A Chinese View On Peer-To-Peer Lending
I found this article in the South China Morning Post.
It would appear that peer-to-peer lending is taking off in China in a big way. Here’s an extract.
According to an unofficial source, there are an estimated 100 such Chinese lenders in operation, with projected total outstanding loans this year of 18 billion yuan (HK$22 billion)
That sounds a lot to me.
The Two Sides Of The Personal Banking Crisis
We have a personal banking crisis in this country and I suspect many parts of the developed world.
A headline in the FT says that the bill for mis-selling PPI has now passed ten billion pounds. And that only includes direct costs to the banks. What about the indirect costs to all of us, who never went near PPI, but are constantly plagued with all forms of nuisance calls and e-mails. Hopefully after the action of Richard Herman, these calls will stop.
We also have the story on the BBC about basic bank accounts offered to those with bad credit histories. Apparently,more and more banks are dropping these accounts.
So what does a basic bank account do. This
These are simple accounts which allow customers to have their wages, benefits, and cheques paid in.
Customers can gain access to their money from some cash machines, or the Post Office.
Bills can be made by direct debit from the account, but these accounts offer no overdraft facility or access to credit – unlike most standard current accounts.
According to the BBC.
In fact that is not unlike the facilities, I use my Nationwide account for.
Although, I do have a credit card, the ability to get my money from virtually all cash machines, full on-line access and a small authorised overdraft, which I never use.
But I never buy anything from my bank or phone them up.
So the opportunities for making money from personal accounts by retail banks from most of their customers is dropping like a stone.
Especially with investors like myself, who use things like Zopa to hold our savings and surplus cash.
It all sounds like to me, that there is a real gap in the market for a personal bank that has these characteristics.
On-line only.
No expensive High Street branches.
No phone lines, with all queries dealt with on-line.
No cheque books.
A simple savings account.
Small overdrafts.
Cash out from any cash point.
Even some of the new entrants to banking like Metro, Marks and Spencer and Tesco don’t seem to be ditching the physical branches. With all the work I did with a major clearing bank in the 1970s, I know that these contribute significantly to the cost of doing everything.
The only certainty is that banking will go this way and there is going to be a lot more empty spaces on the High Street. I just wonder what is going to fill them. We can only have so many mobile phone and payday loan stores.
Applying Control Engineering Principles To Pensions
Pensions are a nightmare and more rubbish is talked about them than any other financial matter, except possibly credit cards.
I’m in some ways typical, but the size of my pension pot is not typical.
When I worked for Metier, our wonderful accountant, Brian, set me up with a pension that I can live on.
I also have an income from the cash I got from selling the stud.
And when the DWP sorts it out I’ll have my State Pension.
So basically, I have a fixed sum coming in each month, from which I take my living expenses. Which of course varies on a month by month basis.
So at the end of each month I have a current account, which either has a small surplus or perhaps a small deficit. If it’s a surplus, the money goes into my Zopa account and if it’s a deficit, I withdraw a proportion of the payments made in at the first of the month.
So Zopa acts like a deposit account, that pays a reasonable rate of interest. The great thing, is that it costs me nothing to transfer money to and from Zopa.
There is of course a slight risk with Zopa, but I’ve used it long enough to have developed a philosphy that minimises bad debt.
Effectively, I’m using Zopa to damp out the fluctuations in cash flow, just as a control engineer might add damping to a feedback system.
Bad Karma
My financial advisor has just left on his bicycle to go home to South West London. I did suggest as it was raining that he cycle to Canonbury station and get the North London line most of the way.
He didn’t as he said that was Bad Karma.
Zopa Start Processing Early
I check my Zopa account every morning when I get up.
At 6:30 this morning, I had £121.91 on offer, with 27 offers totally £2630 being processed.
Now at 7:30, it’s £221.91 and 26 (£2530)
So someone has already said, that a proposed loan shouldn’t be approved.
I Missed This One
I was searching for innovative financial ideas and found this article by Anthony Hilton in the Standard. He says this about Castle Trust.
But the prize for creativity and innovation this week undoubtedly goes to Castle Trust, with a totally new approach to the housing market. On the one hand, it has created investment funds that will track the Halifax house price index. On the other, it will use these monies raised from investors to offer a new form of mortgage finance whereby it will fund 20% of the cost of a house in return for a share of the profits (or indeed or a portion of the losses) when the house is sold.
I’ve never heard of Castle Trust before, but it does show how people in the City are having ideas, that benefit both investors and borrowers.
Long may they think!
The Department Of Work And Pensions Doesn’t Believe In Speed
I was sixty-five on the sixteenth of August and still haven’t had a sniff of a pension, despite several phone calls and a few letters.
I’m not someone who is in desperate need of the money, but surely if I was, it would be causing me great difficulties.
After all, it’s not if my pension age sneaked up on them and they’ve had my details since I started getting winter fuel payments a couple of years ago.
It’s a complete disgrace!
Ten EU Nations Vote For Financial Transaction Tax
The FTT is one of those ideas, that might well come into being in the next few years. But if it does come into being it has to be universal with every country charging the tax, otherwise financial transaction will move to the areas of lowest tax.
So the decision of ten EU countries to introduce such a tax is in my view not the best idea. Read about it here on the BBC. I doubt if this proposal will work very well as two of the shrewdest countries using the Euro; Ireland and The Netherlands are not joining. Obviously, we aren’t as why should we disadvantage the City of London with respect to New York, Dubai and Tokyo?
One question that I have about the limited EU proposals is what do you get charged if your bank is head-quartered in a country, that levies an FTT. I don’t bank with a bank that is, but say if I banked with Santander, I’d be moving my account tomorrow.
On a personal note, an FTT on all transactions might possibly harm peer-to-peer lenders like Zopa, so in fact it might be a block to innovative financial developments in countries within the net of the tax.
I give a non-worldwide FTT a couple of years at most, as it will disadvantage companies in countries within the tax.
If the EU wanted to raise more tax, they could clamp down on illegal cash transfers between countries in the Euro. How do these fall within an FTT? Many houses, too in places like France are sold in part by bank transfer and by cash to avoid the capital gains tax.
Nationwide Looks At The 316 RBS Branches
According to this article in the Guardian, Nationwide is looking at the 316 RBS branches that Santander didn’t want.
I can’t see why as other articles in the news have said that Nationwide has been getting a lot of customers in recent weeks.
I bank with Nationwide and in the last two years, I’ve only been inside a branch twice, except to draw money out from a cashpoint there and have a sit down on a comfortable seat, whilst I put it away.
So if they put this proposal to a vote of shareholders, I would say no, as all it would mean would be that my account costs would rise.
The Daily Telegraph Says Start Sharing
This article in the Daily Telegraph should be read by everyone.
It outlines various Internet-based sharing schemes for cars, money and even land.
It says this about Zopa and its ilk.
When your budget is tight, lending money to strangers might seem crazy, but a rising number of savers and borrowers are going online to cut out the high street banks.
Better still, while interest rates stand at a historic low, DIY bankers who advance loans online at “peer-to-peer” lending websites such asZopa.co.uk can earn an average return of 5.4pc a year.
We live in interesting times.
The Anonymous Widower 