You Can Go And Do It Yourself
There is an article in the comic of the Times today about Jamal Edwards and he uses this phrase and they say it could be his motto.
I like it! And it could have been my motto!
My father always used to say that we’re all the same, sitting on the toilet and to never be afraid of approaching anyone.
Is Funding Circle Going To Sleep With The Enemy?
There are rumours around the Internet that Funding Circle is going to tie up with Santander. Read a report here in The Telegraph.
For many years ING provided funding to a host of smaller lenders in the UK. Then they changed tack and left these lenders up the creek without a boat, let alone a paddle.
The only possible tie-up that I would possibly do if I was the CEO of Funding Circle is to licence the technology for use in a non-competing market.
I certainly wouldn’t get involved in any direct tie-up in the UK, for a number of reasons. Most of these are detailed in the Telegraph.
But I was part of a small dynamic company taken over by a big US corporation and it just didn’t work. Santander and Funding Circle are so different, I’d only give them a few months before they fell out in a big way.
I hope that if they are talking, that Funding Circle see the light and withdraw.
But the rumours probably haven’t done their business a load of good.
Who Needs Outside Investors?
The Sunday Times has two articles today about very successful companies that have become that way and financially secure, without any external finance.
I’ve known about the first, Martin Baker for many years and in some ways it’s surprising that they haven’t sold out, as anno domini catch up with us all.
The other is a Cambridge company called Real VNC, who provide software for virtual network connections. They have just won the MacRobert Award as is reported here.
I like the quote from Andy Harter, one of the founders of the company.
We need to persuade young people that engineering means the people who built the Olympic Park and the internet, and that it is a great choice of career.
I’ve spend a life in engineering and would thoroughly agree. I’ve even applied engineering principles to banking and finance. Bankers have needed me more, than I’ve needed them!
On the other hand when I needed a good banker, I found an excellent one in my friend David, who came to me because of the quality of my work on an internal project he started in the bank. How many bankers these days would recognise a good engineer or scientist? Only after he’s sold his or her company, I suspect!
What Do You Get When You Cross Zopa With Wonga?
At a first glance Zopa and Wonga are at the two ends of the financial spectrum, when it comes to borrowing and lending money.
Zopa, Funding Circle and Ratesetter, and probably a few other peer-to-peer lenders in the UK and around the rest of the world, take in money from those who want a bit more interest on their savings and lend it out to those who after a series of rigorous checks, look like they might be able to repay it.
I have seen figures which show that peer-to-peer lending grew by 300% in the last year and has now lent over half a billion pounds. So they must be doing something right! On a personal note, although my return has dropped a bit in the last year, I still get nearly five percent on my money invested in Zopa before tax, after taking into account all charges and bad debts.
Wonga and the other payday lenders probably lend a lot of their money to people who’d never qualify for a loan from Zopa and their peers. The interest rates are a lot higher and the terms are generally not as favourable as those offered by Zopa.
In some ways what unites Wonga and Zopa is their efficient systems, backed by state-of-the-art computing. Robert Peston talked about Wonga’s systems in this article.
eMoneyUnion is a new peer-to-peer lender, which could be thought as a company, that takes the best practice of Zopa and Wonga and combines them to create a company that can lend to those who wouldn’t get a Zopa loan, but also gives a good return to its investors. This article is about the launch of the company.
So it would appear that eMoneyUnion could be the cross between Zopa and Wonga!
Let’s hope it all works out well. I shall be investing.
Is It Time To Leave Lloyds TSB?
If I was a Lloyds TSB customer, who was being summarily moved to another bank, like the Co-operative Bank or hived off into a subsidiary that was being privatised or perhaps sold to a sovereign wealth fund, I would not be pleased. In fact, given the shenanigans at the bank in this area, over the last couple of years, I would have been long gone.
This disregard of customer wishes is akin to buying a new Sony television and then when it is working well, getting a letter to say, that your new television is being swapped for a Samsung, for no good reason.
It is a matter of my human rights, that I choose where I keep my money and it has nothing to do with the government.
I don’t think that I’m the only person, who thinks like this and it will be interesting to see how many customers Lloyds TSB lose.
Today there is a story on the BBC web site, about how the banks are lining up to take part in the sale of the government’s stake in Lloyds TSB. This will only make matters worse and I suspect, a once-great British institution, will end up in the hands of foreigners.
I certainly will have nothing to do with the Lloyds TSB sale and if it was decided that every UK citizen, should get a few free shares, I’d just say thank you very much, cash them in as soon as I could and then spend the money on something more worthwhile.
Zopa Starts Loans To Sole Traders
Zopa is now moving into new territory by announcing business loans to sole traders. The details are here. Here’s Zopa’s reasoning as reported by the article.
We’ve chosen to start our business loans with sole traders for two reasons:
1. We saw that there were few opportunities for smart sole traders, with a good credit and trading history, to access good-value loans.
2. Sole traders are often looking for loans of a similar size and time period as our personal loan borrowers so offering these loans doesn’t require big changes for our savers to the way they choose to lend
So will it make any difference to the risk of investing in Zopa?
