Lancelot Savings and Loans (LSL) is the next generation peer to peer lender with the aim of offering savers rates above 5% APR and borrowers below 500% APR.
The high street banks no longer offer favourable saver or borrower rates, they are disappearing or/and moving online, further offering little reason to bank with them.
For borrowers seeking a low cost loan, LSL aims to offer very competitive rates and a faster, more rational application process than big banks and building societies.
With a minimum investment of just £100 LSL is offering the British public a reason to save with attractive saving rates.
Since 2008 and the Global Financial Crisis, banks have reduced their exposure to risk, and have been forced to strengthen their capital positions by the regulatory authorities.
With interest rates at historic lows, the options for a cash saver are abysmal. Inflation is outpacing savings interest, meaning that the average saver is actually losing money in real terms. At present even alternative investment offers from platforms such as Zopa or Ratesetter only offer gross 3-year returns of around 4%.
LSL’s mission is to offer savers significantly higher rates of interest than they would receive from traditional savings products via the banks. And at the same time offering borrowers a quick and highly competitive route to finance.
Banks are not giving potential savers a reason to save, and the same banks are not willing to lend.
LSL will automate the matching process between savers and borrowers, the rates given, and the length of the contracts.
As the membership of LSL grows and the platform matures we will look to widen our product offerings, and our P2P product range.
The LSL advisory board is a highly skilled group of individuals from the banking and lending world, together with non-executive directors from Coutts, HSBC and Barclays Banks.
LSL will charge borrowers a small administration fee at the time of funds being drawn down, but the main revenue generation source will be the gap between the rates of the borrowers and savers.
Before any monies from clients can be held or any monies lent, LSL needs to apply to the Financial Conduct Authority (FCA) for permission. This process will take between 6 and 9 months according to the FCA’s current timings.
Having previously applied for two licenses, both of which were granted, LSL is confident and skilled in its ability to secure the required FCA approvals.
The investment will be used for gaining the FCA licence, general operating expenses, brand & marketing, tech development, salaries and office space.
Once a sizeable market share is gained, LSL will then apply to the FCA for a variation of permission to enable LSL to be classed and acknowledged as a ‘bank’, and will then be in a position to offer more financial products.
The target market for the two products are:-
- Cash savers who want to save above what the high street banks are offering
- Borrowers who don’t want to pay the extortionate APR’s other banks & payday lenders offer
The market for both products has huge potential. Since 2008 and the global financial crisis banks have reduced their exposure to risk and have been forced to strengthen their capital positions by the regulatory authorities meaning that they cannot offer savings rates above 5% and are not willing to lend monies out, forcing borrowers to use payday lenders with over 1000% APR rate.
LSL’s mission is to fill that gap in the market, giving savers a decent rate of return on their savings (way above the current high street rate) and lend to borrowers with a much lower rate than the payday lenders. (Wonga and Sunny, as an example, currently over 1200% APR)
Using the LSL interactive web portal, customers will be able to see what they will receive in interest, stipulated by the length they wish to save for and the duration they wish to save for.
Similarly borrowers can use the same interactive website to view the amount they wish to borrow, the length they need it for, and the rate they will be charged.
Using Search Engine Optimisation (SEO) and Pay-Per-Click (PPC) will be key to gaining traction and market share and making both savers and borrowers aware of the products and rates LSL will be offering.
The LSL model is simple and seriously advantageous to saver and borrower. There have been many high street banks losing out to hedge funds and investment houses offering more favourable rates than they can offer, but from the research we have carried out, there is plenty of scope for a “bank” offering savers above 5% APR and offering borrowers below 500%
Offering a better rate for savers above 5% APR and offering borrowers below 500% APR will position LSL as the unrivalled market leader.