A new fintech company, which vows to change the traditional business model of lending, is set to list on the ASX, with an expected market cap of $53million.
DirectMoney is a marketplace lending business, set up to challenge the traditional lending landscape, as well as the growing P2P lending landscape.
DirectMoney, which highlights that marketplace lending is very different to P2P lending, takes the full risk of a loan for the first 30 days. Once the borrower shows a history of paying back the loan, it will sell the loan onto its funds, thus limiting an investor’s exposure to any defaults. Investors also receive a higher level of interest than from traditional bank deposits.
According to DirectMoney, once a borrower has gone through credit checks and is approved under their system, they can receive their borrowed funds immediately. This is unlike other P2P lenders, which operate via a web-based bidding system that can take an average of three days for the loan to be fully filled post approval.
Home Loans CEO Stephen Porges is the executive chairman of DirectMoney and has recently been in the United States and Asia looking at the latest developments in Fintech and marketplace sectors.
According to Porges, the marketplace lending model has the highest user promoter score of any borrower category in the US – 70% versus 3% for traditional banks.
DirectMoney has already received funding from New York-based hedge fund Eaglewood Capital Management, and the boutique investment bank Liberum.
When asked if DirectMoney has plans to enter the broking space, like many P2P lenders have, Porges told Australian Broker
that brokers will be a focus.
“The broker channel will absolutely be a focus and probably fair to say we understand the channel needs better than most.”
Fintech is predicted to grow to a $22 billion market in Australia by 2020, according to a recent report by Morgan Stanley, with much of that growth to be driven by marketplace lending.