Global Banking & Finance Review – Q&A with Tim Simon, Chairman of Madiston LendLoanInvest
With the decline in lending by high street banks in the UK and the growth of alternative financial lenders, what are the major risks a borrower encounters when choosing an alternative lender?
It is important that borrowers understand the detail of the agreement they’re entering into, the charges the alternative lender makes and what happens in the event of a borrower’s circumstances changing or a borrower defaults. To prevent misunderstanding or bad practice in the future, from 1st April this year the P2P Lending market will be regulated by the Financial Conduct Authority and that is already having a positive impact on the market and reducing the risks associated with it. Reputable alternative lenders are welcoming the regulation as are the main trade bodies like the P2P Finance Association whose members make up the lion’s share of the market.
Please give a brief description of Madiston LendLoanInvest and how you came into fruition.
Madiston LendLoanInvest is a very flexible P2P Lending site that enables lenders and borrowers to choose how they want to manage their money. There are two markets – Bidding and Matching – with tools for automatic bidding and re-bidding to make life easier for lenders. The Bidding Market shows borrowers’ loan requests so they can put their case directly to lenders. Lenders can also see the borrower’s credit category and all the bids from other lenders so they have information to make individual decisions on each loan request. The automated Matching Market is for borrowers and lenders who would rather the system did all the work for them. With the tools available, lenders have granular control in the Matching Market too, using AutoLend to set up and flex their lending parameters and ARBU (automatic response to bumped-off underbid) to automatically make new bids if their first offers were too high.
Madiston LendLoanInvest is built on Madiston plc’s own P2P Lending software, designed from the outset as a commercially available, customisable platform. Tim Simon, CEO of Madiston, has a background in FinTech (with market leading software for the securities and banking market) but first came across P2P Lending when he was researching music crowd funding for his son’s band. Seeing the potential of alternative finance, he researched the market and now Madiston has the software to provide lenders and borrowers with more choice, and corporates looking to enter the market with a software platform to suit.
What services do Madiston LendLoanInvest offer that differ from their competitors?
The Bidding Market is different within the personal lending space – most P2P lenders for personal loans use the “behind the scenes” Matching Market style. The Bidding Market is seen more often in business lending but we’ve implemented it for lenders on personal lending giving them the opportunity to decide for themselves if they’d like to help individual borrowers but, perhaps, at a higher interest rate.
Madiston LendLoanInvest offers more flexibility for borrowers – if borrowers want to be specific and borrow £1,110 over 15 months, they can. They are not shoe-horned into one, three or five year loans and they can borrow in £10 increments over £1,000. By borrowing only what they need over the shortest period they can afford, borrowers can contain their costs.
It provides more control for lenders – in addition to the controls they have to set up their lending, they are kept informed of every action and transaction affecting their portfolio (they can switch email notifications on or off) with a dashboard and drill-down capability so they can see, to the penny, where their money is, where their interest is coming from, when repayments will be made and how the charges have been calculated.
It caters for experienced P2P lenders – during our research, we learned that lenders were frustrated because they wanted the opportunity to use their own skills and knowledge on the P2P platforms to increase the return on their money. Direct choices on the Bidding Market, detailed parameter settings on AutoLend and ARBU, combined with the information on the dashboard, means they can now get to know the platform and flex their lending parameters as they see fit to get the most from their money.
Do you offer borrowers financial advice?
We don’t offer financial advice but extensive information about the risks, rewards and costs involved is available on the site.
With regards to lenders, how do your services benefit them?
We have built a system which we believe offers many benefits to lenders, not least:
Wider range of borrowers so higher interest rates on offer. One of the most important considerations for lenders is the return they can expect from their investment. Madiston LendLoanInvest includes a wider range of creditworthy borrowers. These are borrowers who just dip below the credit levels offered on the market leading sites, but still pass the credit, affordability and stability checks. These borrowers are under-served in the market at the moment, sitting on the cusp of B/C credit categories but are often attractive to lenders as they are prepared to pay a sensible level of interest to reflect that. At the moment, there are Loan requests on the site where the borrower has only a few credit stars but has offered an attractive target interest rate of 15 per cent. Lenders set their own risk and reward model by choosing borrowers from the range on offer.
