Auswide Bank teams up with P2P lender

Interviews

Transcription of Finance News Network Interview with Auswide Bank Limited (ASX:ABA) Managing Director, Martin Barrett and MoneyPlace CEO, Stuart Stoyan
 

Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Auswide Bank (ASX:ABA) and peer-to-peer lender MoneyPlace, to talk about how traditional banking and peer-to-peer lending are complimenting each other, is Managing Director of Auswide Bank, Martin Barrett and CEO of MoneyPlace, Stuart Stoyan. Gentlemen, welcome.
 
Martin Barrett: Thank you Carolyn.
 
Stuart Stoyan: Thank you Carolyn.
 
Carolyn Herbert: First to you Martin. Could you start by outlining your arrangement with peer-to-peer platform, MoneyPlace?
 
Martin Barrett:We’re very very excited about the relationship that we’ve struck with MoneyPlace. We see that as being pretty innovative in the marketplace, as the first financial organisation, first bank to take both an equity stake, as well as using the peer-to-peer platform for our personal lending ambitions. So let me talk a little bit about both of those.
 
So from a personal lending ambition, it is part of our strategic push to grow our consumer finance book, our personal loans. And we see the peer-to-peer platform, the MoneyPlace platform as being a fantastic way of getting that national distribution, for those personal loans.But of course with any good relationship, we would like to see the upside from that as well in terms of the fact that we will be able to benefit, from arelationship that has an equity stake. In this particular case, 20 per cent equity stake in MoneyPlace, so very excited about that relationship.
 
Carolyn Herbert: So why has that strategic relationship attracted Auswide Bank?
 
Martin Barrett: We’re in a marketplace I think that is changing and changing quite rapidly. Technology is changing the way that we are competing and it’s changing consumer behaviour. I think overseas, we’ve seen peer-to-peer be particularly successful, in the USA and in the UK. It’s younger here in Australia, but I think it also has some substantial opportunity.
 
Carolyn Herbert: Martin, just how important are innovative relationships and opportunity in 2015/16, and what trends are occurring in your market?
 
Martin Barrett: I think those relationships are quite critical. Innovation is something that we all as companies, have to continue to support and sponsor. If we’re not innovating, I think the saying is you die. And we can’t innovate on everything. We need to be able to see who might be out there, providing something of excellence to the marketplace, that we can actually form a strategic relationship with.
 
In this particular case, I think MoneyPlace have a very innovative group of people, some fantastic technology skills, but also very importantly, credit skills. And you match those two together with an innovative platform. And I think that just creates a wonderful launch pad for us, and a wonderful opportunity for us to be involved.
 
Carolyn Herbert: Now to you Stuart. Can you tell us a little bit more about the MoneyPlace platform, how does it work and how does it attract borrowers?
 
Stuart Stoyan: So MoneyPlace is an online marketplace for creditworthy borrowers and investors. So we’re a pure marketplace in the sense that we’re not a balance sheet lender ourselves. We’re focused on connecting investors with borrowers. Our investor, so AuswideBank for example in this instance, sets out an investment strategy around the types of loans, or the types of risks that they’re wanting to take. And then we in turn, match their investment into loans to borrowers. And for borrowers, it’s consumer loans, consumer loans that are unsecured, between $5,000 and $35,000 with a term of three or five years.
 
 
Carolyn Herbert: Stuart, what are the regulatory requirements around running a peer-to-peer lender, and who bears the risk when a borrower defaults?
 
Stuart Stoyan: We’re regulated by ASIC, so we actually run as a legal structure as a managed investment scheme. And we’re therefore, regulated with ASIC as a holder of an Australian Financial Services Licence.
 
In terms of the credit side and for the borrowers, we have a credit licence. So we operate as any other credit provider. Now what that means is that we’re fully regulated by ASIC, as a non-bank lender. In terms of the credit risk, this is something that’s quite pertinent to the model, which is that the investors are ultimately exposed to the credit risk.
 
Carolyn Herbert: Now to your agreement with Auswide Bank. What does this mean for MoneyPlace?
 
Stuart Stoyan: Having a partnership with a listed bank, is a great validation of MoneyPlace’s business model. Now I don’t like using the word validation, because of course we’re validated. But what we actually see now is we see a bank, an Australian regional bank that is not only investing in our loan, but investing in the business, which I think is a great way to give some assurances to other investors. But also to borrowers, to know that when they come and apply for a loan with MoneyPlace, that we have the ability and the funds and liquidity, to be able to provide those loans.
 
Carolyn Herbert: Finally Stuart. Where do you see the peer-to-peer lending market going over time?
 
Stuart Stoyan: What we see over the next couple of years is really a greater awareness and an understanding, of peer-to-peer lending for both borrowers and investors. And then seeing over time, over the next two to three years that this will become a fairly dominant source of funding, for people searching for consumer loans.
 
Carolyn Herbert: And Martin, what are your thoughts on that?
 
Martin Barrett: I’m very keen obviously to see the peer-to-peer space grow in Australia. I think as a regional bank, it gives us a wonderful opportunity as a partner with MoneyPlace, to be able to compete against the big banks. And as we look to ways and means, as smaller organisations to win customers from the larger organisations, to define what scale means in the new environment, I think that peer-to-peer provides us with that fantastic opportunity. So fingers crossed, peer-to-peer will do well in Australia.
 
Carolyn Herbert: Martin Barrett, Stuart Stoyan, thank you for your introduction on peer-to-peer lending.
 
Stuart Stoyan: Thank you very much Carolyn.
 
Martin Barrett: Thank you Carolyn.
 
 
Ends

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