The New Barbarians of Finance That We All Missed
A new class of funds will soon own our mortgages, student loans, car loans, and other credit — P2P lending funds. Their silent rise has received little publicity, which might be why they still maintain their high returns. This little piece is on who they are, where they are from, and where they invest.
For those who don’t know what P2P lending is
Imagine you are a student from Estonia who moves to Switzerland for a Masters program. To pay your tuition fees, you need to borrow money, but opening a local bank account is hard enough. Let alone getting a loan without a credit history in Switzerland.
Or you are the owner of a gourmet burger chain in Brooklyn expanding to other hipster hubs such as Portland, Oregon. The growth makes it harder to pay suppliers, but neither banks nor private investors will fund working capital.
You can go online to Lending Club, Arboribus, Fellow Finance, or RateSetter. Strangers invest small sums (often $20 - $25) until you get the amount you need. These are the P2P lending platforms.
Where the New Barbarians ride in
But although these platforms are supposedly “peer to peer”, someone needs to put in the big money. Particulars don’t have the muscle to make money flow smoothly and regularly.
That’s when hedge funds, banks, and non-banking financiers swooped in and built the P2P lending funds. These entities are the new barbarians of finance — barbarians, not because of lack of manners or ethics. But because they operate in a brand new space with no rules or norms. They make the rules.
Prime Meridian. Valinor. Blue Elephant. Prestamos Prima. Synthesis. Fintex.
Names most people don’t even know, and yet they are the start of a new era in banking. Why?
81% of Lending Club’s funding comes from institutions.
These platforms are no longer about regular folks giving money to other regular folk. They are basically a new form of banking, just done through a technological platform with a faster, origination and approval.
And these online credit funds of today are going to be the banks of tomorrow, once these online platforms become integrated into regular banks. http://www.crowdfundinsider.com/2015/09/74341-the-rise-of-p2p-lending-companies-will-complement-conventional-banking-soul-htite-ceo-of-dianrong-com/
So who are the big name funds, where are they based, and where they investing?
I compiled a list.
For anybody in P2P lending, or working as an investor in fintech, or otherwise, I hope this list comes of use.
Do you any more names to add to the list or want to make any corrections? Let me know, and I will add it with due credit.
If you want a PDF version of this list or want an updated version in the future, send me a mail at prateeksanjay.india@gmail.com.