Two markets so lenders can control their lending, their way. We operate two markets – a Bidding Market and a Matching Market – so lenders can choose how much involvement they want in their day-to-day lending, from total automation to making individual decisions on every loan.
Lenders’ bids on the Bidding Market are transparent, eBay style. This market is visible on the site, so Lenders can see competitive bids and decide the optimum interest rate to bid for the most competitive loans. This is fascinating to watch as you see bidding strategies in action.
Five portfolios available on the Matching Market for automatic lending. Lenders can set up their portfolios as they wish, perhaps with different risk and reward objectives, giving them granular control over how their money is matched with borrowers. They can set up these portfolios once and let the system apply their parameters without further involvement or they can use their experience to flex the settings over time to improve their returns.
System tools to help achieve the best returns. ARBU is a tool that re-bids automatically if initial bids are too high to be included in the more competitive loans. This avoids the frustration of being outbid at the last minute and missing out on a loan offering attractive rates. Again, lenders choose their own settings so ARBU bids according to their preferences.
An optional Compensation Scheme to protect lenders against defaults and late payments. We offer an optional compensation scheme to lenders so they can opt in if they’d like to have some protection against potential defaults and late payments.
Change in Instalment Plan protects lenders from loans ending early. If a borrower decides to repay his/her loan early, it is the lender that is potentially inconvenienced. The lender, or the system, has to reallocate the money to new loans with an inevitable delay in getting back to earning interest. The Change in Instalment Plan gives the freedom to the borrower to repay early but a small charge is made and lenders are compensated as a result.
Comprehensive information so lenders know exactly what is happening with their money. Quite rightly, lenders like to be kept informed about all events that affect their money. To do this we provide email notifications that inform lenders about everything from a bid on a loan to lenders’ questions and borrowers’ answers on Loan Requests they’re bidding on. This information is also available through an easy to use and informative dashboard, ensuring lenders know exactly where their interest is being earned and how charges are calculated to the penny.
Interest on holding account balances. Madiston LendLoanInvest passes on any interest received in the Client Money account so even when a lender’s money is not lent out, it is still earning a level of interest.
What plans do you have for 2014 to further the activities of Madiston LendLoanInvest in order to provide fair loan options as well as upholding the regulations and high standards of the Peer-To-Peer Finance Association?
Fair is the optimum word – our site is designed to offer a fair balance between lender and borrower with market forces driving the interest rates agreed, so they both feel like the process has been rewarding. As a member of the P2PFA we have been actively involved in the consultation with FCA, the Treasury, HMRC and others to ensure the regulation does its job and we welcome the high standards being set. Madiston LendLoanInvest’s new facilities will be:
- Secondary market for lenders to sell their loan slices
- Flexible loan product to provide a better solution for borrowers than having rolling credit card balances at high interest
- Business lending
Q&A with Clare George-Hilley, co-founder, Centropy PR
Clare George-Hilley is the co-founder of Centropy PR
Global Banking and Finance Magazine recently caught up with Clare George-Hilley, co-founder of fintech and financial services specialist PR agency Centropy, as the company toasts to three years of trading. We asked Clare about what life is like running an agency in the city, the trends she is seeing in the financial services space and what the future holds following the Covid-19 outbreak.
Why did you decide to set up Centropy PR?
I was looking for an opportunity to launch my own agency, both my husband and I had been in the public affairs and public relations industry for over a decade and we thought the time was right to go out on our own.
We could see that the financial services industry was surging, with challenger brands and new technology transforming traditional banks and setting new standards of customer service. There was a huge market opportunity to create and launch a PR agency that could provider first class comms support, alongside a deep understanding of complex regulations such as AML, KYC, and the GDPR. Likewise, many traditional technology firms are diversifying their offerings, to tap into the growing market opportunity posed by the fintech boom.
So, we worked on a business plan, designed a strategy for winning clients and officially launched in September 2017. Within a few months we had a growing portfolio of clients and a thriving business, since that point, we have never looked back!
How is Centropy doing now and what are you plans for growth?
The last three years have flown by and our client portfolio has grown and diversified quickly. We now manage PR campaigns for clients on everything from cryptocurrency, wealth management to payments and trading software.
