A bad experience encountered when applying for a bank loan led Society One CEO Matt Symons to create his peer-to-peer lending company.
Speaking at Disruptocon, Symons said he applied for the loan to compare bank interest rates. Eventually, he was called back and told that his application had been approved at an interest rate of 14.5 per cent.
Feeling this was a bit high, he applied with another bank only to be told that the interest rate would be 14.75 per cent because he had applied for a loan within the last 48 hours.
“What a borrower experience we are creating. This is the reason most people take the first credit offer they get because it is painful to apply and the further you apply, the more you get away from a reasonable price,” he said.
P2P lending uses a technology platform. An eligible loan is broken up into pieces and allocated out to investors.
“We run a real time reverse auction whereby bids come in and the platform allocates those bids until a loan is underwritten. The borrower gets one single price and that becomes the price of the loan," said Symons.
One of the services Society One offers is free access to the customer’s credit history.
“We have to get credit worthy Australians to realise that it is easy to get their score. Why don’t we make it free?”
“P2P lending has the power to be disruptive but it won’t be because it is a cheaper way to get a loan. It will empower borrowers to take back control of their credit history and give them the chance to determine at what rate they get funded,” he said.
He added that Australia has the world’s most profitable banking system, partly because of loans made to customers.
“Banks in Australia who engage in the process of lending have very attractive returns,” he said.
Follow Hamish Barwick on Twitter: @HamishBarwick