Peer-to-peer lending is one of the most explosive and consequential developments in the fintech sphere in recent years, and a Melbourne-based startup has carved out its own distinct space at the forefront of this global trend.
There’s nothing personal about a one-size-fits-all approach, and according to Stuart Stoyan, CEO and founder of fintech start-up MoneyPlace, that’s the problem with traditional banks.
In fact, Stoyan goes so far as to say that tradition lending in Australia is “broken”.
“It’s really expensive, and the discrepancy between lending rates and the Reserve Bank of Australia (RBA) cash rate is the largest it’s been in 25 years. Banks approach lending as a product, not as a service to their customers, and as a consequence they approach lending with a one size fits all solution.
“With all the information and data that is now available, we thought that we could do a better job on consumer lending. Working with a team of people that have worked within the banking sector, we felt that there should be a way for customers to get a personalised rate that’s tailored to reflect their underlying risk as an individual.”
Officially launched in February 2016, MoneyPlace is a peer-to-peer lending marketplace that connects borrowers and investors directly. Borrowers can apply for online personal loans of up to A$35,000 with interest rates that are based on their own individual credit history. For investors, the appeal is the ability to access an asset class previously reserved for traditional lenders, and which offers a higher expected yield than traditional fixed-income products.
“We’re still at the early stages of our business, but the feedback is great. We had one customer who had been with a major bank for over 20 years and MoneyPlace was able to approve their loan application before the bank manager even returned his call. Customers are saving thousands of dollars on their personal loans, and are paying their debts off quicker. We’re helping people to get their personal finances in order–we’re helping them in their lives.”
Being subject to regulation can be a challenge for fintech start-ups, but Stoyan believes that the Australian Securities & Investments Commission (ASIC) has shown a commitment to making it easier for startups to get the necessary approvals.
“Regulation and red tape can be a sore point for many start-ups; in our case it took nearly two-and-a-half years to launch our product. But when we first started talking to ASIC, they hadn’t had to deal with some of the issues that we presented them with. Since then, their understanding of the fintech sector has grown, and they’ve introduced an innovation hub to help fast-track the process of approvals, which shows that they are a progressive regulator.”
In October 2015, Stoyan conducted the inaugural Melbourne Fintech Census–an independent survey of Melbourne’s fintech community. The results of the survey showed that most Melbourne fintech startups were under two years old and that they were solving an array of financial challenges, including solutions for payment, personal finance, asset management and lending. The survey found a strong demand to create a dedicated fintech hub in Melbourne.
“The census shows that Melbourne has a very strong, thriving fintech community” Stoyan explains. “The Melbourne Fintech Meetup Group has over 1,900 members, which makes us the largest fintech meetup outside of the UK and the US. That’s a great accomplishment.”
Stoyan goes on to say that government initiatives are critical for the ongoing growth of Melbourne’s fintech ecosystem. One of the more prominent of these is LaunchVic, a A$60 million startup launch pad formed by the State Government of Victoria.
“The startup community wants to see progress more than anything, and it wants to see it quickly. I think that’s going to be the result of a healthy tension between the innovators and the makers and a multifaceted government committed to resolving issues.”