Interview with Nick Harding Founder and CEO of Lending Works.
Alison Jane Reid interviews Nick Harding, founder and CEO of Lending Works – a peer to peer platform which aims to tear down the old models for loans and investments in the UK and offer a service which is winning accolades for fairness, transparency and ethics. AJ and Nick discuss democratising money, investing in eco-friendly products built to last and what he would do if he became Prime Minister for a day.
Lending Works is yet another example of a youthful financial company seeking to revolutionise and disrupt the way we use our money. The emphasis is firmly on making money work for the many, not the few. The company currently facilitates over £4.5 million in loans per month between lenders and borrowers around the UK. AS of May 2017, the company has lent over £50 million. Lending Works has been Highly Commended in the Moneywise Customer Service Awards for the last two consecutive years and launched in January 2014.
For further information, please visit https://www.lendingworks.co.uk
From the outset, our emphasis has always been on fairness to our customers. Our company is unique in that we have both lenders (investors) and borrowers using our platform, and given the nature of peer-to-peer lending, the two are inextricably linked. This means that, to be fair to our lenders, the onus is on us to ensure that we only lend money to those who are reasonably able to pay it back.
But it is our service delivery which really sets us apart. The loan application process takes just a few minutes, and those who are approved for a loan are typically paid out within one working day. The process is hassle-free, and those who have any queries can call our dedicated customer service team. They won’t be put on hold – they speak to real people who guide them through the process.
Added to that, we pride ourselves on our levels of transparency. We publish and update all sorts or arrears and default figures on our statistics pages, while our loan book is also downloadable. We have nothing to hide, and want our customers – both lenders and borrowers – to feel entirely at ease when using our platform.
I graduated with a degree in Computer Science, and worked at RBS for 4 years. It was there that I really began to understand the frustrations consumers have with the faceless bureaucracy involved with banks and mainstream financial services, and I knew there had to be a better way. The efficiency of peer-to-peer lending was a huge attraction for me, and the ability to genuinely put the customer first so that they benefit, rather than a banker. After some hard work behind the scenes for a couple of years, Lending Works opened for business in January 2014.
We are already the third-largest consumer peer-to-peer lending platform in the UK, which is something we are very proud of given that we are just three-and-a-half years old. We have also ensured that every penny lenders have expected to earn has been received – and on time. Our proudest achievements of all have come at the Moneywise Customer Service Awards, which are considered to be the ultimate stamp of approval from the UK consumer. We’ve won ‘Highly Commended’ and ‘Most Trusted Personal Loan Provider’ for the past two years, while in 2016 we won the Best P2P Platform for Savers award outright. We believe such recognition serves as great vindication for the hard work our team puts in, day in, day out. However, we continue to look for new ways to improve the experience of our customers, and a good example of this is our new Auto Approve function, which ensures that the most creditworthy borrowers are approved and paid out immediately.
We are firm believers in lending money only to those who can afford to take on a loan. That said, it is also our belief that many applicants are either denied a loan, or offered a sub-optimal one by a ‘Computer Says No’ approach adopted by many mainstream lenders. While our credit models adopt a high degree of automation, we also incorporate a human element to our underwriting, so that we can better understand individual situations and circumstances. We believe this significantly increases the chances of delivering a fair outcome, which is most beneficial to the applicant.
About a third of our borrowers take out a loan with us to consolidate their debt, although many people also borrow to improve their home, finance their car or to pay for weddings and other events.
Our credit models are market-leading, and our meticulous approach ensures that only those who are creditworthy are approved for a loan. That said, there is always margin for error, while circumstances can change. As such, we also have a reserve fund, which is continually topped up as a proportion of our loan book. This fund is ring-fenced, and compensates our lenders if borrowers should fall into arrears, or even default. And, as an additional layer of protection, we also have an industry-first insurance which pays out in the event of borrower default for typical reasons such as accident, illness, unemployment, death, or even darker forces like fraud or cybercrime. Such protections not only ensure peace of mind, but are also the reason why lenders have always received their money on time.
We lend across all demographics, although two thirds of our lenders are male. In terms of age, we have lenders aged 18 and 95, although around 65 per cent of our lenders are over the age of 55.
I think the answer to this question lies in the world of fintech, which is disrupting the old, established high-street guard. While I’m not suggesting that the banking system as we know it is about to be ripped up, fintech is providing invaluable competition which forces everyone else to up their game and irons out inefficiencies (and unnecessary margins!). All this has to be good news for the consumer within financial services, who stands to benefit greatly.
At this stage of our development, Lending Works doesn’t currently have the cash resources to donate money to charity. It is something we will consider moving forward. However, we do believe that by making financial services fairer, more affordable and convenient – we are making a contribution to society of which we can be proud.
Perhaps the thing that most attracted me to the financial sector was the fact that I felt I could really make a go of trying to improve it. The UK already leads the way with regard to innovation and technology when it comes to financial services, and there is naturally some pride to be had when working within this realm. But it is the opportunity to shape the future which so appealed to me.
I am a massive believer in safeguarding and preserving the planet. It isn’t necessarily a realm I am expert in, but I always endeavour to do the little things right. I always check labels for eco-friendliness, and I am very insistent on recycling everything I possibly can.
Buying clothes and other items to last is something I am very big on. In my opinion, it is almost always worth paying that extra bit of money upfront to ensure that what you’re getting is of better quality, and thus lasts longer. More often than not, it will end up saving you money, although the overriding incentive should be to contribute to create a more sustainable world.
Like most entrepreneurs, setting up Lending Works required years of hard work and long days behind the scenes for the best part of two years – without actually seeing a penny come in during that time. It can take its toll, and there is an inevitable degree of uncertainty involved. But that said, I never had any doubts about the product we were developing, and always believed so strongly that it would not only see the light of day, but also be an unqualified success when it did. That kind of belief is crucial to overcoming the various challenges of starting a company like ours, and also taking on some established institutions.
As above, I would say the best thing is to ensure that the potential for success of your product or service has been thoroughly researched, that your path to launch and thereafter has been adequately mapped out, and that you have the flexibility and versatility in place to take on things as they come. If all these boxes are ticked and your house is in order, it instills belief, and, with that in hand, I found that things often tend to fall into place.
That said, I think having persistence, grit and perseverance in abundance is vital too. I recall many a tough challenge during the early stages of developing Lending Works, but determination was the key to overcoming these.
My biggest priority of all would be to focus on education. So I guess I’d spend 24 hours trying to get as much invested into the system as I possibly can!
LendingWorks CEO, Nick Harding, in conversation with Alison Jane Reid, Editor-in-Chief.
Protecting customers’ money is the company’s highest priority. Lending Works’ lenders are protected by the Lending Works Shield which includes a reserve fund held in a ring-fenced trust and an industry-first insurance against a range of risks affecting borrowers’ ability to repay loans, including loss of employment, accident, illness, death, fraud and cybercrime.
Lending Works is a member of the industry-body Peer-to-Peer Finance Association (P2PFA).
Lending Works is authorised and regulated by the Financial Conduct Authority.
For further information, visit the website here – Lending Works
This interview is sponsored by Lending Works. The interview, questions and subject matter were chosen entirely by us, not Lending Works).