing online lending space.
Like other fintechs, OurMoneyMarket runs a website that provides a two-way marketplace for making and receiving loans.
Borrowers who want a personal loan - for a wedding or home improvement or whatever else - can come to OurMoneyMarket’s website, insert their financial history and get a loan at an interest rate that the company’s algorithm decides is fair.
For those wanting to lend money, the company’s website allows them to spread their money in A$50 chunks across however many loans they wish.
Lenders can allocate some to conservative loans with lower returns, and some to riskier loans with higher returns. It’s up to them.
“I guess our point of difference is this. If you look at other online lenders, they don’t really allow investors to pick and choose the risk they’re willing to take,” Mr Sutherland says.
Another feature OurMoneyMarket provides is that it co-invests with its lenders. Once the company finds a borrower to recommend to its lenders, the company’s money is where its mouth is.
“If I’m an investor, I’ll feel better knowing that the business itself has skin in the game,” Mr Sutherland says. The money the company lends comes from unnamed private investors.
Like other online lenders, Mr Sutherland says his business got fuel in its tank from the disaffection with major banks.
“Investors and borrowers are tired of banks dictating the terms and charging unjustifiable fees. Why do they charge every month to have money in their accounts? Why are they penalising people for repaying early? That’s a good behaviour from a borrower. We got rid of all those fees.”
He also says that Australian investors should understand that personal loans have great returns and not let the banks hog the market.
“They’re one of best performing asset classes over the past 15 years and dominated by traditional lenders that are among the most profitable corporations. The banks have certainly done well and I think people should too.”