LFP053 – Innovating In P2P with Cormac Leech Co-founder Liberum Alternative Finance

LFP LiberumCormac Leech is co-founder of Liberum Alternative Finance who are a (the?) specialist strategic adviser and development partner to the UK Alternative Finance sector, focusing on online direct and marketplace lending and equity crowdfunding.

Liberum have done some $2bn of the largest P2P investment fund originations in the UK – notably P2PGI now a listed FTSE250 company. Which to make that explicit means that one of the biggest 250 listed companies in the UK purely invests in P2P. An interesting stat in itself when you hear how Fintech ain’t much from the odd naysayer.

Cormac LeechCormac is perhaps London’s best known and deepest thinker on Alternative Finance. In LFP038 Peter Renton and I discussed the highlights of Lendit 2015 – Europe’s largest P2P conference last year. We both picked out Cormac’s coruscating presentation – a little like the scene in Apocalypse now where they are on LSD under the bridge while the battle is going on. More prosaically it fitted a 3hr presentation into about 20 minutes and included everything about P2P including advice to the Bank of England as to how they should in the future use P2P assets to control the money supply.

Plenty has been happening in all directions with P2P lending and I thought it would be a great time to hear from someone who, although having an indirect stake in the success of the industry, is not the CEO of one and therefore that much more dispassionate.  Furthermore as always I aim to dive beneath all the froth and trivia and get to the deeper waters.

Plenty in this show including: –  the evolution of P2P through the three stages “thesis”, “antithesis” and “synthesis”

– Cormac’s career from derivatives to McKinsey to Banks Analyst to Alternative Finance

– comparing the growth of the derivatives market to P2P and how the ISDA master agreement made all the difference to its growth

– challenges of analysing banks; conflicts of interest between divisions and compensation structures

-banks having had 500 years to put in checks and balances; these are not in place to the same extent right now in Fintech – all the way from the operational level to the board level

– the need for an independent verfiication process/system; Global Debt Registry as an example of a firm in this space

– solving this issue would revolutionise the P2P market (&is supported by some leading P2Ps) – taking the whole fraud issue off the table

– relating this to KYC; Thomson-Reuters existing database which is used right now relatively confidentially by most banks in re

– separating data quality and auditing from the platforms

– contextualising Adair Turner’s recent notorious remarks about credit quality in P2P; assessing the likely comparative credit quality of banks and P2Ps

– diving into Deloitte’s recent negative analysis of P2P

– Cormac’s perception that P2P aggregators will become increasingly important “effectively a roboadviser for the P2P space”; Liberum are working with Lending Well in re at present

– the next frontier for P2P being for P2Ps to offer customers a payment card

– Liberum’s work in the Alternative space and the services the offer to investors and companies

And much much more!

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