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Is RBS’s online lender a “massive corporate fudge”?

Funding Circle boss takes shot at RBS’s online lending pilot Esme.

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Funding Circle boss takes shot at RBS’s online lending pilot Esme.

After a period of calm in which online lenders were mostly sanguine about the idea of coexisting with the banks, industry sentiment may be starting to turn. Speaking alongside bankers from RBS and Lloyds at today’s LendIt Europe Conference, Funding Circle boss Samir Desai took a swipe at the former's attempts to break into online lending.

Esme, RBS’s online lending pilot for small businesses, went live in February of this year. 30-year RBS veteran Richard Kerton leads the project. This morning, he told the LendIt audience that Esme could approve and fund business loans in as little as 25 minutes, with broader risk parameters than its parent bank.

Desai and Kerton were in agreement that small businesses are attracted to online lenders due to speed, efficiency and price. Trust was cited by all three speakers (including Lloyds’ Kim Kinniard), as an essential component in attracting customers. But Desai said many customers come to Funding Circle exactly because it isn’t a bank. He therefore asked whether Esme, an example of a high street bank putting a new brand outside of its own, is a “massive corporate fudge”.

Desai dismissed the idea that P2P lenders are overly-reliant on brokers as a “myth”, pointing out that 75 per cent of Funding Circle’s borrowers come directly to the platform, and highlighting the simplicity of the platform as a big part of the reason. Conversely, he said that even finding the right loan product on bank websites can be a challenge.

Kinniard was asked by moderator Andy Davis whether it was too much of a “caricature” to describe Lloyds’ current account as its primary source of origination. She said that it was.

Desai’s comments came shortly after a presentation from Jaidev Janardana, CEO of the world’s first P2P lender Zopa, in which he described traditional banking as a “zero-sum game” between bank and customer. Funding Circle and Zopa are the biggest P2P lenders in the UK and Europe, and are also co-founders of the most prominent industry body in the UK, the Peer-to-Peer Finance Association. 

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