ejohn
Posts: 32
Likes: 11
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Post by ejohn on Jul 5, 2014 10:35:19 GMT
On the original question, the fears would be that Institutions
1) Cherry pick all the best loans so the personal crowd are left with all the high risk loans 2) Buy up the loan so quickly that the small guy does not get a chance to invest. This could happen if IT systems are joined as proposed by a recent investment trust, launched to take advantage of p2p 3) Dilute earning potential 4) Are able to acquire priviledged information about loans
For big loans at this stage some institutional involvement is inevitable. However as p2p/p2b gets more widely known then more small guys will be attracted, so if you want to have a diverse set of lenders then leaving space for them will be important. Being able to put crowdlending into an ISA could be a big trigger in 2015
How you deal with this will be interesting to see. Saving stream had a different problem with small loans being lapped up very quickly. They have introduced a lending cap on small loans for the first 24 hours. Perhaps something to consider?
I am not currently registered with you, so some comments above may be inappropriate, but I will give your site another look over, so i can understand some of your developments.
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Post by emoney on Jul 7, 2014 7:08:30 GMT
Good morning ejohn, a great post!
I think you are spot on, I would like to reply on each point;
1) We intend to allow all parties (individual lenders, individual businesses, fund managers, other small banks/building societies, +++) to participate on the same commercial terms, all with equal access to the varying risk grade loans. Any platform that get's into bed with some back door commercial deal will soon find themselves wanting, the crowd are a pretty savvy powerhouse. This is one reason we aloud the individual crowd to become stakeholders in the eMoneyUnion platform via crowdcube as opposed to allowing institutional money be our 1st round funders. 2) Good point! buying up the loans quickly only becomes an issue if the individual lender does not have cash in his lender account, with us you can pre-bid for loans via our eBidPal service, this allows a lender to state how much money they want to lend per each loan and as soon as the loan is approved the 1st allocation of loan bids is auto matched to those with their eBidPal settings on a fair distribution algorithm. 3) Earning potential will become an issue if there's a shortage of loans, and the institutional money is in play. I think we can safely say that with a £170BN UK personal credit market per annum, there's enough to go round. 4) Privileged information is a valid point, but they won't be receiving it from us. We do supply data to Equifax and other credit checking data houses as do all platforms, institutional lenders can buy marketwide data on general borrower performance so this may well give them a strategy on which risk grade loans to bid on and what amounts, I don't see any reason why an individual that wishes to to make a career in lending i.e. his job becomes the "Business of Lending" then they could access the same data if they so desired. Interestingly in the USA the personal collated data of private lenders is the most valuable and this is shared to the crowd for free!
It will be great to have you on-board ejohn and thanks for taking time to discuss on the forum.
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Post by emoney on Aug 15, 2014 12:32:42 GMT
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