If you could reinvent a bank today, would you? February industry news.
As bank profits continue to fall and layoffs continue to increase, this Bloomberg piece looks at how the banking world has changed since the financial crisis, not to mention the challenges still faced. With the proliferation of technology start-ups that are able to cut out the traditional middle man by linking supply directly with demand, our CEO Samir Desai asks: “if you could reinvent a bank today, would you?”
Thousands of businesses have benefitted from marketplace lending across the country, such as Funding Circle borrower, James Chocolates. This chocolate extraordinaire explains how they went through all of the same processes as a bank in order to borrow from investors like you, however the speed and simplicity of using a platform like Funding Circle was incomparable to the experience they had with high street banks. James Chocolates is backed by over 2,500 individual investors that have helped his business to grow and flourish. Make sure to check out his marvellous shop here ahead of Easter.
Sam Hodges, Managing Director of Funding Circle US, offers his best advice for first-time entrepreneurs. He discusses his biggest mistakes at the beginning of his career and useful advice that he received. Sam advises: “Don’t rush things. If you’re smart and passionate, success will follow.”
As the countdown to the new tax year continues, peer-to-peer lending platforms are getting ready for the introduction of the ‘Innovative Finance ISA’ (IFISA) which is scheduled to launch 6th April. This is a seminal moment for our industry as it will allow you to earn tax free returns on lending up to £15,240 per year. For things to consider ahead of opening an IFISA, check out our latest blog post. You can also read more about ISAs in the Financial Times, Daily Mail and Independent. If you have any questions in the run up to launch, please email our customer relations team at email@example.com or call us on +44 (0) 207 401 9111.
For a useful overview of the leading platforms in this space, take a look at this Telegraph piece. Since all platforms are different, it’s essential that you understand how each one works and the potential risks involved before lending your money. Remember, your capital can go down as well as up.
The latest alternative finance benchmarking report from the University of Cambridge and Nesta shows that a wider range of investors are becoming involved in marketplace lending – from retail investors, to government, to financial institutions such as banks and pension funds. This is welcome news – having a diverse mix of investors at platforms will ensure they are sustainable in the long run, which will help to protect small businesses in a future economic downturn.
And finally, you may have seen recent articles about the industry that stemmed from Lord Turner’s comments, a former chairman of the Financial Services Authority. As peer-to-peer lending matures, we welcome increased scrutiny of the sector and embrace it as an opportunity to show that Funding Circle’s platform and processes are robust, stable and transparent. Our loanbook has been independently stress tested by the same people who stress test the high street banks. The report found that even in the most extreme economic conditions (which the Prudential Regulation Authority set in 2014 at the time they stress tested the high street banks), average annualised returns for Funding Circle investors would remain above 5.5%. Read more here. As with all stress testing assessment, it is important to note that past performance is not necessarily a guide to future performance. The nature of modeling for future economic events is that it is an estimate.