Case Study – SocietyOne
Market place lender SocietyOne has launched secured loans for borrowers, which will also significantly reduce risk associated with lower credit tiers for investors in the lender, according to chief investment officer, John Cummins.
Can you explain what the new product will offer investors in SocietyOne?
For borrowers, our secured loan gives them access to an increased loan amount of up to $70,000 and payment terms of up to seven years. To access this, they need to pledge a vehicle or boat for example as security. They’re also rewarded with up to a 1 per cent discount on their interest rate.
For our investors, the product maintains the high credit quality we’re known for, and risk associated with lower credit tiers is reduced significantly.
Why did you decide to launch now?
We want to ensure we’re delivering the best experience and continue to give customers a better and fairer deal. The secured loan is a natural extension to our existing unsecured offering and just one of the new products coming in 2021, including auto-loans, all building on the momentum we’re seeing from end of 2020. We piloted the product with a few key brokers over December with great feedback and are encouraged by the takeup through both broker and direct channels so far this quarter.
You also mention diversifying your product offerings this year, what else is in the works?
We are working to also launch auto loans in 2021.
What kind of investors do you get in SocietyOne? Are there any particular kinds of investors you will be targeting this year?
Our personal loans unit trust has now seasoned since launch in mid-2019 and we are seeing a steady increase in investors each month. As an income-based investment it has performed really well during the COVID period and we believe it will see strong growth in 2021 from both individual and institutional investors.
Can you share your thoughts on the marketplace lending space? What are likely to be the big challenges going forward?
Economic recovery from the 2020 pandemic continues to pose a challenge for a lot of families and businesses, but as we’ve learned, it does not have to be a barrier to growth. Whilst there are still hurdles to be overcome in terms of regrowing the economy, we are experiencing a really strong Q1 in terms of borrowing – quite consistent with Q1 2020. A lot of our volume is driven by consumer confidence, which we’re seeing returning, given how Australia is managing relatively better compared to other parts of the world. There is still a high degree of customer optimism which puts us in a position for a robust 2021.