“The big four banks in New Zealand are among the most profitable in the world. Why?” asks Monica Mathis, Harmoney’s general manager. Because, she says, while they are lending money to people (to buy a car or take a holiday, for example) at an average 15%-17%, customers with fixed term deposits are getting 2%-4%. “The rest goes into bank operating expenses and profits.”
“Harmoney’s solution? A peer-to-peer money marketplace, the first of its kind in New Zealand, bringing together people looking to borrow money with people looking to lend it.
By connecting borrowers with lenders directly, Harmoney can get borrowers a loan faster and easier, and give lenders more flexibility and better interest rates than traditional banking, the company says.
The online platform offers fast, easy, and transparent lending and investment options, the company says, and loan “fractionalisation” allows investors to spread their investment over a large number of loans, further reducing their risk or exposure to any one borrower. The minimum investment is $500 and the maximum loan is $35,000.
The net investment returns are pegged at between 9.5% and 24% depending on the quality of the investment.
“We have removed the expensive corporate models of banks and through an online marketplace are sharing the benefits between the investors and borrowers”
“We have removed the expensive corporate models of banks and through an online marketplace are sharing the benefits between the investors and borrowers,” says Mathis.
“We have a low cost model – no branches and no big corporate head offices. We take an intermediary fee, and then pass on the majority of the interest revenue to the investor.”
Since obtaining the first peer-to-peer service licence from the Financial Markets Authority in July last year, Harmoney has hit the ground running, the company says. Within three weeks of opening for business, it had facilitated $2 million of loans. The company also attracted $100 million in equity investment from three private equity funds and Heartland Bank, which took a 10% stake in the company.
“This is just the tip of the iceberg for where Harmoney sees its plans in bringing communities together via online marketplaces,” says Mathis.
She says the Australian launch will make Harmoney the fastest growing and largest peer-to-peer marketplace in Australasia.
Harmoney sees a future where its platform can cross borders, sourcing investments from countries like Japan, with low interest rates and continuous deflation, and offering loans to places where SMEs have little choice of lenders.
“We like to think we have a mission to surprise and delight,” says CEO and founder Neil Roberts. “We want to be multi-asset capable, multi-currency capable.”