Julian Cork, Landbay: "We built our platform on technology that was fully under our control"

Julian Cork, Landbay: “We built our platform on technology that was fully under our control”

The UK peer-to-peer (P2P) lending market has flourished in the last decade. Lending volumes among the major platforms are increasing rapidly, pushing the cumulative total above £7 billion for the first time, as the understanding of the investment model continues to grow.

The concept is simple: P2P platforms offer borrowers a competitive source of funds, and by cutting out the banks, investors are offered potentially far more attractive and predictable returns than if they were to hold their money with a high street lender.

Banking continues to be an expensive business with complex architectures and many layers of services and infrastructure to design, build and manage. Many big traditional firms rely on aging core architectures, which provides a relatively slow and clunky service to its customers, and in turn their borrowers. This legacy technology is slow to evolve and prohibitively expensive to replace.

By contrast, P2P lenders only landed in the UK in 2005, with most platforms emerging since 2010 onwards, so they’ve been able to take advantage of the most up-to-date technology when building their infrastructure. This, coupled with their transparency and innovative business model, provides a significant competitive advantage. Recent technological evolution has changed the game entirely for the sector enabling lenders to do three key things to stay on top – move at speed, expand efficiently and stay focused.

New technology architectures, as well as the ability to quickly run up minimal viable products, mean that emerging P2P companies can turn ideas into reality much faster than their larger counterparts (“fail fast” or as I like to call it, “test quickly”). Continuous deployment allows the most technologically advanced firms to deliver updates the moment that the code has been thoroughly tested on the local environment, completely automating every stage of the deployment pipeline. For example, at Landbay we use microservice architecture and the business is scaled horizontally, meaning that new services can be stood up very quickly with little reference to the existing architecture. This process is extensively streamlined, ensuring speed while not sacrificing the individualised treatment that each client deserves.

P2P firms are aware that the sector is too dynamic to be bound by long delivery processes. This process of automation is only really possible in an agile environment. Using cloud infrastructure removes the need for hardware procurement, infrastructure engineers, or data centre premises allowing companies to scale up or down as required without legacy costs. As-a-Service capabilities in many areas of business technology, operations, and business processes, mean that the core team in an organization can outsource all non-core functions and remain focused on the specialised jobs they’re most equipped to do.

This prioritisation of speed and efficiency, coupled with the ability to focus, means that P2P lenders can zero in on specific problems and provide what customers want and are increasingly expecting. At Landbay we can bring a new micro service up from scratch in 20 minutes, with the lag for code from committing to going live being about six to eight minutes whilst still maintaining the up time required.

After some serious research about what features users want, how to scale effectively, and what kind of underlying architecture we needed, we built our platform on technology that was fully under our control. Landbay chose to work with cloud provider Amazon Web Services (AWS) because of its flexibility, scalability, and wide range of features. In particular, we made use of the Amazon “Activate” programme which is specifically targeted at start-ups, with low-cost easy-to-use resources available to help get started with AWS.

The ability to combine cutting-edge technologies and the latest developments and operations with excellent software engineering and architectural design trends allows the platform to deliver at high speed, all the while cutting costs dramatically and future-proofing the architecture. For some servers, we’re saving 80% of the cost by using Amazon EC2 Spot instances, which is a massive benefit.

The government introduced a new individual savings account (ISA) in 2016, the Innovative Finance ISA (IFISA) – an account that allows investors using P2P lending platforms to receive tax-free interest. IFISAs offer great value to investors, often yielding 3.5% interest per year (rather than the 0.5% one would earn in a regular cash ISA, albeit these are investments rather than savings). The market to crack was vast – in the tax year 2014-2015, adult ISA holdings totalled £483 billion.

Landbay had two pre-requisites to offer an IFISA. The first was to obtain full authorisation from the Financial Conduct Authority (FCA) and the second was to be ready for significant scale. Working with AWS allowed Landbay to be one of the first P2P lenders in the UK to launch the IFISA and effectively scale when the investor volumes increased.

Technology has been perhaps the greatest disrupter of the financial services sector in the last decade; the term “fintech” is mentioned in almost every conference or conversation about the future of financial services. It remains to be seen how incumbent lenders will utilise technology to improve their services for customers, but in the meantime start-ups, and scale-ups, will continue to use it as their main competitive advantage. Much is made of the way consumers interact with tech, but some of the biggest innovations are being seen behind the scenes, and there’s still a long way to go.

By Julian Cork, COO of Landbay

  • Vlad 26 October, 2017 at 1236

    CEO and founder of Inspeer P2P lending platform, Denis Kabanets, reveals main opportunities of Inspeer project and gives some guidance on how to succeed in P2P lending.

    According to numerous reports, lending platforms’ costs are much lower than traditional banks costs. AltFi Data Analytics, published by investment bank Liberum, shows that the ratio of operating costs to the loan portfolio at the crowdlending platforms is lower by almost 40% comparing to banks. Lower costs mean higher profitability for investors. In terms of yield, P2P lending outperform savings accounts, and certificates of deposit.

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