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"Peer-to-peer lending" Business Case
HB Reavis's Corporate Financing Department decided to expand a team and hire a high-potential graduate of Financial Management/Economical studies, to occupy a newly created position of Financial & Business Analyst. "Peer-to-Peer Lending" Business Case is supposed to help HB Reavis get in touch with high-potential university graduates, potential future employees of HB Reavis. For more information about the Financial & Business Analyst vacancy, visit http://hbreavis.com/career/
Since the outbreak of the great financial crisis in 2008 various “sharing economy” platforms have emerged, e.g. taxi hailing platforms, hospitality and short-term housing concepts, peer-to-peer lending platforms, etc.
Around the globe there are numerous peer-to-peer lending concepts which differentiate themselves in multiple features, such as targeted market/borrowers, credit risk assessment approach, loans origination strategy, pricing strategy, loan funding sources, etc.
The most advanced and biggest companies are: Lending Club, Ondeck, both companies are already publicly listed, so a significant amount of information, data and reports are available in the public domain.
Your task is to prepare a paper, that will cover topics below. Presentation format should be self-explanatory, no matter what presentation platform(s) will be selected.
Around the globe there are numerous peer-to-peer lending concepts which differentiate themselves in multiple features, such as targeted market/borrowers, credit risk assessment approach, loans origination strategy, pricing strategy, loan funding sources, etc.
The most advanced and biggest companies are: Lending Club, Ondeck, both companies are already publicly listed, so a significant amount of information, data and reports are available in the public domain.
Your task is to prepare a paper, that will cover topics below. Presentation format should be self-explanatory, no matter what presentation platform(s) will be selected.
CHALLENGE
You are to analyze the landscape and outline the strategy for establishing a new peer-to peer lending platform in CEE region (Poland, the Czech Republic, Hungary and Slovakia). Your work should cover these sub-topics:
- Identification and estimation of the market potential (in terms of size, target segments)
- Market entrance strategy, marketing, strategic partnerships, analysis of the competitive environment
- Setting-up of a business plan and financial model which you will present to potential start-up investors. The model should contain standard metrics such as forecasted balance sheets, P&Ls, cash flow, IRRs, break-even analysis, scenarios modelling, capital return indicators
- Propose a simple credit scoring algorithm/thoughts on it
- Staffing, identification of key people, motivating them, remuneration strategyPropose the initial split of the equity pool, its dilution and split further on when another equity financing round would be necessary
- Sustainability of a peer-to-peer business model
- Potential regulatory oversight and its impact on profitability
- Importance of the credit cycle, low interest rate environment, implications on the peer-to-peer lending if the credit cycle turned around
- What are the prerequisites for peer-to-peer lending concept to be successful (concept viability and its commercialisation) in CE region?
- Exit strategy
- Overall conclusion