We’ve also hosted parliamentary debates with key industry figures, including Members of Parliament (MPs) on topics such as the future of the financial services industry and the impact of challenger banks on traditional providers. The team is expanding quickly and we’re investing heavily in the latest training and support to ensure our team members are equipped to reach their full potential.
How do you see the next 12 months?
The Covid-19 outbreak has crippled the economy, forcing millions of people to work from home due to the very serious health risks. The knock-on effect of this crisis will lead to companies cutting costs where possible to save jobs, so tech will play a vital role in ensuring many businesses stay afloat.
We are already working with contactless payments specialists and other fintech companies that offer solutions to help companies survive and thrive despite the inevitable challenges ahead.
We aim to continue building our portfolio of expertise, testing ourselves with new challenges and delivering the best possible service to clients
This is a Sponsored Feature.
Lessons from past recessions and advice for business owners during the coronavirus pandemic
By Neil Davis, managing director and co-founder of Sterling Networks
What is Sterling Networks?
“Sterling Networks is a professional organisation founded in 2014 which facilitates networking events for businesses across the Midlands, Oxfordshire, Wiltshire and the South West. Over 300 members attend our fortnightly breakfast and lunchtime meetings.”
What is your background prior to establishing Sterling Networks?
“During the 1990s, I worked in the corporate team for Halifax. My wife, Tracey, and I went onto own a manufacturing business, which was also called Sterling, and produced a range of gifts, merchandise and promotional items.
“We soon realised tradeshows were a great way to meet distributors and clients. From there, the business grew exponentially, and we managed to build a network of around 500 distributors. Eventually, we became ground down by the manufacturing business – in part because the local manufacturing sector was being devastated by competition from China – and took the decision to sell the business and relocate to Spain.
“After spending several years living abroad, we moved back to the UK to set up Sterling Integrity (EXPO’S) & Sterling Networks (Networking) We were inspired by a desire to help businesses make meaningful connections with one another, and we haven’t looked back since.”
The UK has recently entered a recession, brought about by the coronavirus pandemic. What have you learned from past recessions and how are these experiences helping you to navigate the current crisis?
“I’ve lived through a number of recessions and have seen the pain that insolvency causes companies on a large scale. It’s taught me that there are those who win and sadly those who lose, and that businesses must adapt to a rise in demand for certain products or services at a time of financial crisis.
“Given the nature of what Sterling Networks offers [an opportunity for business owners to connect and grow together] I decided we could build upon the brand due to the demand for new business during the pandemic. We therefore moved our networking events from face-to-face to virtual via tools like Zoom and have gained a steady stream of new members in recent months, reaching an overall total of well over 300.
“On top of that, we’ve taken new staff on during the crisis and have launched a number of new regional groups across the country. I was determined that Sterling should come out of the pandemic with a head start, so my attitude to the recession has been much more positive than those who are forecasting nothing but doom and gloom.
“We can’t pretend high street retail wasn’t suffering long before the pandemic came along, and thousands of new businesses are sure to start up to meet the demand for the products and services that people require at a time such as this. In order to develop and grow businesses need to focus on where changes need to be made to meet this demand.”
Sterling Networks has been providing emotional support to its members throughout the pandemic. What advice have you been giving to members that could be useful to other business owners?
“I try not to be too opinionated and respect other people’s views when giving advice to members, as there are always two sides to every circumstance. I’ve been careful not to say to people that they should be doing one thing or another, as I don’t know their business and its needs quite like they do. The only thing that I have been telling members is the importance of setting up one-to-ones with one another. By doing so, they can listen to the needs and concerns of other, like-minded business owners and work out ways that they might be able to help one another.
“The pandemic has meant we all have a bit more time on our hands, so the advice I would give to people is to use this extra time wisely. Not having to travel physically from one meeting to another means there is a greater opportunity to connect with more people. It’s important to remember that individuals outside of your business can be just as valuable as those within it.”
What makes you hopeful for the future and are there any words of encouragement you can give to budding entrepreneurs?
“The key events that have happened to this country during my lifetime – whether wars, recessions, or the pandemic – have enabled me to take stock of things. While these experiences are certainly challenging, we all become stronger for living through them, and it gives me great confidence that the world will ultimately improve as a result of the pandemic.
