By Gareth Vaughan
High profile director and investor Rob Campbell is promising to bring strong governance to his new role as chairman of peer-to-peer lending start-up Harmoney.
Campbell told interest.co.nz he's attracted to peer-to-peer lending because it offers "genuine change" and "thoroughly new developments" in financial services.
Harmoney is among a handful of companies planning to apply to the Financial Markets Authority (FMA) for a licence to operate an online peer-to-peer payments platform, which will match lenders with borrowers seeking loans for personal, charitable, or small business purposes and receive fees for doing so. Those planning to apply for licences are pledging lower interest rates for borrowers, and substantially higher rates for investors than those offered by bank deposits. The passing of the Financial Markets Conduct Act has enabled the development of peer-to-peer lending in New Zealand. See all our stories on peer-to-peer lending here.
Campbell, who as chairman is an independent director without a shareholding in Harmoney, said he was enthusiastic about the opportunities for both borrowers and investors that peer-to-peer will create.
"I am enthused about the possibility that peer-to-peer creates for borrowers because I think there is a large sector of personal borrowers in New Zealand who pay excessively for their borrowing," said Campbell. "And I think the traditional trading banks take advantage of their market strength in that respect. I think that peer to peer can challenge that and offer people much more friendly access to personal credit and much better rates."
"From the point of view of investors there are not many fixed rate interest bearing opportunities that are all that attractive at the present time. And I think that investors too will be very appreciative of the opportunity to invest and get better returns than are available from the trading banks, (who are) again really taking advantage of their market strength," Campbell said.
A former director of BNZ and ex-chairman of BNZ Finance, Campbell was part of a group led by Localist CEO Christine Domecq that bought the digital marketing company off NZ Post recently. He's also a director of sharemarket listed companies Guinness Peat Group, Summerset Group and Tourism Holdings, Turners & Growers and Precinct Properties. He is chairman of both Summerset and Tourism Holdings. He has also been a director of the Accident Compensation Corporation where he chaired the investment committee.
"I think I bring a strong governance background (to Harmoney)," Campbell said. "And it's very, very important to any peer-to-peer lending proposition that the quality of the governance is impeccable. So a critical role that I've got is to ensure that the mechanisms that the guys have built do work in the appropriate way.".
Neil Roberts, Harmoney's CEO and controlling shareholder, has a background that includes being head of sales and business development at Flexigroup, and was general manager at Pacific Retail Finance, which was bought by GE Finance and Insurance in 2006. Harmoney plans to use what it calls fractionalisation to break down loans from investors to borrowers to $25 lots to spread their risk. Interest rates will be priced via Harmoney's risk grading system that features 30 grades ranging from A at the top to G at the bottom. See more in this video interview with Roberts.
Roberts describes Harmoney as a start up with international aspirations. Campbell said there's plenty of opportunity in New Zealand for the time being, but in the first instance offshore aspirations are towards Australia where Roberts and his team have first hand experience from their days at Flexigroup.
"We think the technology that we're applying and the credit rating approach we're applying is certainly world class so we wouldn't be fearful in any way of competing with any of the bigger players. It's really just a matter of understanding the local credit markets appropriately, (and) that will come in due course. (But) the first thing is to get up and going here," said Campbell.
Both Australian operator SocietyOne and Britain's RateSetter which is setting up in Australia, have declared an interest in the New Zealand market and both have links to this country.
"We'll see how they go. Hopefully we'll make it difficult for them," Campbell said.
Harmoney's yet to formally apply to the FMA for a licence.
"There's still work being done on that, (but there has been a) significant amount of interaction with the FMA," said Campbell. "The FMA is being appropriately cautious about this."
"We are still expecting to be able to launch by mid-year, we're hoping that we'll be underway by July."
Roberts said Harmoney is close to recruiting directors in addition to Campbell but can't provide any other names yet.