SocietyOne has plans to expand into the small-to-medium-sized business market as part of its growth strategy.
One of the first marketplace lenders in Australia, the business has clocked up its five-year anniversary after making its first personal loan to Doug Townsend back in 2012. Since then the business has chalked up total originated loans of more than $320 million in lending to more than 13,000 customers.
“We have gone from being an idea to a business now valued by thousands of customers,” SocietyOne chief executive Jason Yetton (pictured), told AB+F.
It will now look to scale up the business albeit through a careful and considered approach to its growth strategy. “Marketplace lending is not just limited to personal loans,” Yetton added.
SocietyOne originally targeted personal lending because customers had traditionally paid higher rates on personal and credit cards offered by the big banks. This created an opportunity for SocietyOne to enter the market with a new offering, with rates that were not only lower but tailored to individual customers.
“Our model is based on matching the borrowers of capital with the users of capital. It’s a model that can be used to service the SME lending market,” Yetton said.
SocietyOne has already moved into a form of SME lending, launching its Livestock Loans in 2014. The Agri-Lending business has accounted for $70 million of the company’s total lending since then. Farmers can get access to funding via agents to buy cattle and sheep but unlike the banks – where property and the farm is security – the loan is secured against their livestock.
According to Yetton, the product has proved that SocietyOne can tap into a market that has not been effectively serviced by the banks.
“We will be looking at other segments of the SME market that are underserviced. That’s the next cab off the rank for us.”
According to Yetton, SocietyOne will be targeting a loan book worth around $1 billion over the next five years with an eventual goal of a 2 to 3 per cent market share in the $100 billion consumer lending market.
Acknowledging that financial services is a “scale game”, Yetton said the business would look at expansion but with a long-term mindset.
“You don’t want to grow too quickly and compromise your integrity. You need to have good people around you to cope with the growth and you need to have shareholders to invest for the long haul.”
The business has already boosted its management team with a number of appointments including Anna Harper as chief financial officer, John Cummins as chief investment officer and Andrew Staniforth as chief risk officer.
While its well known that Westpac is a shareholder in Society One, Yetton acknowledged the backing of a number of mutuals and credit unions that have all been key to the marketplace lender’s success. Beyond Bank, G&C Mutual Bank, Unity Bank and Regional Australia Bank are already on SocietyOne’s shareholder registry.
“The partnerships with credit unions and mutual banks have been pivotal to our success. Around $100 million worth of lending has come from this sector," he said.
In terms of its strategy to build scale, the business will look to focus on building its brand, investing in technology and, as highlighted earlier, look at targeting underserviced parts of the lending market.
“If you are to be a true challenger then people need to know who you are. That requires significant investment in marketing and branding.”
A significant advertising campaign ran in August last year, which aired as part of the Rio Olympic Games coverage – a deal secured through its partnership with Seven West Media.
The campaign has delivered with Yetton noting that people are now starting to talk about the business. Investment will also be ploughed into its technology even it if means challenging the way SocietyOne manages its business.
“You always know you have to be prepared to disrupt yourself. You need to always focus on improving yourself. Digital technologies will continue to offer businesses a faster and simple way to do things and we need to be prepared for that.”
As a former Westpac banker, Yetton continues to relish his role as CEO while recognising that marketplace lending is challenging. Even the more established global businesses such as LendingClub have had ups and downs. He also sees further consolidation in the market and predicts that just one or two players – including SocietyOne will dominate.
Yetton acknowledged the importance of SocietyOne being a pioneer in marketplace lending but “equally important” is recoginsing the two co-founders of the business – Greg Symons and Matt Symons. While Matt Symonds has left the board, he will continue as shareholder in the business.
“Full credit must be given to Greg and Matt who both believed in launching a marketplace lender. They have redefined a better way for people to borrow and created new opportunities for investors," said Yetton.
“It takes a lot of vision, passion and determination to start a business in financial services and get it to the foundations it has today. They are the true believers.”