The Money Platform’s chief executive George Huntley tells Marc Shoffman about the lender’s mission to help underbanked individuals while providing good returns to investors…
George Huntley has been involved with peer-to-peer consumer lender The Money Platform since its early days of 2016, as he sought a start-up to make use of his entrepreneurial spirit. He has previously been head of operations and chief of finance but took over as chief executive in 2020 when Joshua Graham stepped back from the business. He explains how the P2P lending platform hopes to help the underbanked avoid illegal money lenders.
Marc Shoffman (MS): What got you interested in the P2P lending space?
George Huntley (GH): I worked in corporate finance at Peel Hunt and used to do really long hours. To make that more palatable, I read a lot of the Financial Times and it had a column called Start-Up Stories. I really wanted to be part of building a business from scratch, so I interviewed at a couple of other companies.
The Money Platform was one where I felt there was a chance of being a co-founder and being there from the beginning. It was obviously a big change of pace. My salary went down by a lot, but it has been an interesting journey. We are now in an industry with a strong footing.
MS: Where does The Money Platform sit in the P2P space?
GH: We are a consumer credit lender focused on short-term credit. The goal of the business is to drive down interest rates for borrowers by using the power of the crowd. We are targeting closer to the near prime space. A lot of our customers are extremely reliant on high cost, short-term credit. It is an underserved market and there is a big gap between the interest rates they experience.
We have driven down rates for customers but to provide a product that really works for them in the longer term we need a suite of longer duration products to get them into mainstream finance and improve their credit scores, some of which are impaired.
The Money Platform will be launching a 12-month product this autumn and there are also plans for an 18-month product to come later. The platform will continue to do short-term lending, but our growth will be in the longer duration product. We are lending £1m per month right now and the company has been profitable so far this year. There are a lot of lenders that have withdrawn from the space so lots of customers are being increasingly underserved. Our goal is to be the P2P solution.
MS: How do you assess borrowers?
GH: We rely on credit bureau data and are heavily invested in open banking. There is also a behavioural based scorecard that looks at how a customer interacts with our website. It allows us to pick out customers who have good behaviour and leads to lower levels of bad debt for customers.
MS: Who are your typical borrowers?
GH: Our typical borrowers are aged 20 to 30. They may be suffering from the cost of living such as rent issues. These people are still relatively high earners, with income of £30,000 to £40,000, but are just poor at managing money. Often it is first generation migrants with limited credit history. They probably shouldn’t be taking on more debt but the reality is that we provide a better solution to alternatives which is often illegal lenders.
This money solves a particular problem such as if a boiler is broken and needs to be fixed. We are supporting people in a regulated, legal way to give them a better interest rate compared with what they would get elsewhere. The goal is to move people from short-term dependence on cash to longer-term sustainability. We have a personal finance section on our website that helps our borrowers get in a habit of saving and managing their money better.
MS: Should people be reliant on short-term credit?
GH: We have rules to stop people treating our product as an overdraft. It is to be used preferably once or twice when you need it. We can block people who have had a certain amount of loans with us or other providers and use open banking for this. A lot of it is about educating people on managing their money better.
MS: What returns can investors get?
GH: We are forecasting 12-month returns of 5.5 per cent to 6.3 per cent or around a six per cent net return.
MS: What do borrowers pay for a loan?
GH: It depends on the loan and score. The new product will start at an annual rate of 69 per cent, our typical borrower will be offered a rate of 0.7 per cent per day, which is less than the average in the sector and 40 per cent below what Wonga used to charge.
MS: How did The Money Platform navigate the pandemic?
GH: A million people are reliant on illegal money lenders, according to the Centre for Social Justice (CSJ). We continued lending throughout the pandemic as we knew the problem was recurring and that required our support. There was still a market for it. Returns were decent throughout the pandemic. Demand was lower but we were able to grow as fewer players were around. We showed forbearance throughout and didn’t charge additional interest for people to move payments.
There were regulatory rules around forbearance and we have continued that from now. Customers did have to delay payments at the start of the pandemic but it then comes back to this idea of training people to improve their financial position. We have since had good performance from our Covid loan cohorts. Demand is now increasing a lot due to the cost-of-living crisis. We are factoring that into our decisions. That does make it trickier to approve customers but we are concerned there would be a rise in illegal money lending without alternatives.
MS: How has the P2P lending market changed?
GH: The regulator has gone from being extremely pro-P2P to appearing to treat it as risky investing. P2P can make an interesting alternative to equity market investing, as it is often less volatile but can produce decent returns. It is a shame that the FCA’s approach has changed. It seems to be treating P2P on a similar level as crypto investing, which is a massive error. Crypto is much more volatile.
That said, P2P lending is an investment and there has been confusion about that in the past. There has been confusing messaging on P2P lending platforms about how quickly you can access your money. It is right that the industry has received some scrutiny and that there are now wind-down plans in place. There haven’t been any scare stories about P2P lenders recently. A lot occurred up to 2019 before the new regulations.
MS: What are the platform’s plans for the future?
GH: An Innovative Finance ISA may be something we consider doing. We are waiting to see where the FCA goes with its review of the P2P sector. There is the longer-term loan product being launched and we are building other products that help a particular subset of underbanked customers. We will also continue building our decision engine, incorporating open banking, so we can identify good quality customers not served by traditional finance.