Peer to peer (P2P) financing is the loan of cash to people or companies through online services that match lenders directly with borrowers without dealing with a conventional financial intermediary such as a financial institution.
P2P lending first appeared in 2005 together with the introduction of Zopa in the United Kingdom. It spread through the western world until to eventually become a global phenomenon. Providers of alternate finance in western states are now looking at the next growth region: Asia.
P2P appeals to both people and companies, but especially those that are deemed ‘unbanked’. Banks look at your credit history or credit files to generate a credit rating. Without a credit rating, many lenders are unwilling to offer loan, or will charge higher rates of interest and give less advantageous conditions to you.
This can become problematic in cash-intensive markets for example Asia. Not possessing even a bank account, or a credit card, doesn’t always mean that you’re a poor payer. It merely means that banks don’t have some track record of your credit history.
A bunch of fintech startups have develop alternative credit systems to permit customers to avoid conventional financial intermediaries. ECredable, for example, gives a letter grade predicated on their payment info that the company collects in the landlord, utility provider, insurance company or alternative vendors to confirm timely payments to consumers. Cignifi uses Big Data technology to produce credit and marketing scores using mobile phone behavioral data. SharedLending on the other hand, uses an algorithm that determines one’s credit worthiness based on five human characteristics: finance, resilience, productivity, health and education.
While Asia’s P2P giving industry continues to be in its infancy, several startups are quickly emerging as key regional players.
Started in 2006, CreditEase is one of China’s largest P2P giving and microfinance platform, serving working professionals, business owners, students, individual investors, as well as farmers, covering 96 rural areas and 232 cities .
Targeted at democratizing credit in China, CreditEase is the parent company of internet lending platform Yirendai, which held one of the very first major IPOs of a Chinese P2P lending firm last December.
Earlier this month, CreditEase announced it has raised a US$80 million fund with plans to purchase US$50 million of loans from American online lending platforms Prosper Marketplace Inc. and Avant Inc.
MoolahSense is a Singaporean P2P giving platform connecting local SMEs .
MoolahSense is backed by East Ventures and Pix Vine Capital, and contains recently signed partnership to refer borrowers that were successful to the financial institution for bigger loans and other conventional banking services.
Headquartered in KL/Malaysia, Crowdo is a fintech firm offering lots of crowdfunding solutions including equity crowdfunding and peer-to-business lending.
Started in 2013, Crowdo is one of the region’s longest running and biggest crowdfunding programs with over 20,000 members and offices in Singapore, Kuala Lumpur and Jakarta.
From MAS, Crowdo received a provisional Capital Marketplace Services License in April, letting the company to manage its digital crowdfunding and giving platforms in Singapore. Crowdo is licensed by the Securities Commission of Malaysia.
Funding Societies (Indonesia)
Funding Societies is an internet platform that joins SMEs with individual and institutional lenders. The company is targeting the Southeast Asian market, especially Singapore.
Funding Societies started an office in Singapore last May and in January a second place in Jakarta. The startup has already increased over US$1.5 million in financing.
Funding Societies is the primary Singaporean peer to peer giving company to integrate a trustee enrolled using the Monetary Authority of Singapore (MAS).
WeLab Holdings (Hong Kong)
Founded in 2013, WeLab Holdings is one of Asia’s leading Internet finance company. The firm is headquartered in Hong Kong with offices in China and India.
WeLab Holdings is backed by leading investors, including Li Ka-shing’s TOM Group and Sequoia Capital. In January, the company raised US$160 million in a Series B financing round from ING Bank, Khazanah Nasional Berhad, and state-owned Guangdong Technology Financial Group.
Crowdcredit is a cross-border marketplace giving program operator that delivers the ability to give to SMEs and individuals in Italy, Cameroon, Estonia, Finland, Spain and Peru to Japanese private and SMEs investors.
The company aims at offering both economic and societal yields to customers by joining borrowers and lenders worldwide.
Established in 2014, the system has been used to raise over ¥848 million in loans. Crowdcredit has raised US$2.76 million in funding so far.
Maneo operates Japan’s largest P2P lending platform which allows SMEs to borrow cash from investors.
The platform was used to raise over ¥48 billion in loans since its foundation in 2007. The service is utilized by over 31,000 investors.