“The whole world is effectively rebooting right now, as is the business community. I like to think entrepreneurs will recognise this opportunity to take better care of their peers, and this translates to greater collaboration between organisations. Speak to as many people as you can, ask all the questions that you need to and do your homework. This might well be a difficult time for us all but planning for the future must start now if it is to become as prosperous as I know it can be.”
Exclusive Interview with Ugo Loser, CEO of ARCA Fondi SGR
Arca Fondi SGR is a mid-sized Italian active asset management company. Founded in 1983 by a consortium made up of 12 regional banks, the company has grown in time, expanding its network of distributors and its client base. Nowadays Arca manages Mutual Funds, Pension Funds and Institutional Accounts with total AUM exceeding 30 € bln, reaching more than 100 banks and financial institutions and serving more than 800,000 final clients.
What are the key contributors to ARCA Fondi SGR’s success over the past 35 years?
Arca has always put clients and distributors first. That is to say we have always privileged fair pricing for funds and developing high quality products and services for our customers. This requires constant innovation as an objective and looking for people’s talent to be free to produce its effect
Why are people the founding element of ARCA Fondi SGR and how have you sustained this vision over the years?
We work in small teams, people are young and motivated and can perform duties with a high level of autonomy and responsibility. Innovation is asked to everyone, everyday
What makes Arca Fondi SGR different from other asset management firms in Italy?
Arca is a company focused on doing what it can do very well, that is to say mutual and pension funds, services for clients and banks. We never follow short term trends but always look for long lasting impact on the industry, like we’ve done may times in the past
What products/services has ARCA Fondi SGR pioneered?
Arca has been the inventor of “Arca Cedola”, fixed-horizon, coupon paying funds, which have been with no doubt the greatest product innovation of the past 12 years on the Italian market. This type of funds, at first strictly based on bonds and later as a balanced product, has encountered an enormous success both with clients and distributors due to its simple and effective value proposition. Arca is a market leader also in the “PIR” segment of funds, a range of product focused on mid and small sized companies, that have been the best performers in the Italian stock market for the last few years. In services, Arca is a leader in technology applied to asset management. Our website, app and digital services for clients and banks are award winning, state of the art combination of data, technology and channels, and the best is yet to come on this side.
What strategies do you have in place to sustain your market position and withstand professional competition in the country?
As I mentioned, we do not waste resources on projects with dubious results, instead we constantly invest on people, products and services. The high level of profitability that Arca has been able to maintain even in difficult years for the markets of the banking sector is a further testimony that this strategy works very well
How do you use technology to create meaningful experiences for your customers?
First of all, we have created a whole new division, Arca InnovAction Lab, dedicated to technology, data and processes. This ensures projects are delivered quickly and they are free to leave bad past practices behind. Arcaonline.it, Arca’s website, provides distributors with detailed information on clients’ portfolios, asset under management and subscription/redemption requests. It monitors aggregate selling data offering to our partners a suite functions and analytics to track commercial campaigns. And if the banks branches need assistance, they may ask Sara, our digital chatbot. A broad and timely multimedia production, covering exclusive reports, comments, presentations, videos, webinars and newsletters is also available on the website.
Customers, subscribing Arca’s funds through its distributors’ network, may access Arcaclick, a dedicated area on Arcaonline.it. With Arcaclick the client can easily browse through her portfolio of funds, analyze its characteristics, view transactions and historical funds’ performance in customizable views. Arcaclick is also a powerful source of information on Arca product range: Prospectus, KIIDs and other literature is easily accessible along with news, comments and reports. Arcaclick may also be accessed via Arca Fondi App, a free application for mobiles and tables, running on both iOS and Android. Available 24/7 and in mobility, Arcaclick gives clients the opportunity access information, news and details of their personal portfolio anytime and anywhere.
What key trends will drive pension growth in 2020 and beyond?
The Italian market for pension funds is still very small and therefore there is a great opportunity to grow. Arca Fondi manages the biggest open ended Italian pension fund and it’s been constantly at the top of its rankings. As people and workers are looking for yield and to weather short term volatility, the pension fund is very well poised to profit from this trend.
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