Andy Siemers is founder and managing director of LEND. He has more than 20 years of marketing and risk management experience in the consumer lending and credit card sector. His experience working as Chief Marketing Officer at consumer lending market leader Cembra Money Bank (previously GE Money Bank), with responsibility for all product lines.
Interest rates for consumer loans have changed noticeably since the Federal Council changed the maximum legal interest rate in July, 2016. What is your take on the current interest environment?
Andy Siemers: The Federal Council reduced the maximum interest rate for consumer loans to 10% from the previous 15% limit. But this adjustment has not drastically benefited consumers because banks are very selective about whom they issue low-interest loans to. As a crowd lender, we fill the loans gap, and pass savings on to our customers.
Will the new regulations make for a more volatile interest environment?
The interest landscape will, in my opinion, become more dynamic. Consumers want to see more competition between lenders and subsequent reductions in the costs of loans. The new requirements and the emergence of alternative lending solutions are broadening the selection of loan products available to consumers. This dynamic is beneficial to borrowers.
The Swiss market is being disrupted not only by new regulations but also by the appearance of new lenders. Does the market have room for these newcomers?
New service providers only establish themselves in markets if the service they provide fills a lack or meets the needs of a neglected audience. Many banks take advantage of their strong market presence and charge high interest rates. Thanks to new, digital business models and the implementation of a customer centric culture, the needs of customers can now be fully met. The success of LEND shows that the market is nowhere near its saturation point.
Digitalization has reached the lending sector. What are the most significant effects of the digital incursion into the sector?
If correctly implemented, digitalization can lead to better products and lower costs. In my experience, making the shift to digital is a struggle for many longstanding lenders. New arrivals, on the other hand, can more quickly adapt to meet changing consumer needs and are more motivated to pass savings on to customers. Platforms like LEND, for example, offer both borrowers and investors more attractive interest rates than those offered by conventional lenders.
What makes digital lenders different or better than conventional financial services providers?
Value for customers is and will remain the key factor. New lenders can implement digital processes to their customers’ benefit. Borrowers using LEND, for example, can quickly access information relating to payments or balances at any time. The same applies to investors: data is shown in real-time, down to the last centime. Returns and costs are clearly visible.
Peer-to-peer lending is relatively new in Switzerland. Could you provide a brief synopsis of this lending method?
Peer-to-peer or “crowd” lending allows individuals to make money available to other individuals (their “peers”) directly, without their assets being invested indirectly through a bank. Investors connect directly with loan requests put forth by individual borrowers.
Companies like LEND provide consultation and facilitate the creation of contracts. The exact way in which peer-to-peer lending platforms deliver this service differs between providers. Because protecting our customers’ sensitive personal information is very important to us, LEND never shares names between borrowers and investors engaged in a contract. All transactions are also made directly through LEND.
How do investors benefit?
Investors benefit in several ways. On the one hand, they benefit from the simple handling of loans and the ability to access relevant information online at any time. Investors also profit from the low administrative costs involved in the process. These savings are passed on to investors in the way of above-average yields. Again, it is important to note that the security of both investors and borrowers is fully insured at all times.
How do borrowers benefit?
Borrowers receive more attractive loan conditions which cut the costs of loans. Over 75% of the loans issued on LEND are used to refinance more expensive loans. Thanks to the lower interest rates, many of our customers are able to reduce their loan terms and get out of debt faster.
How does LEND differ from other Swiss lending platforms?
LEND puts people first and is built on transparency. All loan requests are described in detail. The rates provided reflect the actual net interest rates or yields after cost deductions. As a fee-based Swiss company, LEND has no incentive for keeping interest rates high. Last but not least, the LEND team is composed of experts who are capable of delivering competent and individual consultation to both borrowers and investors.
Where do you see LEND in five years?
We are convinced that, within a five-year time span, our product will be adopted by a broad base of investors and borrowers, putting us in the position to compete with Switzerland’s four established loans providers.