1 00:00:21.600 --> 00:00:23.850 Vlad Sherbatov: What is peer to peer lending? 2 00:00:24.170 --> 00:00:26.240 Marc Caya: Do you know where where banks get the money from 3 00:00:26.240 --> 00:00:29.450 when they issue loans? So they actually use customer's 4 00:00:29.450 --> 00:00:31.610 deposits. So the money that you have in the bank account, 5 00:00:31.700 --> 00:00:34.310 they'll use this, and they'll lend it out keeping the profit 6 00:00:34.310 --> 00:00:37.790 for themselves. So what and we've been operating like this 7 00:00:37.790 --> 00:00:41.720 for literally hundreds of years, the model has never changed. So 8 00:00:41.720 --> 00:00:45.560 what peer to peer lending is, is that we're modernizing that old 9 00:00:45.560 --> 00:00:49.940 structure. And we're connecting borrowers directly with lenders, 10 00:00:50.180 --> 00:00:53.750 so that instead of having the banks keeping the profits for 11 00:00:53.750 --> 00:00:57.980 themselves, we connect borrowers and lenders and indirectly so 12 00:00:57.980 --> 00:01:00.470 they're, we're removing the banking intermediary. 13 00:01:00.830 --> 00:01:02.360 Vlad Sherbatov: And there are two sides of it, there is 14 00:01:02.390 --> 00:01:07.190 borrowers and our investors, how do they interact with each other 15 00:01:07.190 --> 00:01:08.030 and with the platform. 16 00:01:08.270 --> 00:01:10.850 Marc Caya: As a borrower, you would go online and go here, 17 00:01:11.360 --> 00:01:15.590 sign up for a loan similar, similar to what you would do for 18 00:01:15.590 --> 00:01:18.980 an online loan applications, it takes about five minutes and 19 00:01:18.980 --> 00:01:22.190 you'll get you'll get approved, or no, you'll get an answer 20 00:01:22.190 --> 00:01:27.170 within a few hours of your, of your applications. If the loan 21 00:01:27.170 --> 00:01:31.010 is approved, it gets listed on the go peer platform, where 22 00:01:31.010 --> 00:01:34.100 investors can browse through the available loans and select how 23 00:01:34.100 --> 00:01:37.460 much they want to invest into each of the loans. And then when 24 00:01:37.460 --> 00:01:40.280 a loan is completely funded, when it has gathered enough 25 00:01:40.370 --> 00:01:44.390 investments from investors, the loan proceeds are dispersed to 26 00:01:44.390 --> 00:01:45.080 the borrower. 27 00:01:49.820 --> 00:01:51.830 Vlad Sherbatov: Most people are familiar with mutual funds or 28 00:01:51.830 --> 00:01:57.740 stocks, or GICs, for example, how is investing in the goal in 29 00:01:57.740 --> 00:02:00.560 goal peer and peer to peer lending in general different 30 00:02:00.560 --> 00:02:03.530 from investing in those conventional types of forms? 31 00:02:05.040 --> 00:02:07.950 Marc Caya: Well, I think it's both it's both similar and 32 00:02:07.950 --> 00:02:13.230 different at the same time. So investing into peer I think is a 33 00:02:13.230 --> 00:02:16.620 peer to peer loans is a great way to diversify your portfolio. 34 00:02:16.620 --> 00:02:19.020 So I wouldn't invest all the money I have in peer to peer 35 00:02:19.020 --> 00:02:23.010 loan, but rather say five to 10% of the portfolio of investment 36 00:02:23.550 --> 00:02:26.790 could very well benefit from peer to peer loans. Mostly 37 00:02:26.790 --> 00:02:29.640 because it's the returns are uncorrelated with most other 38 00:02:29.640 --> 00:02:33.780 asset class that you mentioned, like stock, it's a fixed income 39 00:02:33.780 --> 00:02:38.370 note. So there's no fluctuation, like a stock price can go up and 40 00:02:38.370 --> 00:02:43.440 down. Usually the returns on on fixed income loans like like 41 00:02:43.470 --> 00:02:50.070 peer to peer loans will be a lot more steady, passive income. One 42 00:02:50.070 --> 00:02:53.700 of the key aspects though, is that if you invest in a three 43 00:02:53.700 --> 00:02:56.940 year term loan or a five year term loan, you need to be able 44 00:02:56.940 --> 00:03:00.930 to hold your investment for the duration of the term. So unlike 45 00:03:00.960 --> 00:03:04.380 stocks, you cannot sell it the same day. With peer to peer 46 00:03:04.380 --> 00:03:08.220 loans, you'll receive repayments on a monthly basis of capital 47 00:03:08.250 --> 00:03:11.370 and interest over every month, you'll receive a little bit of 48 00:03:11.370 --> 00:03:14.100 your investment, but you cannot sell it out if you need the 49 00:03:14.100 --> 00:03:18.180 money, say tomorrow. So you'll need to you need to be able to 50 00:03:18.180 --> 00:03:19.890 hold it for the term of the loan. 51 00:03:24.540 --> 00:03:27.242 Vlad Sherbatov: Let's talk about the industry that you're in 52 00:03:27.303 --> 00:03:31.111 right, peer to peer lending. I mean, how big is this industry, 53 00:03:31.172 --> 00:03:35.164 is it? You know, where is Canada right now among maybe some other 54 00:03:35.225 --> 00:03:38.234 international peers when it comes to this type of 55 00:03:38.296 --> 00:03:42.042 experience, both for borrowers and for lenders? Can you share 56 00:03:42.103 --> 00:03:45.420 some of the industry insights from your point of view? 57 00:03:45.899 --> 00:03:49.440 Marc Caya: Yeah, definitely. So the industry is brand new in 58 00:03:49.512 --> 00:03:53.920 Canada, actually were the first consumer focused peer to peer 59 00:03:53.993 --> 00:03:58.473 lending company that's available to everyday Canadians and not 60 00:03:58.545 --> 00:04:02.592 just accredited investors. However, it's been around for 61 00:04:02.665 --> 00:04:06.928 over 15 years in the United States, the United Kingdom. And 62 00:04:07.001 --> 00:04:10.470 it's it's really big, particularly in the United 63 00:04:10.542 --> 00:04:15.167 States where I think it's almost 30% now of all loans originated 64 00:04:15.239 --> 00:04:19.070 in the US originated online through fintech startups. 65 00:04:19.579 --> 00:04:21.942 Vlad Sherbatov: Don't forget to subscribe to the Smarter Loans 66 00:04:21.993 --> 00:04:25.230 YouTube channel for more videos that will help you make smarter 67 00:04:25.282 --> 00:04:26.310 financial decisions.