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SocietyOne May Be the Most Innovative P2P Lender on the Planet

by Peter Renton on February 5, 2013

Matt Symons has big plans. He is the co-founder and CEO of Australia’s first fully compliant p2p lender called SocietyOne. Sure, he wants to be Australia’s version of Lending Club and dominate the market down under but he sees that as a narrow vision.

Symons’ goal is to reinvent the concept of the personal loan. That is a big goal but his company is already backing it up with action. SocietyOne won best in show at the recent Finovate Asia conference for their ClearMatch technology platform, which automates virtually every aspect of the loan underwriting process.

I urge everyone to watch this video of their demo at Finovate Asia. It is one of the most innovate demonstrations I have seen from any company in this industry.

Symons believes that the platform of choice for obtaining a personal loan in the future is going to be the mobile phone. Here is what he had to say about this when I chatted with him recently:

We are trying to make the personal loan a product that can compete successfully with the variety of other credit options that exist that currently win because of ease and convenience. In our analysis the reason that people don’t use personal loans more often is that it is perceived to be a hassle and a lot of effort to apply for one. If you can make the personal loan something that is easy for people to get on a phone then people will use a fixed payment-type personal loan instead of a credit card.

This makes perfect sense to me. This decade will likely see the phone become the payment vehicle of choice as initiatives like Google Wallet and Apple Passport take hold. Once consumers become accustomed to using their phone for everyday purchases it is not much of a stretch for them to use their phone for bigger ticket purchases funded by a personal loan.

Today, users of SocietyOne’s SmartLoan application (currently still in beta release) can apply for a loan, get approved and funded in just three minutes as they demonstrated in the Finovate video.

How does this work? Once a user has downloaded the SmartLoan app to their phone and registered as a user they can obtain a loan in just a few steps. The underwriting is all done with SocietyOne’s ClearMatch technology platform that has been tried and tested in a traditional banking environment that issued over $1 billion in loans. The really cool part of the software is that once a loan is listed on the SocietyOne platform it can be immediately funded by investors. I imagine this is done in a similar way to Prosper’s Automated Quick Invest, so if the loan fits investors’ criteria they automatically place a bid and if enough investors bid the loan gets funded. Obviously that can happen very fast, in a matter of seconds.

The exciting part of all this is that we are only seeing the first version of their software. As the platform gets more sophisticated this process could happen even faster particularly for repeat borrowers. Then we will have a product that will compete directly with a credit card and will truly revolutionize the purchase of big-ticket items.

How is SocietyOne doing so far? They began operations in August last year and they just crossed over the $1 million milestone in total loans issued in January.  Yes, it is a humble beginning when compared with the huge volume at Lending Club but it is all going according to their plan.

Australia's leading p2p lender SocietyOne

Unlike Renaud Laplanche, the CEO of Lending Club, who is maintaining his company’s focus purely on unsecured personal loans, Symons believes the future for SocietyOne is across multiple asset classes. As soon as later this year they are looking to expand into new areas including secured loans. There is nothing they can share publicly yet but there are some interesting innovations in the pipeline.

With just 15 employees it is clear that SocietyOne is fighting above their weight. They may well be the most innovative p2p lender on the planet and clearly the management of Lending Club and Prosper could learn a thing or two from them.

I may be biased because they do hail from my hometown of Sydney but I think this Aussie startup is destined to make a big impact on the p2p lending industry.

{ 11 comments… read them below or add one }

Claus February 5, 2013 at 3:39 pm

Great video, Peter
Thanks for sharing

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Dan B February 5, 2013 at 6:52 pm

“In our analysis the reason that people don’t use personal loans more often is that it is perceived to be a hassle and a lot of effort to apply for one. If you can make the personal loan something that is easy for people to get on a phone then people will use a fixed payment-type personal loan instead of a credit card.”

It is an absolute no brainer that making the application process easier will get people to increase usage of pretty much anything on the planet. However I doubt the “instead of” part of the above quote. The reason people love credit cards is because of the flexibility of “revolving” credit. The reason people in financial duress ditch all sorts of commitments but pay credit cards (unless they’re maxed out) is because of the same reason. The reason a lot of people take out debt consolidation loans is because they can do so……………& concurrently de facto increase their available “revolving” credit on their credit cards (i.e. they get more credit).Then if they need to tap credit, the credit cards will allow them to do so unencumbered by their previous balance which has now been paid down (i.e. transferred over to) the personal loan. So, though I have no doubt that an easier/quicker app & approval will dramatically increase market share for this company, I have serious doubts that it will be an “instead of” credit cards scenario & that will affect or be at the expense of credit card usage whatsoever.

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Peter Renton February 6, 2013 at 4:55 pm

While I take your point that people like the “revolving” part of credit cards, I think for bigger ticket items a personal loan with a fixed payment will be compelling for many people. We will see. It will be interesting to see what innovations the next few years bring, I have a feeling the entire payments ecosystem is going to change dramatically.

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Simon Cunningham February 5, 2013 at 9:55 pm

Stunning.

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Danny S February 6, 2013 at 8:31 am

I would love to see Lending Club and Prosper delve into Secured Loans. For Borrowers, it could be a way of offering up some amount of collateral, and obtaining much lower rates (for instance, if they offer a vehicle thats worth 50% of their loan request, as collateral, they could get a loan rate that is 50% less than what they would otherwise be charged). For a Lender, that added level of security could well be worth a lower rate of return (especially perhaps for institutional investors).

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Dan B February 6, 2013 at 8:40 am

I disagree. I’d say take the collateral but charge the same high interest loan as before. So who would accept such terms you ask? The answer is some/many of the 80% of borrowers that get rejected for loans today.

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Peter Renton February 6, 2013 at 5:03 pm

I think we will find that when LC or Prosper dips their toes into secured loans that the interest rates will be comparable with what we have today. There will be more costs with running a secured loan operation I would expect and the numbers just won’t work at the lower interest rates. As Dan points out it should not be difficult to find borrowers.

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Gary S. February 6, 2013 at 12:39 pm

I would love to see prosper and lendingclub garnish the wages of those who miss payments!

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Peter Renton February 6, 2013 at 5:05 pm

Lending Club does garnish wages where it is allowed. Read my review of their collection practices here:
http://www.lendacademy.com/the-collection-practices-at-lending-club/

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Gary S. February 6, 2013 at 5:10 pm

Ah that is good news I figured there collection policies were more lax than that.

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Lewis M March 1, 2013 at 12:53 pm

Ratesetter in the UK is still the slickest, simplest P2P site out there in my opinion…

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