Stuart Stoyan & Paul Abbey, MoneyPlace
The personal lending space is one that is ripe for disruption; fat margins, dissatisfied customers, low levels of loyalty, a complete lack of innovation and a pretty average customer experience… You sit back and think ‘yep, this is actually going to be pretty easy’. This is the opportunity - who knows a customer who loves their bank? Nobody!
“People ask us, ‘what is it that you do, how is it different to banks?’ Well, we [MoneyPlace] are going to assess customers based on the risk they present, we’re going to price it accordingly and we’re going to price it fairly. Now that in itself is not an innovation, but it has got a lot of people excited about the opportunity. The personal lending space is one that is ripe for disruption; fat margins, dissatisfied customers, low levels of loyalty, a complete lack of innovation and a pretty average customer experience. I recently applied for a personal loan just to see what the experience was like (actually I’ve applied for several personal loans - which has probably impaired my credit report somewhat!) I completed an online application and didn’t hear anything for about 10 days, after which I received an SMS – ‘thanks for your application, your number is ‘blah’, please click on this link to download a form, sign it, fax it to this number or email it to this address…. So I sit there, look at that and think, ‘yep, this is actually going to be pretty easy’. This is the opportunity - who knows a customer who loves their bank? Nobody!”
And with that, we met Stuart Stoyan, Founder of MoneyPlace.
Stuart discussed the importance of net promoter score (NPS) and the opportunity for peer-to-peer lenders to surpass an online bank or community bank in terms of NPS due to the high levels of satisfaction with customer experience.
“Net promoter is something that has come on quite strongly in Australia. I’m ex-Bain as a Management Consultant so I’m very familiar with the great results that can be achieved. As a bank, you’re looking at single digits, maybe negative. If you’re a regional bank you might be looking at 20s. If you’re a community bank you might be pushing 30s or 40s. Why? Because people feel an affinity towards them, they will refer their friends and family. If you’re a digital bank, you’re higher again. Lending Club in the United States however, has a net promoter score of 79 – that is a ridiculous score. That is a score that I’ve not seen in any industry from any company, so it’s saying that the majority of Lending Club’s customers are referring customers back to them.”
Stuart explained how this indicatively demonstrates the way in which peer-to-peer lending businesses are able to grow at such pace and how that in itself is an enormous opportunity. He went on to explain how MoneyPlace has already been fortunate enough to receive an abundance of publicity due to the hype surrounding the peer-to-peer lending space.
Stuart explained to the audience that the buzz and excitement surrounding peer-to-peer lending in Australia for businesses such as SocietyOne and RateSetter has created a firm platform for MoneyPlace to comfortably jump right on to.
“It allows us to shift a conversion from ‘I need a loan because I need a loan’ to ‘I need a loan because I want to renovate my house, I want to pay for my wedding, I want to buy a car’. When you actually think about why people are in this market, it’s not because they want to complete a ten page application form and then print it out, sign it and fax it somewhere, it’s about something more. And that is the heart of what MoneyPlace is about; it’s all about a better experience. It’s not just a play around risk-based pricing; it’s a completely different proposition around a user experience.”
MoneyPlace believes that the personal loan process should be simple, fast and convenient for the customer, and they want to educate people on the fact that it can be that straightforward.
“You can get a quote in two minutes, complete an application in eight and you can get the money in your account the very next day. This is what personal lending should be and this is the experience that customers are yearning for; they just don’t know that it is available. I will speak for Paul and say that one of the things that attracted him to MoneyPlace and the reason why he left a bank is the fact that you can be unconstrained, which enables you to deliver a superior proposition both to a borrower and an investor. We have a team of people who have previously worked at a bank and have recognise that there is a better way of doing something. That’s what brought us together in this unified vision.”
Stuart and Paul concluded by citing examples of peer-to-peer lenders that have successfully collaborated with banks, and share with the audience their vision to do the same in Australia, to benefit all parties involved and to improve the financial literacy of the Australian population.
“Lending Club is the largest peer-to-peer lender in the world and they are a company that is worth eight billion dollars. Lending Club has a partnership with Union Bank, which has invested over 100 million dollars into P2P loans. Lending Club has also just announced a partnership with a group of 200 community banks. The community banks have recognised that the online proposition and the pricing proposition, but also just the low cost and the efficiency of writing loans via Lending Club’s platform is so much better than anything than they could do alone. More importantly however, it provides geographic diversification. The ability to invest in peer-to-peer loans that can be funded from an institution that might give you exposure to other states is a phenomenal opportunity. This is the opportunity for community banks, to see peer-to-peer lenders who are more agile and have more sophisticated analytical technology and risk assessment and to be able to partner and work with them. That for us is the way forward and the way we see this coming together. This is not ‘we will put the banks out of business’… because we won’t put the banks out of business, we are conscious of that. It is about filling the unmet needs of both borrowers and investors and to educate the Australian public around financial literacy.”