I don’t think it will make much difference at all, especially as I suspect the profile of the sole traders they lend to, won’t be far removed from a typical Zopa personal borrower.
The only problem, I can see is that to support this new area of lending the Government is injecting millions into Zopa. What effect will this have on the rates lenders like myself get, I do not know or wish to predict!
Banks Don’t Do Parties
It’s many years, since I had any hospitality courtesy of my bank. It was probably a meal from David, when we were getting each other out of various scrapes.
But last night, one of the peer-to-peer lenders I use, invited me to a party.
One important thing was said, which addresses one of the problems of the peer-to-peer lending market and that was that the major peer-to-peer lenders had asked the government to legislate and bring them under the wing of the Financial Conduct Authority. It will probably happen in the spring of next year, but as with most government legislation, who knows? How many organisations or groups of companies have actually asked to be regulated? I can’t think of one, even outside of the financial area.
There was also a feeling at the party, that the various high-profile payday and short-term lenders cause confusion in consumers’ minds and this didn’t help. Let’s face it, judging by the number of bus and television adverts for these higher cost lenders, the public might even think that peer-to-peer lending didn’t exist or was a very niche product
It would be interesting to know, how many possible borrowers, never check that they might get a better deal from a peer-to-peer lender than their current bank, simply because they don’t know of peer-to-peer lending or don’t know how to contact the lenders? For instance, it would also be interesting to know such things, as how many people with excellent credit ratings, who regularly borrow money, don’t use the Internet!
If I ran a peer-to-peer lender, I’d get someone like YouGov to do a survey! After all, the party last night was a convention of believers, so anything obtained there would be statistically skewed.
The party was also a great place to exchange ideas and investigate how your money was handled. When did your bank last explain to you personally, why they were giving you such a poor rate on your Deposit Account? No one, probably gets decent service out of their bank these days, until they pop their clogs, as only then will the bank lose the easy money they make from that customer.
Robert Peston On Wonga
Everybody and especially politicians of a certain colour, love to hate Wonga. I have little time for them, every since I saw a presentation by one of their founders at an Internet awards ceremony.
But Robert Peston in this article on the BBC web site, asks whether we look at Wonga through the wrong set of glasses. This is the first two paragraphs.
In many ways Wonga.com is an impressive, even admirable business (and please resist your temptation to send me hate mail – I am feeling delicate).
It is, for example, funded exclusively with equity capital, or £100m genuinely at risk of being lost if things go wrong.
The article also says that as it takes no deposits, it can’t suffer a run and be bankrupted, as effectively happened to Northern Rock. And will probably happen to other banks in the near future.
Remember, I used to part-own a finance company and did a lot of analysis of the dynamics of the loan business. Hence my admiration for the Zopa model, which I think is very stable. I said that here in a lot of detail.
Obviously, Wonga did a lot of analysis on their data and this has led them to their success, as they have the right model and technology. Peston says Wonga’s technology is world class. If banks such as RBS, Northern Rock and Bradford and Bingley had had world-class technology, they might not have gone bust.
Most of the comments on the article, seem to say Wonga and their ilk should be banned.
But you’re going for an easy target, that plays well in the media.
The real problem with Wonga, is the appalling level of financial education in this country, which means that people succumb to the charms of the likes of Wonga.
If people knew how to manage their money better, there’d be no need for Wonga. But that doesn’t happen to people until they’ve had at least one financial crisis!
A Take On Bankers Worth Reading
This blog post on bankers is worth reading. Two of my least-favourite politicians get the treatment with no holds barred.
Read it! If I paraphrased it, I’d reduce the quality of the criticism.
Nespresso Is The Apple Of Coffee
Not my statement, but something that was hinted at in an article in The Times.
I don’t drink much coffee and I always wondered about Nespresso, with its expensive advertising. If it was that good, why don’t I see more machines in peoples’ houses.
It looks like they’ve got a marketing philosophy based on a cheap machine and expensively-packaged coffee.
I tend to avoid machines in the kitchen, as you have to wash them up and except for my cooker, microwave and fridge, I only use three pieces of electrical equipment; a kettle, a toaster and a Kenwood chopper, which was heavily promoted by Delia. I do have a dishwasher, but I don’t use it, as it was wrecked by the tenants, who lived here before I bought the house. It just doesn’t get anything clean, whereas my Mark One hand and a gammy one, perform the task well.
So when I see that Nespresso, a subsidiary of Nestle are involved in a legal spat with Mondelez, who in my book are still called Kraft, as I do here on Reuters, I know that there can only be one winner, the lawyers. And the poor old consumer will pay for it all in higher prices. So Nespresso is a product to avoid!
Incidentally, both companies are on my avoid lists, as they don’t in my book publish full and detailed information on gluten about their products. I also don’t like Nestle’s stand on powdered milk for babies and who would buy anything from the company that made its name with sliced cheese. Other companies in my avoid group are Mars and in fact any company, where you can’t find the gluten-free information easily on their web site, or if you’re in the shop, on the packaging.
The Anonymous Widower 