Cissé’s Stand On Wonga
Papiss Cissé is adamant he won’t wear a Wonga-branded shirt, as reported here in the Guardian.
I support his stand.
I would like to see a law, where all loan companies from the banks, through peer-to-peer lenders to the legal loan sharks, have to publish the amount of money they lend in various parts of the country.
That way we could see if shirt sponsorship was a good idea for lenders.
Zopa Tweaks The Alogorithm
I am a Control Engineer by training, so I’m supposed to be able to make systems perform in a safe and stable manner. As an example, when your train comes into the station and stops precisely in the right place, or an airliner lands itself automatically, a Control Engineer will have been responsible for working out the principles of how that is done. I have said before that Zopa is in fact a stable system, but now they have tweaked the algorithm to speed up the lending process without losing any of the stability. It’s all described here in their blog.
The most important way to lend money faster is to create a bigger demand. Zopa asks lenders to spread the word to those with good credit ratings, who might want to borrow money for sensible purposes.
But of course, you won’t get a bigger demand unless you have more money in the pot to borrow! So the whole process should spiral and feed in on itself.
The one thing that needs to be maintained to the highest possible level, is the checking of borrowers to make sure, they’re credit worthy.
But even this process should get better, as Zopa learns more about good borrowers and this feeds back into the system.
The whole system is a classic feedback control system, that has the ability to mutate and change itself by learning from its history.
Does your very average bank, like the Royal Bank of UK Taxpayers behave like this? Of course it doesn’t, as those at the top cast a strategy in stone and it gets slavishly followed to the letter. Unfortunately, it has no capacity to learn and change in a Darwinian manner.
But more importantly, it can’t respond easily to increased demand and a changed marketplace. Royal Bank of UK Taxpayers also has constraints placed on it, as regards to parameters like working capital.
Zopa just needs to balance their lending to the amount that is deposited by lenders, or as I prefer savers. If I look at my figures for Zopa over the last year or so, these figures have been moving towards balance.
Now with their Safeguard system enabled, the loop has been closed!
The Future Of Cash Machines
This article raises a few questions about cash machines and how they will look in the future.
I don’t have a problem with the machines themselves, but increasingly over the last few years, I’ve had problems with the placement of a few machines, due to being unable to read them in the sun. And it’s not just cash machines, as this post shows.
I also have problems with some touch-screen technology.
And of course, if they insists on a smart phone in some way, they can forget it!
As they can, if I get charged to take out my money!
I think we’ll see the standard design last a few more years yet!
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!
Zopa Is The Kwikfit Of Banking
This article on Wired.com reports a speech made by Zopa CEO; Giles Andrews. He starts in combative form.
The banking industry has “forgotten who its customers are”
They would have lost most of them, if people thought hard about their banking.
Giles then says this.
But the banking industry has left itself vulnerable, he says. He compared the need for consumer-focussed disruption in banking to the transformation of the car services industry 40 years ago. KwikFit made car repair faster, more convenient and cheaper. “They provided a product that was better value, offered better convenience and a better customer experience. It was just a better product.”
Zopa is truly the Kwikfit of banking. I just wish I’d started to use them earlier.
The Archbishop Preaches
According to the Sunday Times, the Archbishop of Canterbury, wants to drive payday lenders and loan sharks out of business. He has delivered a speech to the House of Lords on the subject and it’s reported here.
I don’t share his optimism, as there are some bad practices that are impossible to stamp out, save of executing everybody who does them! But even would that discourage smokers? I doubt it!
He says we should encourage the growth of credit unions. It’s a laudable aim, but we have just so many financial illiterates for it to make any difference.
Is This A Real Payday Loan Site?
This site called lolcatloans.com was mentioned in the Money section of The Times today.
Is it real? I certainly wouldn’t borrow any money from them, despite the appealing cats!
The site appears to be registered in Panama, although it does appear to offer loans in pounds.
I would sugest that you laugh at the cats and do no more!
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.
The Anonymous Widower 