Johnathan Ransom, Managing Director, Investment Management & Operations, is the focus of this months interview, representing LoanBook's management team.

1.  What is your role in LoanBook?

My title is Managing Director, Investment Management & Operations which means that I am primarily responsible for developing and overseeing business processes, systems and controls. In practice, we have a very capable team with a huge amount of experience, which means that I can focus my attention on those areas that we need to improve. I have a background in operational performance improvement at the consultancy firm, Ernst & Young, so we like to do things right.

My next big task is to prepare LoanBook for the regulatory changes that we are soon to be subject to; a development that is very exciting for our industry and that we are fully embracing, having been closely involved in its development.

2. What goes through the mind of an Englishman to start a project in Spain?

I am very fond of Spain as a place to both live and work. I think that there is a huge opportunity for us to help improve the efficiency and effectiveness of the financial markets in Spain. LoanBook’s crowdlending, or peer-to-peer, model is one that is being used to great success in the UK and US and there is every reason to expect it to be as beneficial to businesses and investors here.  

3. What did you learned during your tenure in large firms such as Ernst & Young, Invesco and GPT Halverton that can be applied in such an innovative project as a crowdlending platform?

At Ernst & Young I learnt how important it is for businesses to provide a service that their clients want, at Invesco the importance of getting the right balance between risk and return and at GPT Halverton the benefits of openness and transparency. We try to apply each of those principles to LoanBook’s products and services.  

4. Is alternative financing a passing trend?

If economies are starved of alternative sources of finance then they will be much less efficient for it. I believe that borrowers and investors should have a choice of products and services and should not be limited by those that are offered by banks, which has traditionally been the case, to a large degree, in Spain. So, provided Spain continues to work towards developing competitive markets (a core objective of the European Union in its desire to develop and sustain an internal market where competition is free and undistorted) I think that ‘alternative finance’ is here to stay.

Now, alternative finance can take many forms. But I truly believe that the principles that we adopt as part of the peer-to-peer finance model will make our sector sustainable, as those principles of fairness, transparency and trust are ones that should stand the test of time.

5. How would you describe crowdlending in 140 characters?

Crowdlending is the financing of businesses, individuals or projects from multiple sources of capital. The crowd element refers to multiple sources pooling resources and sharing risk. The lending element refers to the fact that those resources are put to work in the form of a loan, on which interest is paid, thus generating a return for the ‘crowd’, and helping the borrowing business grow in the process!

6. In your opinion, what are LoanBook’s key characteristics?

LoanBook is made up of a group of individuals, each with a lot of experience in the traditional world of finance, fixed-income investment, technology and customer service, who are striving to play a part in restoring trust in financial markets by helping to empower investors and borrowers alike. We are characterised by our desire to make a sustainable change for the better and our commitment to do it in the best interests of our customers.

7. What are the main advantages of crowdlending over traditional banking?

I mention some of the benefits previously. Others include:

• Commission transparency: our revenues are based on a simple, transparent fee linked to the service we provide. We do not make profit by putting client’s funds at risk by utilising them for creative financial purposes.
• Disintermediation: crowdlending puts the end user of capital together with the source of capital, which means that the lender is empowered to make their own decision based on their own investment goals, rather than paying someone else to do it for them.
• The marketplace model, where investors can influence the interest rate on the loan, is efficient and transparent, removing conflicts of interests that often occur when a third party is in control of other people’s capital and the decision to lend.  

8. What are your hobbies? Do you have any recent recommendations?

As an Englishman in Spain I am still obsessed with sitting in the sun, particularly at this time of year when it is wet and cold at home – I am making up for years of sun deprivation! But it’s not really a hobby, so combine sun with skis and fresh snow and you have my recommendation!    

 

We have recently launched an English language version of our website, which is in Beta. It's in Beta because there are a few aspects that are not yet available in English, including borrower descriptions, Frequently Asked Questions and Terms & Conditions.

You can contact us directly on [email protected], or 0034 936 240 428, if you have any questions regarding these or any other aspects of our website and services.  

If you’d like to access our English language website now then click here and select the language option in the top right had corner. 

 

This blog post is intended to give an introduction to our English language users on how to participate in auctions.

How do I make a bid?

You can make a bid either directly through on the Marketplace page, by clicking on the bid icon, or through the credit profile page. Once you’ve made a bid you can monitor their progress either in My Account by clicking on Pending Activity, or in the bottom half of the Auction Summary on the credit profile page. You are only able to cancel or edit bids through My Account.

Marketplace:

Credit profile:

 

How are bids accepted and rejected?

Once the auction comes to an end, bids with lower interest rates will be accepted in preference to those with higher rates.

Auctions have a pre-determined duration and will remain open to new bids for the entire duration, regardless of whether bids reach 100% of the credit amount before the final day. This is to allow bids to become competitive, with bids at higher rates being superseded by those made at lower rates.

How do I know if my bid is competitive or not?

Bids are marked with flags to indicate their status. You can see these flags in the Status column under the Pending Activity tab in My Account, as well as in the bid table on the Auction Summary section of the credit profile.

The flags indicate:

 The bid is currently competitive and would be accepted if the auction were to close given other bids in the auction.

The bid is not currently competitive and will be rejected if the auction were to close given other bids in the auction.  

 The bid is partially competitive, meaning that if the auction were to close a proportion of the bid would be rejected given other bids in the auction.

If an auction becomes competitive due to an over-subscription of bids, and your bid is superseded by another bid at a more competitive rate, then you will be notified by email.

How does the Floor Rate help ensure my bid remains competitive?

You can optionally introduce a Floor Rate when making a bid. This enables the rate of your bid to be automatically lowered to ensure it remains competitive in the event of an over-subscribed auction. Your bid will never be lowered below the Floor Rate you set. 

What’s the purpose of the Target, Average and Maximum AER’s?

The Auction Summary contains three bits of information intended to help guide the rate of bids.

Target AER

The target AER is normally expressed as a range, and indicates interest rate range that we consider to be most appropriate for this credit, given its risk rating.

Average AER

This is the average rate of bids that are currently competitive in the auction.

Maximum AER

Once an auction becomes competitive, i.e. after it is 100% subscribed, the maximum AER indicates the rate below which a bid must be made for it to be competitive. 

 

We hope that this information helps you get started and we look forward to hearing from you with any questions or feedback!

 

Kind regards,

Trinidad Pérez

Senior Operations Manager

Trinidad is responsible for daily operations at LoanBook. She has over 10 years’ experience in operations, a degree in Business Administration from the University of Barcelona, and a postgraduate degree in Finance and Operations, specialising in process and systems optimisation.