Vlad Sherbatov: What is peer to peer lending?
Marc Caya: Do you know where where banks get the money from
when they issue loans? So they actually use customer's
deposits. So the money that you have in the bank account,
they'll use this, and they'll lend it out keeping the profit
for themselves. So what and we've been operating like this
for literally hundreds of years, the model has never changed. So
what peer to peer lending is, is that we're modernizing that old
structure. And we're connecting borrowers directly with lenders,
so that instead of having the banks keeping the profits for
themselves, we connect borrowers and lenders and indirectly so
they're, we're removing the banking intermediary.
Vlad Sherbatov: And there are two sides of it, there is
borrowers and our investors, how do they interact with each other
and with the platform.
Marc Caya: As a borrower, you would go online and go here,
sign up for a loan similar, similar to what you would do for
an online loan applications, it takes about five minutes and
you'll get you'll get approved, or no, you'll get an answer
within a few hours of your, of your applications. If the loan
is approved, it gets listed on the go peer platform, where
investors can browse through the available loans and select how
much they want to invest into each of the loans. And then when
a loan is completely funded, when it has gathered enough
investments from investors, the loan proceeds are dispersed to
the borrower.
Vlad Sherbatov: Most people are familiar with mutual funds or
stocks, or GICs, for example, how is investing in the goal in
goal peer and peer to peer lending in general different
from investing in those conventional types of forms?
Marc Caya: Well, I think it's both it's both similar and
different at the same time. So investing into peer I think is a
peer to peer loans is a great way to diversify your portfolio.
So I wouldn't invest all the money I have in peer to peer
loan, but rather say five to 10% of the portfolio of investment
could very well benefit from peer to peer loans. Mostly
because it's the returns are uncorrelated with most other
asset class that you mentioned, like stock, it's a fixed income
note. So there's no fluctuation, like a stock price can go up and
down. Usually the returns on on fixed income loans like like
peer to peer loans will be a lot more steady, passive income. One
of the key aspects though, is that if you invest in a three
year term loan or a five year term loan, you need to be able
to hold your investment for the duration of the term. So unlike
stocks, you cannot sell it the same day. With peer to peer
loans, you'll receive repayments on a monthly basis of capital
and interest over every month, you'll receive a little bit of
your investment, but you cannot sell it out if you need the
money, say tomorrow. So you'll need to you need to be able to
hold it for the term of the loan.
Vlad Sherbatov: Let's talk about the industry that you're in
right, peer to peer lending. I mean, how big is this industry,
is it? You know, where is Canada right now among maybe some other
international peers when it comes to this type of
experience, both for borrowers and for lenders? Can you share
some of the industry insights from your point of view?
Marc Caya: Yeah, definitely. So the industry is brand new in
Canada, actually were the first consumer focused peer to peer
lending company that's available to everyday Canadians and not
just accredited investors. However, it's been around for
over 15 years in the United States, the United Kingdom. And
it's it's really big, particularly in the United
States where I think it's almost 30% now of all loans originated
in the US originated online through fintech startups.
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