Last week Funding Circle announced a couple of changes to their lending platform, including a greater focus on automated bidding and selling, and the withdrawal of the option to manually choose loans. This is a similar operating model to Zopa and Ratesetter, two of the biggest peer-to-peer platforms in the country.
Autobidding can be a powerful tool for lenders who are time poor or not interested in choosing individual loans. New lenders might also find it an easier way to gain access to the world of peer-to-peer lending.
Despite the news at Funding Circle, I still believe there is a strong case for a platform to offer lenders the opportunity to choose individual loans. It’s something our lenders expect; we do whatever is needed to ensure the lending opportunity is appropriate, but once a loan is on the platform, our lenders have the control to make their own lending decision.
Autobidding and autoselling can make life a lot easier for everyone, but having the opportunity to ask questions and find out what’s ‘under the bonnet’ can work just as well for the right kind of lender. It might make our life a bit more difficult, but we know there are no shortcuts to building a credit-led property finance platform.
Lenders’ capital is at risk. Past performance is not an indication of future returns. Remember, payments are not guaranteed if the Borrower defaults.
**About the author: **CEO David Turner co-founded Invest & Fund after a 30-year career as a trader in the City of London, working for various financial institutions including Tullett Prebon and RBS.