P2P-Banking.com

PeerFX.com a p2p currency exchange that wants do to away with high margins and fees banks charge when exchanging currencies, announced to launch on August, 1st. Users will be able to change US and Canadian Dollars directly (USD, CAD).
Watch a video of the funding. The founders Robert Dunlop and Florence Leung gave away a 51% percent stake of the company for 250,000 CAN$ seed funding.

Personally, I am not convinced by the business model. For consumers there are less and less needs to actually exchange currencies in advance. You can nearly always pay with plastic. In Europe the realm of the Euro is expanding. And several European banks allow their account holders to withdraw cash from any ATM (of any bank) worldwide fee-free.
But maybe the situation is different between the US and Canada. What is your opinion on this, dear reader?

Apparently Peermint.com has participated in the New Ventures BC competition.
The deadline for round 3 is August, 13th.

First prize is 60,000 CAN$ in cash plus 100,000 CAN$ proof of concept award.

Update: Peermint made round 2 but is not among the 30 startups in round 3

Today the Quebec security regulator in a press release commented on the action taken against IOU Central:

At the request of the Autorité des marchés financiers (AMF), the Bureau de décision et de révision en valeurs mobilières (BDRVM) issued an order on February 27, 2008 against IOU Central Inc. ("IOU") to cease any activity, directly, indirectly or by Internet, in respect of a transaction in a form of investment governed by the Securities Act (the "Act"), including any activity as a securities dealer. The BDRVM also ordered Philippe Marleau and all directors, officers, employees, representatives and mandataries of IOU to cease any activity in respect of a transaction in securities in a form of investment governed by the Act for and on behalf of IOU, including any activity as a securities dealer.

…

For the protection of investors, the AMF stressed that it was imperative that the BDRVM issue this decision without a prior hearing since IOU continued to operate its website.
The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.

More background on Microlending.ca. The link to the Toronto Star article there did not work. I believe this is the correct link.

After being offline for several hours, Canadian IOUCentral.ca is now online again, but with limited functionality. That means that currently no loan listing and bidding is possible.

From the website:

Why Is IOU Central Operating With Limited Functionalities?
IOU Central is now operating with limited functionality while we resolve a regulatory matter. IOU Central is acting in a very new area. We are the first in Canada, although similar models are operating under similar regulatory environments in the US and the UK. We are modeled on those innovative enterprises. We are committed to working with all the relevant regulatory bodies in order for us to continue to offer this service to borrowers and lenders. We will take all measures necessary to ensure we are working in full compliance with all regulations.

When Will IOU Central Be Fully Operational?
We will notify all our users by email when the site is fully operational. If you are not already a user, you may register with us and we will notify you by email when the site is fully operational.

IOU Central launched first in Canada. As I already mentioned in my first post on IOU Central they profited from the knowledge input the two founders of danish Fairrates.dk brought with them. Fairrates had problems with fraud cases due to incomplete access to credit histories.

Here are some interesting notes by Bartlomiej Owczarek from Virtuous Cycle taken at a conference in Poland where Fairrates founder Arkadiusz Hajduk, now product manager at IOU Central, gave a presentation:

• The startup was initially located in Denmark
• Two guys on a sofa
• I liked the quote - “expert is a person who committed all possible mistakes in a narrow field of specialty”
• Idea was inspired by Prosper
• They didn’t bother with business plans and presentations (note: maybe not so good in the end, given later credit history problem, see below)
• Nevertheless, they got angel from early on - entrepreneur, house builder
• Features of their angel - did call from time to time, but otherwise didn’t require much reporting, in retrospect now they would prefer someone more of a “mentor” type
• They coded for 4 months without office
• Then they got office, at respectable location (good for customer trust)
• They coded another 6 months when they had office
• First version was seen and tested by some 30 people
• Operating model assumed that they don’t make credit decision or take on risk - all this is on the lender
• Highlight of the “growth” period - 90 minutes on the front page of a major business portal
• After launch, lenders turned out not a huge problem; in a first week, one person offered equivalent of ca. PLN 50k
• However, huge problem with (good) borrowers
• Also, in Denmark there is no access to credit history (only yes/no credit problems query possible)
• Side note: banks in Denmark do not care to advertise to people more than 25 years old, because no one ever changes the bank
• They had two evident fraud cases
• In the end, business model didn’t fly because of borrower problem (people took wait-and-see approach), resulting in the “decline” phase
• Luckily, they were approached by people from Canada, who had non-technical capabilities in the area but needed technology platform, and they sold out
• Angel apparently got 150% of his initial contribution
• Lessons learned: don’t hesitate to kill your own ideas

(via Prosper Lending Review)

IOU central launched the first active p2p lending service in Canada today. Borrowers can request loans from 1,000 to 25,000 CAN$ and select a term between 1 and 36 months. IOU central allows the borrower to specify a minimum amount at which he will accept the loan, should it not fully fund in the 2 weeks listing duration. IOU Central pulls the TransRisk credit score of the borrower, provided by Transunion Canada. According to the press release, lenders can expect to earn interest rates between 5 and 25 percent.

