It isn’t just mobile payments that are disrupting traditional notions of banking.
Sydney-based consumer finance startup SocietyOne has launched Australia’s first peer-to-peer online lending platform, which aims to bypass traditional bank lending entirely.
Akin to “crowdfunding” in the US which helps raise equity capital through outsourcing to the crowd via the Web, SocietyOne’s loan product will raise capital from interested debt investors over the Internet to disburse as consumer loans entirely through the Internet.
SocietyOne is targeting Australian consumers who have seen “disproportionately high” lending rates for a long time, said SocietyOne cofounder and CEO, Matt Symons.
Its lending procedures may ultimately be more efficient than a traditional bank, giving online price comparisons to consumers on interest rates much like online airline price comparison sites, he said.
With its flagship product, ClearMatch, a Web-based loan application and loan management product, individual borrowers could access up to $30,000 in unsecured loans. The loan funds, in turn, are raised through mini deposits of multiple investors online who can build a diversified portfolio of consumer loans on SocietyOne’s site, earning double digit returns. Its prospective investors will also be Australia-based.
Just like a traditional bank, SocietyOne will verify accounts, perform credit checks, credit reporting, funds transfers and collections - all online. It has been granted a credit license by the Australian government.
SocietyOne hopes to replicate the success of eBay-like Internet lending and borrowing companies Zopa, the UK-based online loans company, and US-based Lending Club, an online lending community which recently raised $US15 million in equity from Kleiner Perkins Caufield & Byers, and boasts former Morgan Stanley chairman John Mack as a board member, Symons noted.
“We see no reason why P2P lending cannot shake-up the personal lending market here in Australia in the same way it has internationally," Symons said, adding that financial investors are demanding more transparency.
"People want to take back control," he said.
The Web loan product ultimately has applications beyond consumer loans such as corporate debt, which the company will evaluate over the next several months, he said.
Its consumer loan could also expand beyond Australia into other markets in Asia-Pacific and disburse in local currencies eventually.