Borrowers pay a closing fee ranging from 1 to 3 percent depending on their credit score. Lenders pay an annual servicing fee of 0.5 percent of the open principal balance. Only Canadian residents can borrow or lend. The borrower needs to have a Trans union credit score.

Borrowers may have several loans, but the total outstanding principal may not exceed 25,000 CAN$.

Lenders earn interest on deposited money (bank prime rate minus 2.5%). Individuals may lend up to 5 million CAN$. Corporations may lend up to 50 million CAN$. Minimum bid amount is 25 CAN$.

Studying the team of IOU Central I noticed Robert Bialek (VP Technology) and Arkadiusz Hajduk (Product Manager), which were the founders of FairRates.dk, a p2p lending service in Denmark, which now is part of IOU Central. An assumption would be that IOU Central acquired (or merged with) the company, to gain the knowledge and experience made.

The IOU Central launch did beat Communitylend in being first in the Canadian market. Communitylend has long announced to launch a Canadian peer to peer lending service, but has not launched yet. 

To discuss IOU central, the lending or borrowing experience or to ask questions on the service you can use Wiseclerk's IOU Central forums.

(Link)

CommunityLend.com, which strives to be the first peer to peer lending service launching in Canada, has secured 2.5 million dollar venture capital. Furthermore CommunityLend announced winning Barry Campbell, former MP and Secretary to the Minister of Finance and Jim Jones, CEO of GMAC Residential Capital as additional directors.

In an email Co-Founder and CTO Colin Henderson told P2P-Banking.com: "… We have relaunched our site, as we move towards launch in early 08.  The key aspects of this milestone for us, is securing our funding, appointment of our management team, and appointing our Board of Directors. From here we will move towards launch in early 08. "

Quoted from the CommunityLend website:

Share in the Rewards of Investing in People

The unsecured consumer loan marketplace in Canada exceeds $100 Billion in volume every year and generates interest payments on those loans exceeding $15 Billion annually. By definition, “unsecured” loans are often small loans used for purposes like funding a wedding or paying off high interest credit card debt and for which the lender has not taken security to support the loan.

Today in Canada, this very profitable industry is also a very closed industry, with only a handful of major companies involved. This means that a very small list of banks and credit cards companies are literally today the sole beneficiaries of one of this country’s most profitable industries.

CommunityLend intends to democratize lending in Canada by opening up this billion dollar industry to other Lenders interested in participating. Share the wealth, we like to say!

Canadian Communitylend.com started a blog. The first post in the Communitylend blog is "links for 2007-11-01". Odd post to start a blog for a new service. I expected more excitement and insights. Maybe it was not intended to be public and rather a test.

Peermint.com says it will be offering peer to peer lending in Australia, New Zealand and Canada. In Australia and New Zealand Peermint will probably be the first social lending service, whereas in Canada it will compete with Communitylend.com which plans launch for Fall 2007.
Source: The Better Banking Blog

CommunityLend.com has announced the start of p2p lending in Canada on the site in fall 2007 enabling person to person lending without a bank as the middlemen, thereby eliminating banking fees. It promises lenders higher returns and borrowers lower interest rates and flexible payment options on loans. It aims to 'revolutionize the way lending works in Canada'. 

Earlier it will launch a working pre-view which allow users to test drive the site without using real money. CommunityLend expects useful user feedback during this work preview which it plans to use to enhance the site until the launch date.

CommunityLend is driven by an impressive team which includes Michael Garrity (Founder and President), ex-Bank of Montreal exec and BankWatch blogger Colin Henderson and John Philip Green, currently Director of Engineering at Affinity Labs and Co-Founder of of Savvica and Rapleaf.

CommunityLend profits as it can pick the best form the existing models (Prosper, Zopa). It will not just replicate one site. Few is known about the plans, but the announcement states that Community Lend will include auctions and groups (as does Prosper) as well as selectable paypack periods (as does Zopa).

Sources: p2p-kredite.com and others

P.S.: If you blog about this a link back here would be appreciated. Thank you!

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